The dynamic interaction between circular economy and the environment: Evidence on EU countries

This study examined the causal dynamics between circular economy (CE) and carbon dioxide (CO2) emissions in European Union (EU) countries. The selected CE indicators included the trade in recyclable raw materials (TRM) and the circular material use rate (CMR) in the secondary raw materials area, the...

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Bibliographic Details
Published in:Waste management & research 2022-07, Vol.40 (7), p.969-979
Main Authors: Pao, Hsiao-Tien, Chen, Chun-Chih
Format: Article
Language:English
Subjects:
Carbon Dioxide
Carbon dioxide emissions
Causality
Circular economy
Decoupling
Economic Development
Emissions
Emissions trading
Error correction
European Union
Indicators
Municipal wastes
Raw materials
Recyclable materials
Recycling
Resource management
Sustainable development
Waste Management
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Summary:This study examined the causal dynamics between circular economy (CE) and carbon dioxide (CO2) emissions in European Union (EU) countries. The selected CE indicators included the trade in recyclable raw materials (TRM) and the circular material use rate (CMR) in the secondary raw materials area, the generation of municipal waste per capita (GMWp) in the production and consumption area and the recycling rate of municipal waste (RMW) in the area of waste management. The coefficients of the panel cointegration equations showed that for every 1 percentage point increase in RMW, average CO2 emissions decreased by 0.5%, while for every 1 percentage point increase in GMWp and TRM, the average CO2 emissions increased by 0.263% and 0.101%, respectively. It also showed that the recycling volumes and recycling rate had a positive but very limited impact on the CMR. The panel vector error correction model result showed that there were long-run bidirectional causalities between CE indicators and carbon emissions, and the TRM had a short-run negative impact on waste generation. However, the short-run impact of CE indicators on carbon emissions was not significant, which may be because the European CE is still in its infancy. The finding suggests that policymakers should adopt multilateral policies such as reducing carbon emissions, improving the efficiency and productivity of resource management and waste recycling, and increasing investment and innovation in the secondary raw materials market to achieve resource decoupling and impact decoupling. The decoupling of these two types is a necessary condition for sustainable development.
ISSN:0734-242X
1096-3669
DOI:10.1177/0734242X211057015