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Can a Circular Economy contribute significantly to the EU-27 carbon neutrality by 2050?

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By Tainara Freitas

· 8 min read

During their initial industrialization in the eighteenth century, developed countries relied upon the intense use of iron and coal which allowed society to escape from the limits of natural resources and overcome the scarcity of food, goods, shelter, energy and infrastructure during the industrial revolution [1]. In the late nineteenth century, the discovery of oil accelerated this new linear-system economy, further augmented in the mid-twentieth century with the discovery and use of synthetic fibers and manufactured materials [1]. However, these developments depleted natural resources and damaged the environment, crossing planetary boundaries and putting at risk humanity by generating large-scale abrupt or irreversible environmental changes [2]. In the late twentieth century, implementation of new energy policies [3] and the Circular Industrial Economy approach emerged [3], but GHG emissions increased substantially even after countries signed Kyoto Protocol and the explanation lies mainly in China's economic expansion and other developing countries taking place, which is followed by a significant increase in emissions [2].

From 1990 to 2004, households accounted for over three-quarters of GHG emissions from a consumption perspective [4]. While energy use accounts for 38% of the total GHG emissions from household expenditure, 62% are attributed to emissions embedded in products and services consumed [4]. Specifically, the highest rates of GHG emissions are from recreation and leisure (probably due to aviation impact), followed by food and catering with 22% of the contribution [4]. Those high levels of emissions coming from everyday products and services bring into light the importance of understanding how infrastructure and production contribute to climate change and why material choices became the most common form of environmental commitment practice in the last few years [5].

Circular Economy as a new paradigm for reducing GHG emissions

The concept of a Circular Economy gained space among many governments and international organizations, and it is considered essential for the mitigation of GHG emissions. It became trivial for achieving climate goals since it is a tactical systems-level approach to achieve economic development but decoupled from the extractive linear system of exploiting finite resources [6]. Ideally, for avoiding catastrophic consequences from GHG emissions, economic development needs to happen without relying on fossils fuels while resources should be managed for the long-term [6] through resource consumption reduction and reusing, remanufacturing, and recycling materials [7].

The concept of the circular economy is related to closing material loops and strategies based on material transformation. The idea behind the material transformation is to add financial value alongside the phases of the supply chain while reducing emissions and waste generated from consumption and production [8]. The circular economy is complex and assumes dynamic systems without an endpoint, differently from the traditional linear industrial economy. Instead, closing the loop is more about a process of transformation of the material and the creation of complex products departing from existing ones [8]. There are seven important elements that describe some of the most important strategies for switching an economy to a circular one [8]:

  • Designing for the future and extending the lifetime of products by applying the right materials and adopting circularity as the core of the design process.
  • Incorporating digital technology to make resources more easily traceable and, optimize the process within the supply chain.
  • Sustaining and preserving what has been already produced through prolonging their lifetime by maintaining, repairing and giving a second sense to resources.
  • Rethinking the business model which comprises new opportunities to create value aligned to models supported by circularity.
  • Using waste as a resource thus, recovering it and recycling it for reuse.
  • Priority to regenerative resources by using more renewable, reusable and non-toxic resources for producing energy.

Finally, within every step of a circular economy, it is necessary to collaborate between parties and ensure more transparency throughout the supply chain.

It becomes evident why circularity is so complex to be defined and to be measured. The difficulties behind connecting empirically, circularity and GHG emissions, might even be the reason behind the lack of empirical research and more objective policies across countries. Nonetheless, the European Commission relaunched, in 2020, a new EU action plan regarding the circular economy, where member states were invited to play their full part in the EU action at a national level. It provides a future-oriented agenda with a list of initiatives and actions considered essential to promote the circular economy and make sustainable products, services and business models the norm. Following the previous report launched in 2015, it comprises a working plan and guidance on product requirements to promote the reparability, upgradability, durability and recyclability of products. However, the new instruments promoted by the new EU action plan such as the EU Ecolabel or the EU green public procurement (GPP) still have a limited impact since it is still considered a voluntary approach.

Indeed, although the EU is considered advanced in recycling, with most countries showing recycling rates between 19% and 61.9%, still, members states have circularity rates not exceeding 26.9% with an average of around 7.9%, with an exception for the Netherlands, which is a positive deviation [9]. In terms of recycling rates though, countries like Germany, Austria, Belgium, Sweden, Netherlands, Luxemburg, Denmark, lead the rank with more than 40% of materials being recycled. In fact, high performance in recycling rates does not proportionally reflect material circularity ones [9].

Although recycling and circularity both are measures of resource efficiency [9], they differ not only in concepts but also in their complexities. Even so, circularity strongly depends on recycling to be implemented. Therefore, recycling is considered one of the most important strategies to shift an economy from linear to circular [9]. Indeed, a process that produces large quantities of waste that can be recycled, transformed and used in another process is preferable to ones that produce less amount of waste but without the possibility of being recycled [10]. This is because waste from industrial processes can become new raw material after the end of their lifetime, and therefore, reduce the environmental impact of industrial manufacturing [10].

