An Analysis of Circular Economy Literature at the Macro Level, with a Particular Focus on Energy Markets

Abstract

Sustainability is a strategic approach to develop a more sustainable economy to support the environment and socio-economic development. Literature on sustainability has been concerned mainly with global warming and environmental degradation issues, whereas the Circular Economy (CE) concept has recently been suggested as an alternative solution to support market sustainability and deal with both environmental and socio-economic challenges. In order to tackle these challenges, countries must switch from linear economies that follow the “take-make-dispose” principle to circular and sustainable economies. This study applies a structural and conceptual literature review to elucidate the most decisive determinants in the formation of circular strategies, particularly in the context of the energy sector. This study examines obstacles that hinder CE adoption and formulates drivers and measures to overcome them. The strategic literature review shows that the circular approach is critical in achieving sustainable development. Circularity can be considered a novel and innovative approach to alleviating the contradiction between rapid economic growth and energy and raw materials shortages. The CE structure must be considered as a sustainable foundation to enhance economic growth by avoiding waste, preserving natural capital, managing resource scarcity, recycling materials, maximizing energy efficiency, and recirculating them into the economy. Analysis reveals that the circular system is a key pillar of sustainability, security, and efficiency in the energy sector. The sustainable energy transition requires incorporating the CE principles in the design process. It also revealed that both public and private sectors must move away from the linear paradigm towards circularity to achieve CE implementation.

1. Introduction

Since the 20th century, greenhouse gas emissions have been the primary driver of climate change and global warming, leading to various health and environmental issues. Aside from climate change, air pollution, respiratory diseases, food shortages, and wildfire outbreaks result from climate change caused by greenhouse gases. In light of this, global emissions have caused concern in all economies [1,2,3]. Several factors contribute to global emissions, including a sizeable simultaneous surge in population, consumption, and economic growth, which are associated with an increase in resource and land consumption and waste production [4]. Population growth will increase the demand for natural resources, specifically energy, raw materials, water, and fertile land. Environmental pressure increases dramatically as the demand for these resources grows [5,6]. Humanity’s irreversible effects on the earth could make it impossible for the next generations to enjoy high living standards, primarily due to global warming, biodiversity loss, and land degradation [7].

Electricity production is one of the sectors contributing significantly to greenhouse gas emissions. Approximately 60% of the world’s electricity is generated from fossil fuels, requiring a gradual shift towards a more secure, sustainable, and accessible energy system. As reported by the International Energy Agency (IEA), over 40% of all energy-related emissions come from electricity generation. Globally, fossil fuels emit approximately 34 billion tonnes of CO₂ annually [8,9].

In order to mitigate environmental threats, countries should adopt green strategies to establish a modern, circular, and sustainable economy. To transition toward a sustainable low-carbon energy system, countries must switch from fossil fuels to renewable energy sources and improve their energy efficiency. Recently, the world has seen an acceleration of ambitions regarding energy transition and decarbonization, particularly in terms of achieving net-zero carbon emission targets. In order to achieve net-zero targets and energy-efficient development, all industries must modify their infrastructures, a process that will require large-scale reconstruction and retrofitting for a very high cost. Energy industries also need to be entirely redesigned and implement new technologies in the process of electricity production or industrial activities (i.e., batteries and solar photovoltaic (PV)). In addition, the linear decarbonization process only focuses on the reduction of emissions from energy production and renewable energy consumption, which are not sufficient to reach net-zero targets. The CE approach is recently on government agendas as an effective means to support sustainability, accelerate decarbonization, and facilitate energy efficiency [10]. Therefore, CE approaches are complementary to existing energy and decarbonization policies in enhancing the energy transition toward a clean environment. Creating resources from waste is one of the most effective ways to contribute to sustainable development. To reduce waste and emissions in energy transition policies, policy makers must consider CE principles in their energy transition guidelines.

Over the past century, linear economies have dominated industrial development [11]. In an economy based on linearity, natural resources are directly transformed into waste because of the way in which they are designed and manufactured [12,13]. The process is comprised of three phases: take, make, and waste [14]. There is, therefore, a great deal of waste produced in traditional and linear economies. In contrast, circularity is an excellent replacement for the linear economy to eliminate waste, maximize resource efficiency, optimize material consumption, take advantage of renewable resources, and continuously replenish natural resources [15]. In circular economies, raw materials are reused instead of being produced from scratch, and a closed loop can be employed to achieve this objective [16]. The electricity sector can benefit from the CE strategies when dealing with renewable energy like solar, wind, and bioenergy. Over the past decade, the CE has gained popularity in areas such as sustainability, energy efficiency, resource management, and productivity. Circular economies make efficient use of bio-based materials in many different ways as they cycle between the economy and the environment. Environmental concerns such as climate change, biodiversity loss, waste, and pollution can be alleviated through CE strategies.

In terms of energy market perspective and CE strategies, countries have the potential to produce electricity from biomass, biogas, wind, and solar or use energy store systems or portable batteries. New technologies are being developed to generate energy from waste in a circular manner. As traditional technologies and coal-fired power stations are replaced by infrastructures and new technologies, it is essential to apply CE principles to unlock waste’s resource potential and minimize its management challenges. For example, waste-to-energy (WtE) generation technologies have recently emerged and gained increasing attention. WtE technologies utilize waste to generate energy in the form of electricity or heat. Like other power generators that use thermal coal, oil, or solar, WtE plants use waste as a fuel to produce electricity. In these plants, the concept of energy from waste involves converting non-recyclable materials into energy through various methods, including thermal and non-thermal processes (combustion, gasification, landfill gas recovery, and anaerobic digestion). A WtE system contributes to a sustainable and circular economy in various ways. As one of the solutions to increase circularity in the energy sector, we provide an explanation of WtE technologies in this study.

