Analysing the systemic implications of energy efficiency and circular economy strategies in the decarbonisation context

The Paris Agreement goals require a rapid and deep reduction in global greenhouse gas emissions. Recent studies have shown the large potential of circular economy to reduce global emissions by improving resource and material efficiency practices. However, most large-scale energy system and Integrated Assessment Models used for mitigation analysis typically ignore or do not adequately represent circular economy measures. This study aims to fill in this research gap by enhancing a leading global energy system model with a representation of energy efficiency and circular economy considerations. The scenario-based analysis offers an improved understanding of the potentials, costs and impacts of circular economy in the decarbonisation context. The study shows that enhanced energy efficiency and increased material circularity can reduce energy consumption in all sectors, but most importantly in the industrial sector. They can also reduce the required carbon price to achieve Paris goals and the dependence on expensive, immature, and risky technologies, like Carbon Capture and Storage. Circular economy measures should be properly integrated with broad climate policies to provide a holistic and self-consistent framework to deeply reduce carbon emissions.