**2. Literature Review**

Life cycle assessment (LCA) and energy systems optimization modelling (ESOM) methodologies are widely used individually. Studies about ESOM and LCA suggest different frameworks, however, they share a common interest in CE principles. The integrated application of these methods has also been investigated in the literature previously to provide a comprehensive approach [14]. A very recent case study by Quest et al. [15] examined integrating life cycle assessment with energy system modelling. The operation of different heating and power systems is optimized with the energy model and their environmental impacts are evaluated with LCA. The optimization scenario offered a shift from the gas boiler to CHPs, heat pumps and PV systems. The results show that a nearly 40% reduction in GHG emissions is expected in the cost-optimized scenario and a more than 50% reduction in the CO2-optimised scenario. Ecotoxicity results expect a 22% increase due to oversized battery storage. Hybrid applications of solar technologies with heating and cooling systems are investigated in a recent study [16]. A multi-objective optimization model is coupled with the life cycle assessment methodology to assess the solar-assisted natural gas combined cooling, heating, and power (CCHP) system. The results show that solar collectors help to reduce acidification impact by 6.7% and respiratory effect by 28.4%. The environmental impacts of electricity production technologies in Spain are investigated by Garcia-Gusano et al. [17]. The TIMES model is used to create future scenarios and LCA provided environmental impacts based on these scenarios. The results show that the 80% reduction scenario has higher environmental impacts than the BaU scenario due to the higher deployment of renewables. Metal requirements for solar PV and wind turbines create ozone depletion and acidification problems. However, damage to human health and ecosystems is reduced by phasing out fossil fuels. Pietrapertosa et al. [18] created

a framework for the integration of LCA, ExternE (Externalities of Energy), and comprehensive analysis (a bottom-up model) to investigate energy systems. This approach has been applied to a case study in Italy where authors investigate the environmental impacts of sustainable strategies adopted in energy systems. The results show that renewable technologies are crucial for future energy supply systems. However, more focus should be given to the manufacturing and disposal phases of these technologies.

The circular economy (CE) definition has been widely used in the literature. Several studies have systematically reviewed the literature to identify CE features and perspectives [19–23]. Implemented studies and concepts on different levels (macro, meso and micro levels) are analyzed based on the CE framework. According to a review study conducted by Kirchherr et al. [24], the CE system aims to replace end-of-life operations with reducing, reusing, recycling, and recovering material usage in the production and consumption stages. The perception of CE also differs among people. Some authors in the literature equate the CE concept with 'recycling' and some of them neglect 'reduce' in their definitions. The waste hierarchy is not clarified in one-third of the definitions, and more than half of the definitions are lacking systems perspective. On the other hand, economic prosperity is seen as the dominant perspective among previous studies, whereas more focus should be given to the environmental implications and social aspects. Only one out of five definitions include the consumer as an enabler of CE so more emphasis should also be given to the end-user side of the system. Karali and Shah [25] investigated the collection and recycling strategies for critical raw materials for low-carbon technologies from a circular economy perspective. The results show that end-of-life recovery will still be limited in 2050 when the current practices continue. However, enhanced collection and recycling could provide 37–91% of critical material demand through secondary materials. Moreover, recycling low-carbon technologies could also provide potential economic value and employment opportunities. EU's 'Circular Economy Action Plan' has been utilized to create a circular ecosystem for Scotland in a previous study [26]. Implementing this action plan at a national or regional level could help to accelerate the transition into a circular economy. The study has defined twelve actions under four thematic areas: business, support, and finance; skills and education; promotion and awareness; and policy and regulation.

Integration of LCA and ESOM methods was investigated in the literature [14–18]. Most of the studies focused on the environmental impacts (mainly GHG emissions) of energy production technologies on a larger scale at the supply side of the system [17,18]. Some studies focus on individual low-carbon heating technologies [15,16] without assessing overall impacts. The lack of a methodological approach which does not accommodate system thinking creates difficulties between actors and the consistent development of circular practices. On the other hand, national targets on decarbonizing heating require strong commitments in terms of electrification of heating by heat pumps and energy efficiency improvements of houses. However, a holistic approach considering the enduser side by investigating archetype-level savings and system thinking with achieving macro-level targets is needed. This research advances the current literature of specialty by combining LCA with ESOM, considering a number of archetypes for the building stock and assessing the impact of ASHP at the macro level (in this case Orkney).