The circular strategy has become one of the most popular research areas from various disciplines and hemispheres in terms of conceptualization, definitions, drivers, metrics, and sustainability. The literature mainly concentrates on specific industries like manufacturing [17,18], construction [19,20], supply chain [21,22], energy [23,24], fashion [25,26], and water industries [27,28]. However, this study goes a step further and examines all aspects of the CE, such as motivations, barriers, technologies, and requirements for switching from a linear to a circular system in the global market and also the energy sector. The aim of this paper is to identify factors that can hamper, encourage, facilitate, or stimulate the transition towards a CE system.

Using a systematic literature review and various perspectives of scientific studies, this paper explains what the circular economy is, why it is essential, what are drivers and barriers, and how it can be accelerated. Unlike the previous literature, which has discussed the background and concept of the CE itself, in this paper we examine current CE progress as well as the steps that need to be taken to accelerate its growth. In the first stage, an in-depth and general analysis is provided of corporate CE approaches and their applicability and transferability to the macroeconomic level across all industries. Then, a particular emphasis is placed on the energy sector to examine the implications of the CE system in the energy sector in terms of decarbonizing electricity generation and utilization, as well as its wider implications. We discuss principal drivers and obstacles to the implementation of CE approaches in a global context as well as in energy markets. We identify how the current scheme of policies could facilitate and incentivize CE measures to complement existing energy policies in order to achieve the full decarbonization target.

This article explores the potential for CE development in all industrial sectors through waste management strategies. Through a combination of literature review and computational models, we identify the main motivations and obstacles to the implementation of CE and propose significant solutions that policymakers and government officials should consider. It is revealed that CE approaches are very critical and effective solutions for economic growth, sustainability, and energy decarbonization, which are beneficial not just for energy markets but also for other industries. It shows that the CE contributes to the reduction of pollution, water acidification, and carbon emissions that ultimately contribute to climate change. Furthermore, this study illustrates how CE strategies can lead to a range of environmental benefits in the energy sector.

It has been discovered that there are many obstacles that have to be addressed in order to establish a circular system that is capable of bringing socio-economic and environmental benefits to the wider economy. There are practical barriers to the CE adoption in economies, including economic and financial obstacles, regulatory policies that are dominantly targeted towards traditional and linear economic models and hence linear decarbonization policies, knowledge barriers, cultural obstacles, and technical limitations. It is interesting to note that obstacles are interconnected. For example, the lack of CE policies reflects a lack of knowledge about the CE concept among regulators and legislators. Alternatively, consumer knowledge and awareness are reflected in regulators’ knowledge. It indicates that all aspects of society can contribute to the adoption and implementation of circular economic systems. Therefore, the first step in the transition from a linear to a circular economy is enhancing social knowledge about the importance and benefits of circularity.

The practical implications of this study can be represented as follows. First, circularity is frequently the subject of research among scientists and professionals. However, CE development requires the involvement of governmental bodies, policymakers, and stakeholders beyond the expert community in order to increase knowledge of CE necessity and its implementation. This paper will stimulate and motivate governmental bodies to invest in circular developments and bio-energy generators to reduce emissions. Second, circularity can be considered as a novel and innovative approach to alleviate the contradiction between rapid economic growth and shortages of energy and raw materials. Third, since eco-circular approaches are developed to enhance efficient resource allocation, CE approaches should remain applicable even once zero-emission targets are achieved. Fourth, we found that waste-to-energy technologies are the best alternative way to generate electricity from waste, which contributes to a sustainable and circular economy in a variety of ways. A waste-to-energy plant can produce electricity, heat, or fuel in the form of renewable and clean energy, resulting in fewer greenhouse gases and a smaller carbon footprint. Fifth, a clear public policy framework should be implemented by evaluating economic strategies, CE perspectives, and decarbonization policies simultaneously.

The remainder of this paper is organized as follows. We discuss the research design and framework of the study in Section 2. A conceptual analysis of the CE approach is presented in Section 3. Results are presented and discussed in Section 4, while the conclusion is summarized in Section 5.

2. Research Design

This section aims to identify the most relevant studies in the context of the CE. This study is certainly not the first on the topic of circularity, and a great deal of literature has already been published on the transition from a linear to a circular system. Previous studies focused on particular geographic locations or industries. In addition, they only focused on a few of the following concepts: motivations, challenges, technologies, practices, industries, and requirements. However, this study presents a comprehensive overview of all aspects of CE adoption in global markets. Accordingly, this paper aims to delve into the main motivations, obstacles, and requirements in implementing a CE at the macro level, with a particular focus on energy markets.

2.1. Framework of the Literature Review

An integrated systematic review was conducted in this study to evaluate different perspectives of the CE. Systematic reviews help identify trends and changes in a research area and track the evolution of knowledge about a specific topic [29]. This study is designed to achieve a comprehensive understanding of CE within both the global view and the energy transition concept. Significant objectives of this study are: (1) present a comprehensive review of the CE literature; (2) examine various aspects of circular economies, like advantages/disadvantages, motivations, barriers, and implementations; and (3) provide recommendations and solutions for accreditation of the CE. The framework of the literature review is presented in Figure 1.

