Incentivising Decarbonization through the Circular Economy

Despite the accelerating drive for decarbonization and gains in emission reduction from the uptake of renewables and energy efficiency policies, there is growing debate around the argument that ‘full decarbonization’ required to achieve net zero targets may not be achievable under the current linear economic paradigm. So long as economies continue to grow and carbon-intensive energy is used to produce more goods and services, carbon emissions will continue to be generated throughout the supply chain. In the linear decarbonization model, reductions in emissions from energy production would need to decline very rapidly to offset the expansion in economic output. The paper looks at the rise of the material efficiency and circular economy approaches – both traditional economic concepts applicable within firms, sectors or organisations – within governments’ policy agendas, as instruments to enhance decarbonization and reduce emissions through ‘indirect’ (i.e. non-energy) means. We explore this further through the following research questions: What other solutions (i.e. beyond renewable energy production and energy efficiency) can be used to enhance decarbonization in order to meet net zero carbon targets? What framework of policy signals can be implemented to incentivize and facilitate these solutions to encourage full decarbonization in a way that minimizes the net environmental impacts? And, what are the barriers to their implementation, if any?

By: Anupama Sen , Carlo Napoli

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Electricity , Electricity Programme

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