Limits to the circular economy?

In a short space of time the circular economy has been adopted as a framework for delivering sustainable economic growth. In Europe, a net importer of raw materials, this presents an opportunity for creating new markets, new jobs as well as reducing environmental degradation. 

Encouragingly, there are a growing number of public and private sector circular economy initiatives; however, there is a need for scrutiny when applying that label to different activities. Indeed, the need to clearly define and measure progress towards the circular economy is already outlined in the EU’s Action Plan.

Building on IEEP’s work on ex-post and ex-ante assessment of resource decoupling policies, it can be argued that:

- The circular economy should respect established environmental limits and thresholds, including planetary boundaries as well as the finiteness of resources
- Real resource savings must be measured as absolute, rather than just relative, in order to have an impact and avoid Jevon’s paradox (i.e. where relative efficiencies mask increasing consumption)

In an interview at the ERF for Agora Rollberg, IEEP’s Jean-Pierre Schweitzer cautioned that there is a risk that the circular economy can be used to “rebrand acts of consumption as ecological”, warning that:

- Innovative business models, including the sharing economy, have utility but do not offer optimal solutions when they remain coupled to growth in polluting activities (particularly fossil based energy mixes).
- Europe may be a leader for environmental policy but per capita consumption and waste production remains very high with significant global impacts.
- Very few examples of truly circular economies exist, except in some traditional and indigenous societies.
- The circular economy does not automatically integrate concepts of social and environmental justice which must be part of a future development models.

Building on these observations, IEEP will continue to be active in promoting the transition to a circular economy in Europe and better understanding what this should mean in practice. For more information on our work in this area, please contact Emma Watkins (ewatkins@ieep.eu), Ben Allen (ballen@ieep.eu) , or Jean-Pierre Schweitzer (jpschweitzer@ieep.eu).