2.2. Literature Review

In the first step, a structured keyword search is conducted across a variety of search engines to improve the reliability of the collected data, including Google Scholar, Science Direct, Willey, JSTOR, Taylor & Francis, PubMed, and IEEE Xplore, Scopus, and Web of Science. It must be noted that Google Scholar is considered the primary web search engine for the literature collection in this study. Other databases are considered for robustness checks to identify all relevant studies. However, Google Scholar provides access to all referenced studies.

Keywords like ‘Circular Economy’, ‘CE’, ‘Circularity’, ‘Circular’, ‘Circular System’, ‘Decarbonization’, ‘Energy’, ‘Renewable Energy’, and ‘Energy Transition’ are investigated. In CE notion, the following keywords are used: ‘Motivation’, ‘Driver’, ‘Advantage’, ‘Disadvantage’, ‘Obstacle’, ‘Barrier’, ‘Practices’, ‘Solution’ and ‘Recommendation’ are jointly found.

Considering the numerous potential benefits of the CE compared with the conventional economy, a large strand of literature has been undertaken to examine various features of the CE across a wide range of contexts. A variety of publications are examined to develop a comprehensive and robust study, including peer-reviewed articles, grey literature, PhD dissertation and books. From 2010 to 2022, more than 900 studies focused on circular economies across different sectors. There has been a particular focus on manufacturing, agriculture, construction, supply chain, energy, fashion, and water industries. These studies mainly focus on some specific areas, which are highlighted in a representative list in

Table 1. Circular economy literature.

Industry	Sample of Publications
Supply Chain	De Angelis et al., 2018 [30]; Farooque et al., 2019 [31]; Hussain & Malik, 2020 [32]; Kumar et al., 2021 [33]
Agri-food	Toop et al., 2017 [34]; Esposito et al., 2020 [35]; Gkountani et al., 2021 [36]; Liu et al., 2021 [37]
Energy	van Leeuwen et al., 2018 [38]; Priyadarshini & Abhilash, 2020 [39]; Holmberg & Ideland, 2021 [40]
Fashion & Textiles	de Aguiar et al., 2021 [41]; Radhakrishnan, 2021 [42]; Chen et al., 2021 [43]
Manufacturing	Paletta et al., 2019 [44]; Acerbi & Taisch, 2020 [45]; Badhotiya et al., 2022 [46]
Furniture & Wood	Susanty et al., 2020 [47]; Hartini et al., 2021 [48]; Paul et al., 2022 [49]
Water	Ayçin & Kayapinar Kaya, 2021 [50]; Liu et al., 2021 [51]; Salminen et al., 2022 [52]
Plastic	Simon, 2019 [53]; Guyot Phung, 2019 [54]; Alvarez-Risco et al., 2020 [55]
Public	Klein et al., 2020 [56], Barreiro-Gen & Lozano, 2020 [57]; Droege et al., 2021 [58]
Automotive	Saidani et al., 2018 [59]; Kayikci et al., 2021 [60]; Sopha et al., 2022 [61]; Baldassarre et al., 2022 [62]
Construction	Jones and Comfort, 2018 [63]; Bilal et al., 2020 [64]; Hjaltadóttir & Hild, 2021 [65]; Giorgi et al., 2022 [66]
Tourism	Brightley, 2017 [67]; Falcone, 2019 [68]; Vatansever et al., 2021 [69]; Kazancoglu et al., 2021 [70]
Mining	Kinnunen & Kaksonen, 2019 [71]; Singh et al., 2020 [72]; Gedam et al., 2021 [73]; Luthra et al., 2022 [74]
Electronic	Gama et al., 2016 [75]; O’Connor et al., 2018 [76]; Curtis et al., 2021 [77]; Rizos & Bryhn, 2022 [78]
Coffee	Van Keulen & Kirchherr, 2021 [79]; Pires, 2022 [80]
Leather	Moktadir et al., 2020 [81]; Karuppiah et al., 2021 [82]; Cabrera-Codony et al., 2021 [83]
Logistics	Van Buren et al., 2016 [84]; Dutta et al., 2021 [85]; Gupta & Singh, 2021 [86]
Finance	Hassan et al., 2020 [87]; Gonçalves et al., 2022 [88]
Medical	MacNeill et al., 2020 [89]; Kandasamy et al., 2022 [90]
Maritime	Laso et al., 2018 [91]; Milios et al., 2019 [92]; Okumus et al., 2022 [93]
Aerospace	Stavileci & Andersson, 2015 [94]; Brennan & Vecchi, 2020 [95]; Dias et al., 2022 [96]
Cosmetic	Fortunati et al., 2020 [97]; Lourenço-Lopes et al., 2020 [98]; Morea et al., 2021 [99]

, along with some samples of studies. As shown in the table, supply chain, agri-food, energy, fashion, manufacturing, furniture, and water are the main spotlights of CE studies within these sectors.

Conducting a systematic literature review commences by determining which publications are worth considering and which should be excluded. More than 349 publications were collected, of which 52 publications are considered relevant to the research objectives since they study different aspects of the CE in the global markets and the energy sector. The division of the studies sheds light on the debate surrounding the CE within the scientific and practitioner communities. Figure 2 depicts the distribution of studies with a specific focus on circularity from 2010 to 2022. The figure shows that the number of publications in the CE context has increased significantly in the past decade.

Figure 3 presents the main characteristics of the sourced literature, including the most common geographical locations of CE studies and the distribution of literature in the energy sector. The distribution of studies based on geographical locations is presented in Figure 3a. As shown, China, European countries, India, Africa, and the United States are the most significant countries considered by scholars. China accounts for the majority of studies; 250 studies have been conducted there (23%). Figure 3b displays the contribution of energy studies from 2010 to 2022. Research findings reveal that fewer studies have conceptually examined circularity approaches in energy markets. The number of publications has increased significantly since 2016, indicating a growing interest in CE strategies in the energy sector.

