Trilemma or Trinity? The nexus of economic growth, circular economy and net zero

Parantap Basu, Tooraj Jamasb and Anupama Sen

Energy Economics, 2024, vol. 138, issue C

Abstract: How can economies achieve economic growth without causing negative environmental externalities? There are two aspects to the long-standing debate on ‘sustainable growth’. A first-best solution is for economies to replace fossil fuels with renewable energy sources, mitigating carbon emissions. A second-best solution is to also adopt efficient waste management, recycling residual waste and pollutants (including hard-to-abate carbon) from production (circular economy). We establish a simple growth model that integrates three fundamental pillars of economics: (i) the net zero carbon target in environmental economics (ii) the circular economy, dealing with waste management in resource economics, and (iii) sustainable growth, in growth economics. We argue that growth, circularity and net zero emissions present a trinity of solutions to the sustainable growth problem, showing that the circular economy is a necessary condition for achieving net zero. We show that an economy with ‘active’ environmental policy achieves net zero faster than one with ‘passive’ policy, and also eliminates carbon emissions.

Keywords: Net zero; Growth; Circular economy; Pollution; Capital; Recycling (search for similar items in EconPapers)
JEL-codes: O44 Q43 Q52 Q55 Q58 (search for similar items in EconPapers)
Date: 2024
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Working Paper: Trilemma or Trinity? The Nexus of Economic Growth, Circular Economy and Net Zero (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:138:y:2024:i:c:s0140988324005528

DOI: 10.1016/j.eneco.2024.107844

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