How Decarbonization and the Circular Economy Interact

The widely heralded decarbonization of economies is a significant intervention in countries’ societal metabolism, which eliminates the use of fossil fuels but also requires renewing societal stocks such as buildings, vehicles, and power plants, which in turn requires materials and energy. The circular economy (CE) shifts a country's metabolism toward less material demand, waste, and emissions, moving away from a linear resource flow pattern to one that narrows and slows flows and closes loops, in order to support climate protection. This article uses the example of Austria to examine how decarbonization and CE interact in the buildings, transport, and electricity sectors. We use scenarios to analyse the contribution of decarbonization and CE strategies to achieve targets set by Austrian policy: firstly, carbon neutrality by 2040, secondly, ambitious reductions in material consumption, and thirdly, limiting annual land take. A scenario focusing on "decarbonization" alone reduces processed materials by 7 percent compared to the reference scenario, but is associated with high risks: it requires large supplies of green electricity, technology-critical elements, and smooth permitting procedures. A "weak CE" scenario shows little mitigating effects on these risks. CE and land take targets are missed in the two scenarios. Avoiding further expansion of buildings and roads on unbuilt land as part of a "strong CE" scenario is identified as key to narrow the processed materials of respective sectors from 102 to 26 Mt/a consistent with all three policy targets. It reduces inter alia demand for green electricity facilitating decarbonization and additionally generating co-benefits for health.