At the end of the review process, a comprehensive assessment of all collected studies is conducted to find motivations, barriers, and requirements for switching from linearity to the circular economy and presents essential solutions.

3. Conceptual Analysis of Circular Economy

3.1. Global Review of Circular Economy

In the late 1970s, the concept of the CE gained momentum. It was introduced by Kenneth E. Boulding, who first mentioned it as an academic concept in 1966, criticizing linear “cowboy economies” and describing a future “spaceship economy” in which all used resources were redirected back into it [13,100]. The CE, derived from Boulding’s theory, was developed by the environmental economists Pearce and Turner [101] in which they discuss the lack of markets and prices for environmental goods and emphasize the need to internalize these costs. It is more likely that a transition towards a circular system will occur if these externalities are internalized [102]. There are several authors, including Andersen [103], Ghisellini et al. [13], and Su et al. [104], who give credit for the introduction of the concept to Pearce and Turner [105].

Some specific features of CE were introduced by Stahel and Reday [106], particularly in the field of industrial economics. In their conceptualization, a loop economy is used to describe industrial strategies for preventing waste, creating jobs, efficiently utilizing resources, and dematerializing the industrial system.

As stated by Ghisellini et al. [13], a circular strategy is an economic structure designed to improve resource efficiency and interaction between the economy, environment, and society. Accordingly, CE can be considered as a novel and innovative approach to alleviating the contradiction between rapid economic growth and shortages of energy and raw materials [107].

There have been several academic reviews about CE concepts, including those by Andersen [103], Su et al. [104], Sassanelli et al. [108], Kristensen and Mosgaard [109], De Pascale et al. [110], and Mhatre et al. [111]. There has been a particular focus on supply chains, sustainable business models, and circular product design.

The principles of CE are as follows: (1) enhance and preserve natural resources through the management and replenishment of natural capital; (2) make optimal use of materials and resources to maximize value; and (3) eliminate negative externalities from the economic system and lifestyles in order to promote system effectiveness [112,113].

Over the past two decades, the CE has gained momentum among policymakers, influencing national, regional, and local governments, as well as inter-governmental agencies. Germany has been a pioneer in the incorporation of the CE into national laws. In 1996, Germany passed the CE and Waste Management Act (also referred to as the Circular Economy Act or the “KrWG”) that explicitly promoted the concept of CE [114]. In January 2002, this was followed by Japan, which established a comprehensive legal framework, titled Japan’s 2002 Basic Law, to achieve a recycling-based society [104,115,116]. Another country was China, which introduced the “Circular Economy Promotion Law of the People’s Republic of China” in January 2009 [117]. Figure 4 is a graphical scheme of a cyclical pattern in a circular economy.

3.2. Waste to Energy

Millions of tons of waste are constantly produced and dumped in landfills, which adversely affects ecosystems, the environment, and the health of humans and wildlife. New technologies are being developed to generate energy from waste in a circular manner. Waste-to-energy (WtE) is the process that uses waste to generate energy in the form of electricity or heat. Like other power generators that use thermal coal, oil, or solar, WtE plants use waste as a fuel to produce electricity. In these plants, the concept of energy from waste involves converting non-recyclable materials into energy through various methods, including thermal and non-thermal processes (combustion, gasification, landfill gas recovery, and anaerobic digestion). Economies are striving to develop technologies for compressing and disposing of waste while also generating energy from it. The energy that is produced in the form of electricity, heat, or fuel using WTE plants is renewable, clean, and environmentally friendly, producing fewer greenhouse gases and having a limited impact on the environment [118,119].

Recently, the phenomenon of WtE generation has emerged and gained increasing traction [120,121,122]. In developed countries, it is being successfully implemented as a measure of waste management and energy security. Therefore, many countries have started using waste to recover energy [123]. A WtE system contributes to a sustainable and circular economy in the following ways:

• Recovering energy from waste can be significantly beneficial in facilitating energy transition and reaching zero-carbon decarbonization targets;
• WtE methods are instrumental to enhance energy security, reduce reliance on fossil fuels, and generate clean and reliable sources of thermal energy, electricity, and fuels;
• Implementing a sustainable framework with no contradiction with existing decarbonization measures;
• One of the most effective approaches to enhance the efficiency of power generation and energy consumption through waste incineration operations;
• Recovery of secondary raw materials from incineration residues;
• Delivering a hygienic service to society through municipal waste management and the treatment of combustible non-recyclable waste.

Let us examine how waste to energy is currently applied worldwide. Figure 5 shows the generating capacity of power plants that use renewable energy sources to produce electricity. As presented in Figure 5, the amount of electricity generated by waste globally increased from 2012 to 2021, with Europe, Asia, and North America generating the most electricity from biogas, bioenergy, renewable municipal waste, and solid biofuels.

Despite the growing application of renewable energy and waste in electricity generation in the last decade, fossil fuel is still the primary source of energy. Figure 6 illustrates the level of different types of fuels employed to generate electricity. It is evident that there is a significant difference between renewable energy (including waste energy) and high-carbon fuels. In 2021, nuclear power and renewable energy generated more than one-third (36.7%) of global electricity. As for waste energy, it contributed only 3%, which is a very small percentage. Therefore, countries should pay significant attention to waste resources to generate electricity in order to repurpose waste in a positive way and also diminish coal-fired generator emissions.