However, the circular economy also includes creating smart material input while reducing to a minimum the waste generation [6]. Therefore, it becomes clear why although both recycling and circularity rates are connected, they differ largely in percentage across economies. While recycling accounts only for material that was recycled, regardless of the resources used during the manufacturing process and even during the recycling stage, the circular economy is based on resources reduction and lifetime increase of products [6].

Can circularity be decisive to countries when achieving carbon net-zero?

There are several models on the determinants of GHG emissions. A more recent model, STIRPAT, firstly developed by Ehrlich and Holdren in 1971 as IPAT, was used in a study at the University of Glasgow, to measure empirically the circular economy’s influence on GHG emissions. This model was initially created after Ehrlich and Holdren understood that, although population growth could cause disproportional environmental degradation, it should be considered in combination with economic growth, resources utilization and depletion, altogether. The outcome was an accounting framework, the IPAT equation (1), which has been used for measuring environmental impacts (I) as a result of three key factors: population (P), affluence (A) and finally, technology (T).

The results from this research at the University of Glasgow [11] showed circularity could have an impact of almost half proportional to GHG emissions. In other words, an increase of 1% in circularity could be responsible for a reduction in GHG emissions by 0.44%. This percentage was higher than the impact of financial development and GDP per capita on emissions, confirming circularity and energy consumption are among the most important factors that could contribute positively or negatively to carbon neutrality by 2050 in the EU. Therefore, efforts should be done on homogenising circularity within the EU members states and, although the European Commission launched in 2020, an extensive call to action for member states to switch their linear economies into a circular one, clear policies should be created on the EU level which enables recycled products to be upcycling while also diminishing resources consumption. This has been proved challenging since recycling rules change considerably even within a country.

Reducing waste and increasing recyclability became even more challenging after the breakout of COVID-19, with more than 129 billion face masks and 65 billion gloves used monthly since the pandemic began [12]. Moreover, especially in the food industry, circularity is even more complex due to hygiene and health concerns, but also due to a consequence of food delivery. While the pandemic might be temporary, consumers’ behaviours are not so easy to change and therefore, food packaging will continue to be a problem if more rigorous policies and financial incentives to technologies to promote circularity do not take place. Solutions for increasing reuse packaging, alternatives to plastic and increase recyclability, besides collaboration between parts, are only a few of the possibilities for all members of the European Union towards a more circular economy and consequently, GHG emissions reduction.

Future Thought Leaders is a democratic space presenting the thoughts and opinions of rising Energy & Sustainability writers, their opinions do not necessarily represent those of illuminem.


[1] Stahel, W.R. and MacArthur, E., 2019. The circular economy: A user’s guide, Routledge, New York.Laurent, 2020

[2] Laurent, É., 2020. The new environmental economics: sustainability and justice, John Wiley & Sons, Cambridge

[3] Mediavilla, M., de Castro, C., Capellan, I., Miguel, L.J., Arto, I., Frechoso, F., 2013. The transition towards renewable energies: Physical limits and temporal conditions. Energy Policy, 52, pp.297-311.

[4] Druckman, A. and Jackson, T.D., 2009. Mapping our carbon responsibilities: more key results from the Surrey Lifestyles Mapping (SELMA) framework. Resolve Working Paper Series 02-09.

[5] Dietz, T., Gardner, G.T., Gilligan, J., Stern, P.C. and Vandenbergh, M.P., 2009. Household actions can provide a behavioral wedge to rapidly reduce US carbon emissions. Proceedings of the national academy of sciences, 106(44), pp.18452-18456. (Haas et al., 2015)

[6] Ellen MacArthur Foundation, 2019. Completing the picture: How the circular economy tackles climate change. Accessed 9th October 2021 <>.

[7] Walker, S., Coleman, N., Hodgson, P., Collins, N. and Brimacombe, L., 2018. Evaluating the environmental dimension of material efficiency strategies relating to the circular economy. Sustainability, 10(3), p.666.

[8] Circle Economy, 2019. The Circularity Report. Accessed 29th October 2021 <>.

[9] Kostakis, I. and Tsagarakis, K.P., 2021. Social and economic determinants of materials recycling and circularity in Europe: an empirical investigation. The Annals of Regional Science, pp.1-19.

[10] Frosch, R.A. and Gallopoulos, N.E., 1989. Strategies for manufacturing. Scientific American, 261(3), pp.144-153.

[11] Freitas, T.S, 2022. How Circular Economy can contribute to the EU-27 carbon neutrality by 2050: An empirical analysis under STIRPAT model. University of Glasgow.

[12] Prata, J.C., Silva, A.L., Walker, T.R., Duarte, A.C. and Rocha-Santos, T., 2020. COVID-19 pandemic repercussions on the use and management of plastics. Environmental Science & Technology, 54(13), pp.7760-7765.

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About the author

Tainara Freitas is an MSc in Environment and Sustainable Development at the University of Glasgow. She is working with sustainability in the agri-food sector, specialising in ESG and carbon footprint accounting.

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