4. Result and Discussion

4.1. Drivers and Barriers

This study examines opportunities and barriers to implementing a CE to develop research agendas. Following a review of the literature, several factors have contributed to or prevented a CE, ranging from arguably the “hardest” (technical, economic) to the “softest” (social, institutional) factors. The “drivers/opportunities” are aspects that stimulate and facilitate transitions towards the CE system, while “barriers/obstacles” hinder progress.

4.1.1. General Circular Economy Drivers

The first step to examining the drivers of CE implementation is to identify and understand the motivational factors.

Table 2. CE drivers at global market.

Factor	Drivers
Environmental	Developing a circular and sustainable economy is a strategic approach to protecting the environment through waste reduction. CE has the potential to increase the availability and efficiency of resources.
Technical	New technologies that facilitate resource optimisation, re-manufacturing and re-generation of products. The potential to improve existing operations.
Economic-Financial	To increase profits and market share, industries would adopt CE initiatives that have the potential to reduce costs, boost efficiency, generate new revenue streams, and improve profitability. Through CE, industries can reduce production waste, that can boost profit margins, enhance customer loyalty, entice new customers, and boost investment return. Increasing the long-term revenue generation by recycling activities. There is potential for entrepreneurship, innovation, business development, and synergistic relationships. CE’s potential for economic development and job creation goes beyond profit margins and cost savings.
Institutional-Regulatory	Developing regulations and standards associated to recycling and circular economy. Establishing rules and standards by government authorities to support and promote more sustainable production and the use of recycled products. End-of-life management policies to protect resources, safety, health, and environment. Through support funds, credits, and loans, the government can assist enterprises in transitioning from linear to circular pathways.
Social-Cultural	Creating a country with minimal waste-related health and environmental problems is a desired goal of governments and societies. CE has the potential to alleviate landfill, solid waste, and emissions by performing functions that include reusing, reprocessing, and recycling waste. Increasing global awareness of sustainability that is connected to social awareness, environmental literacy, and shifting consumer preferences (e.g., from ownership of assets to services models). Consumers are empowered to make environmentally responsible decisions. By increasing consumer awareness of the environmental impact of their purchasing decisions, waste can be significantly reduced.
Health	Traditional economies dump substantial amounts of the waste directly or indirectly into the environment, posing a threat to animal and human health. Shifting from a linear to a circular pathway will provide ample opportunity to improve health. The development of circular products with minimal environmental impacts can reduce greenhouse gas emissions and preserve ecosystems.
Supply-chain	A reduction in supply dependence and the prevention of high and volatile prices are potential advantages. Resources and capabilities are more readily available due to multidisciplinary.
Organizational	Potential for differentiation and strengthening the company brand. Enhancing knowledge about the demands of sustainability. The circular strategy is integrated into the company’s strategy and goals. Increasing the level of knowledge, skills and capabilities for the CE.

illustrates these drivers. We have categorized these drivers based on their similarities and definition. Motivational factors and drivers are based on a review of previous literature, including studies undertaken by Pitt and Heinemeyer [125], Ghisellini et al. [113], Lieder and Rashid [117], Govindan and Hasanagic [6], Prieto-Sandoval et al. [126], Cramer [127], Ranta et al. [128], De Jesus and Mendonça [129], Tura et al. [130], Salim et al. [131], Agyemang et al. [132], Gusmerotti et al. [133], Jabbour et al. [134], Dijkstra et al. [135], Jia et al. [136], Aloini et al. [137], Neves and Marques [138], and Neligan et al. [139].

4.1.2. Circular Economy Drivers in Energy Sector

The purpose of this section is to present potential drivers of the circular pathway in the energy sector, which are presented below [140,141,142,143,144,145]:

• Sustainable energy production—WtE systems that convert waste materials into energy contribute to the transition to a circular economy. In addition to producing a sustainable energy market, these technologies can reduce environmental and health risks associated with waste;
• Conservation of critical materials—the energy transition will require a shift towards renewable energies by shifting away from fossil fuels towards wind, hydro, solar, and geothermal power or zero-emission technologies supported by batteries. However, the transition to green technologies will lead to a massive demand for minerals like lithium, cobalt, and rare minerals. As IEA [146] reported, achieving the net-zero target by 2040 will require a six-fold increase in mineral input. There could be requirements of more than a 40-fold increase for some critical metals, such as lithium, and over 20-fold for nickel and cobalt. Extraction and mining are the only ways to obtain these materials, which are hazardous to the environment and human health. Moreover, these metals are discovered in relatively small concentrations that are tough to extract, resulting in a more expensive and time-consuming extraction process than other minerals. Through the transition to a CE, economies are capable of recycling these materials from millions of tons of electronic devices like laptops, hard drives, batteries, and other devices. Therefore, it allows countries to eliminate their dependence on mining metals and extend existing materials’ lifespan using circular pathways;
• Economic development—the combination of circular systems and energy production can lead to economic and ecological improvements. In the production of metals, energy, foods, and other types of products, circular production reduces emissions and energy requirements. By doing so, money can be saved, emissions reduced, and energy production and consumption are decreased. Thus, economies will be less dependent on critical materials because they will be able to recycle them. As a result, a circular and efficient energy market can contribute to economic growth;
• Environmental drivers—greenhouse gas emissions can be reduced through the use of new technologies and the efficient use of waste materials, such as biogas and biomass;
• The efficient use of materials—circular economies and recycling technologies allow countries to recycle and reuse 95% of the critical materials, such as aluminium, steel, glass, copper, etc. Therefore, all metals used in batteries (i.e., lithium, nickel, and cobalt) can be recycled. The result is an increase in battery production and a decrease in coal-fired generation units;
• Waste reduction—the waste disposal process includes five steps: waste transfer, landfill, incineration, waste compaction, and composting. It is both highly harmful to the environment and health and extremely expensive. By using waste resources for energy generation, economies can reduce waste disposal costs and generate electricity, which is vital for human life;
• Reduction of fossil fuel consumption—WtE facilities instead of coal-fired plants can save over 200,000 barrels of coal per year;
• Material efficiency—material efficiency developments could offer a valuable alternative solution to current decarbonization policies along with renewable energy use and energy efficiency. By incorporating CE systems into material production, energy consumption can be reduced, thereby reducing greenhouse gas emissions (GHG);
• Battery recycling—for developing technologies and business models, recycling different types of batteries is placed at the top of the pyramid, and extensive research and development is being conducted, leading to a revolution in circular economies.

4.1.3. General Circular Economy Barriers

Implementing a CE would require fundamental changes in industrial practices and consumption patterns, especially in heavy industries and resource production areas, leading to significant obstacles. In recent years, several publications have developed around barriers that have restricted CE implementation. In order to implement a CE system, we must overcome a number of obstacles that can be classified into the following segments: economic and financial obstacles; knowledge barriers; political challenges; technical roadblocks; cultural obstacles; and regulatory barriers. In this section, we provide a general overview of potential barriers to CE adoption in global economies as well as energy markets, which are presented in

Table 3. Barriers to the CE implementation in global markets.

Classifications	Obstacles
Economic & Financial Obstacles	Large capital requirements, high initial costs and uncertain return/profit—CE processes are expensive, so they are not widely adopted. Economies must bear significant up-front costs and risks in the short term—e.g., upgrading machinery, relocating, and shifting factories, creating new distribution and logistics systems, recruiting skilled and professional employees, and training staff. Developing a strong business case will be necessary before transforming a country’s economy toward a CE. Lack of financial support and tax incentives—the CE Adoption is hampered by financial barriers, difficulties in funding CE business models, and high up-front investment costs.
Knowledge Barriers	Lack of knowledge that is necessary as a part of the transition towards a circular economy. In order to switch from linear to circular, it is necessary for us to know how and what the necessary steps are. However, given the novelty, complexity, and disruptive nature of the CE, it appears that people lack the proper knowledge. The lack of awareness of the benefits of circular economies has been identified as a barrier to implementing circularity. Following a review of the literature, knowledge gaps have been determined based on five aspects: relatability, transition, validation, product life-cycle analysis, and awareness.
Political Obstacles	Lack of knowledge about circularity in the energy sector—due to the political pressure on ending fossil fuel use and raising green energies consumption, researchers are developing more cost-effective methods for generating and distributing renewable energy. However, governmental authorities and political parties face challenges in involving citizens and businesses in the transition toward renewable energy by focusing on the CE in the energy sector. In consequence, the circular transition does not receive much political attention.
Technical Barriers	Lack of technical support and training about the CE concept. A shortage of qualified and technical labour forces. Lack of data and information. Infrastructure and development models that require many resources—the traditional model relies on massive growth in industry and infrastructure that is resource-intensive. It is clear that emerging economies require a less resource-intensive development model, but there are no ready-made options. Lack of IT-based measures and monitoring systems—even though specific waste detection software exists, it has not reached every business or has not been used because waste stream data are scarce. Moreover, IT systems are essential for a transition from a physical-goods-based economy to a service-based economy and a less resource-intensive immaterial economy.
Cultural Barriers	Cultural challenges—cultural barriers concern aspects of the social, behavioural, and managerial contexts where the CE needs to develop, including the entrenched nature of the linear economy; ownership and status perspectives; and silo mentality. Lack of consumer interest/awareness—the principles of the CE are not yet well known in society. Lack of interest, knowledge, skills, and engagement throughout the value chain by suppliers, customers, and internal is a core cultural barrier to engage with the CE adoption and collaboration in the value chain. Insufficient demand in the market for recycled, remanufactured, or reused products. Hesitant company culture—lacking policies in support of a CE transition and obstructions in laws and regulations of economies.
Regulatory Barriers	Lack of regulatory support—the absence of policies in support of the CE transition and obstructions in laws and regulations of economies could pose substantial obstacles to transferring from linearity to circularity in economies. A lack of policies, taxes, and subsidies that support the transition to CE—the government support and financial aid supporting linear production methods pose major obstacles to improving the financial competitiveness of a CE.

. They are based on studies undertaken by Govindan and Hasanagic [6]; Bet et al., 2018 [7]; Grafström and Aasma [102]; Ranta et al. [128]; de Jesus and Mendonça [129]; Cramer [127]; Salim et al. [131]; Agyemang et al. [132]; Geng et al. [147]; Xue et al. [148]; Zhu and Geng, 2013 [149]; Vanner et al. [150]; Bicket et al. [151]; Gumley [152]; Rizos et al. [153]; Rizos et al. [154]; Böttcher and Müller [155]; Ilić and Nikolić [156]; Pheifer, 2017 [157]; Mont et al. [158]; Wildschut [159]; Hart et al. [160] and Jabbour et al. [161].

4.1.4. Barriers to the CE Acceptance in Energy Industries

The CE strategies are evidently of great importance in the energy market and can have a significant impact on energy transition and decarbonization. While CE creates a variety of benefits and opportunities for the energy market, CE implementation is hampered by a number of practical obstacles that prevent entrepreneurs and policymakers from taking advantage of them. A number of these barriers are outlined below:

• Government regulations—the current economic policies and regulations are predominantly based on linear economic models, not circular pathways, in energy markets. As a result, there is less governmental support for the CE adoption in the energy sector;
• Consumer behavior—the level of energy embodied in products is significantly impacted by decisions made by consumers in all types of situations (individuals, industries, and governments) and is capable of reducing energy demand. Accordingly, decisions made by consumers play an important role in the development of circular economies. However, a reverse condition exists, and consumer attitudes and demands are major barriers to the CE implementation. Energy efficiency, environmental protection, recycling, and circular systems are not well known by the general public [162,163];
• Energy transition—in today’s world, climate change, global warming, and health problems caused by greenhouse gases are the major issues. As a result, political attention has shifted to the green energy transition nationally and internationally. Accordingly, the political, governmental, and energy authorities focus mainly on the green energy transition. There is a struggle among governments to involve the public and businesses in this transition. Therefore, the circular transition receives less attention from the government and entrepreneurs in energy markets;
• Emphasis on renewable energy—energy transition refers to the transition from traditional fossil-fuel-based energy production and consumption systems to renewable energy sources. As a result, the primary focus of research is to develop renewable systems, energy sustainable technologies, and renewable generations. Consequently, there is a lack of knowledge and awareness about circular systems in energy markets;
• Lack of battery recycling technologies—developing long-life batteries plays a crucial role, specifically in the energy and transportation sectors. A wide range of batteries are designed for energy storage systems and electric vehicles. Lithium-ion batteries are likely to play a major role as they are widely used in electronic devices (i.e., mobile phones, laptops, digital cameras) and electric vehicles (EVs). However, the energy sector faces a new challenge with the development of batteries, which is battery recycling;
• Batteries consist of hazardous materials that can be classified as hazardous waste [164]. Most batteries are composed of toxic materials such as lead, cadmium, mercury, nickel, or copper, which are all hazardous to human health and the environment and pose a threat to water sources and ecosystems if they leach out of landfills [165,166]. However, most batteries are not properly recycled, especially lithium-ion batteries, which are expensive and difficult to recycle. The number of lithium-ion batteries being recycled is still relatively low due to the cost of recycling and the immaturity of recycling processes. These batteries have been designed and manufactured in ways that make it difficult to repair, remanufacture, or recycle them. As a result, two key issues arise here: (1) lack of recycling technologies in battery industries; (2) as material markets fluctuate, it can be difficult to achieve economic efficiency in battery recycling;
• Lack of recycling infrastructure for wind energy markets—millions of tons of composite materials have recently been used in the world wind energy sector and construction of wind turbine blades such as glass fiber, composite materials, fiber, resin, wood, foam, adhesives, coatings, copper, and steel. The recycling infrastructure for turbine blade materials is still under development, requiring further research and implementation. For such materials, recycling infrastructures have not yet been established, studies about end-of-life treatment technologies remain in the developmental stage, and there are no secondary markets for recycled materials [167];
• In light of the global transition towards sustainable and green environments, biofuels would be a good step toward a cleaner pathway. Compared with petroleum-based fuels, biofuels come from renewable resources and often produce cleaner emissions than fossil fuels. However, water, land, forests, and fertilizers required for sufficient biofuel production may result in other issues, such as food crisis, water depletion, contamination of lands, deforestation, fertilizer-related pollutants, and other environmental risks [168,169].

4.2. Recommendations and Solutions

By considering the economic and political aspects of CE implementation, various approaches can be taken to address the challenges and promote the solutions outlined in

Table 4. Recommendations and solutions.

Groups	Recommendations
Political	Policies relating to renewable energies should be sustainable from an environmental perspective. Biofuels must contribute positively to lowering CO2 emissions, protecting water and land resources from depletion and contamination, and protecting the environment. Subsidies to encourage excessive resource consumption should be eliminated, and all ‘externals’ should be incorporated into energy and resource prices for the market to respond effectively. Governments should prohibit producing biofuels that jeopardise the supply of food and crops essential for animal feed and humans. In addition, importers and exporters of biofuels should be aware of and follow all environmental laws and biofuel standards. Biofuel regulations must be aligned with food security policies that protect poor and food-insecure economies. In particular, there should be a focus on the challenges caused by rising food prices in countries heavily reliant on imported foods, particularly among developing countries and vulnerable rural consumers.
Financial	The implementation and development of CE programs require financial resources, which means companies need access to a variety of funding options. The most effective way to lead industries towards a CE is through collaboration within the industry value chains as well as establishing financial instruments for investment across all industrial chains at the macro level rather than in a single industry. Consequently, risks and profits can be distributed, and collaboration opportunities can arise to establish a circular economy that is profitable for all sectors.
Technology	Implement circular design principles to make future energy infrastructure more durable, repairable, and recyclable.
Political	Governments play a critical role in facilitating the transition towards circularity, and insufficient regulations and policies substantially impact the transition from a linear economy to a circular one. As a result, it can be argued that a progressive legal framework and thoughtful principles could facilitate CE adoption. Implementing transparent, robust, and predictable policy frameworks will encourage investments by industries in CE systems. Governments and policymakers must accelerate the transition to CE approaches while addressing global challenges like climate change and water scarcity. These include legislative measures as well as voluntary actions by stakeholders. In order to optimize the treatment and management of resources and waste streams, policy gaps and market barriers must also be addressed. Economies must refrain from dumping unsuitable technologies in third-world countries and exporting machinery and equipment to countries with inadequate waste-management strategies.
Production	Resource-efficient manufacturing practices and optimal logistics approaches must be integrated into all industrial policies. Decommissioned equipment can be remanufactured and reused by industries for lower-tier applications.
Social	A positive public perception of sustainable practices has a large influence on their behavior, which can motivate industries to revise their business models to promote circularity. In spite of this, due to the relative novelty of CE practices and the existence of linear economic systems in most industries, there is a lack of education relating to CE practices. Given that CE is a novel concept, companies tend to avoid high risks by taking small, safe steps rather than undertaking a complete transformation toward circular approaches. In order to embrace both individuals and industries about circular economic system, knowledge and comprehension need to be cultivated. Through education and media coverage, governments can increase public awareness of circular economies.
Waste Recycling	Implement a waste management plan for end-of-life infrastructure by adopting appropriate processing methods. The number of materials and components that can be recycled should be maximized in order to generate secondary raw materials for new energy infrastructures and other manufacturing sectors.

.

To address the lack of framework discussed previously in the barrier section, economic strategies, CE perspectives, and decarbonization policies must be evaluated simultaneously in order to establish a clean energy-based economy that targets economic growth. The recommendations and mentioned policies are imperative solutions for CE adoption and can create a sustainable and essential framework for economies and industries to move from a linear to a circular system.

5. Conclusions

Sustainability is a strategic approach to develop a more sustainable global economy to support the environment and socioeconomic development. Literature on sustainability has been concerned mainly on global warming and environmental degradation issues, whereas a CE concept has recently been suggested as an alternative solution to support market sustainability and deal with both environmental and socioeconomic challenges. To tackle these challenges, countries must switch from linear economies that follow the “take-make-dispose” principle to circular and sustainable economies. The CE approach focuses on the transformation of waste into resources and linking production with consumption activities. In spite of the CE importance in all economies, this area of research has received little attention. The aim of this study is to uncover the most important determinants of circular strategies from a global economic perspective through a structural and conceptual literature review. The study examines barriers to the CE adoption and proposes drivers and measures to overcome them.

In terms of energy, recent years have seen an acceleration of ambitions regarding energy transition and decarbonization, particularly in terms of achieving net-zero carbon emission targets. For net-zero targets and energy efficient development, all sectors, primarily the energy industry, will need to modify their infrastructures, a process that will require extensive reconstruction and retrofitting at high costs. Furthermore, the linear decarbonization process focuses only on reducing emissions from energy production and renewable energy consumption, which are not sufficient to achieve net-zero emissions. Recently, the CE approach has been gaining attention as a means to accelerate decarbonization and facilitate energy efficiency. Therefore, CE approaches are complementary to existing energy and decarbonization policies in promoting energy transitions toward a cleaner environment. Circularity emphasizes the transformation of waste into resources. Nowadays, recycling materials and waste in an efficient manner are imperative to maintain a sustainable environment. Accordingly, this paper aims to analyze various aspects related to implementing the CE approaches at the macro and energy levels.

A systematic literature review indicates that circularity is an essential strategy to attain sustainable development. The CE structure should be considered a sustainable framework to enhance economic growth by reducing waste, protecting natural resources, managing resource scarcity, recycling materials, improving energy efficiency, and recirculating them into the economy. Findings reveal that the circular system is a key pillar of sustainability, security, and efficiency in the energy sector.

In terms of the energy concept, the study concluded that the integration of CE approaches in economies through coherent public policy approaches must be considered as an essential component of existing decarbonization instruments, since they are capable of both increasing efficiency and decarbonizing during the energy transition. Embedding the CE principles into the design process is essential for the sustainable energy transition. It also found that both the public and private sectors need to move away from linear paradigms to achieve CE implementation. From a technological perspective, countries have the potential to produce electricity from biomass, biogas, wind, and solar, or use energy store systems or portable batteries. As traditional technologies and coal-fired power stations are replaced by infrastructures and new technologies, it is essential to apply CE principles to unlock waste’s resource potential and minimize its management challenges. As an example, WtE generation technologies contribute to a sustainable and circular economy in various ways. These technologies utilize waste to generate energy in the form of electricity or heat. A WtE system contributes to a sustainable and circular economy in various ways.

It has been discovered that there are major barriers that need to be overcome in order to create a circular economy that is capable of bringing socio-economic and environmental benefits to the wider economy. There are practical barriers to the CE adoption in economies, including economic and financial obstacles, regulatory policies that are dominantly targeted towards traditional and linear economic models and hence linear decarbonization policies, knowledge barriers, cultural obstacles, and technical limitations. It is interesting to note that obstacles are interconnected. For example, the lack of CE policies reflects a lack of awareness and knowledge about the CE concept among the regulatory authorities. On the other hand, the levels of knowledge and awareness of consumers are reflected in regulators’ knowledge levels. It indicates that all aspects of society can contribute to adopting and implementing circular economic systems. Therefore, the first step in the transition from a linear to a circular economy is enhancing social knowledge of the CE necessity. In addition, economic strategies, CE perspectives, and decarbonization policies must be evaluated simultaneously in order to address obstacles and implement a clear public policy framework.

According to the findings, circularity is frequently the subject of research among scientists and professionals. However, the CE development requires the involvement of governmental bodies, policymakers, and stakeholders beyond the expert community to surge knowledge of the necessity of CE and its accomplishment. Circularity can be considered as a novel and innovative approach in alleviating the contradiction between the rapid economic growth and shortages of energy and raw materials. This paper will stimulate and motivate governmental bodies to invest in circular developments and bio-energy generators to reduce emissions. Moreover, since eco-circular approaches are developed to enhance efficient resource allocation, CE approaches should remain applicable even once zero-emission targets are achieved.