IDEAS home Printed from https://ideas.repec.org/a/eee/energy/v320y2025ics0360544225009909.html

How does the circular economy affect energy security and renewable energy development?

Author

Listed:
  • Sohail, Muhammad Tayyab
  • Ullah, Sana
  • Sohail, Sidra

Abstract

In addition to climate change, energy security remains a key concern for world leaders globally. Renewable energy is widely recognized as the best possible solution to overcome the issues of climate change, global warming, and energy security. In recent times, some new economic models have also gained popularity; among them, the circular economy is the most popular and practiced one. However, whether a circular economy has any role in promoting energy security and the development of renewable energy sources is a research question that hasn't received much attention in the past. Thus, an ample gap in the literature needs to be addressed. This study aims to fill this gap by investigating the impact of the circular economy on energy security and renewable energy development in Europe. To that end, we have employed the two-stage least square (2SLS) and system generalized method of moments (SGMM) estimation techniques. The findings reveal that circular economy, circular material, circular innovation, and circular economy investment help reduce the energy security risk in Europe. However, these factors and trade-in recyclables are vital in enhancing European renewable energy production. In addition, financial development and logistic performance mitigate energy security risks, while foreign direct investment and carbon emissions enhance energy security risks. On the other hand, financial development and carbon emissions are helpful in renewable energy production.

Suggested Citation

  • Sohail, Muhammad Tayyab & Ullah, Sana & Sohail, Sidra, 2025. "How does the circular economy affect energy security and renewable energy development?," Energy, Elsevier, vol. 320(C).
    • Handle: RePEc:eee:energy:v:320:y:2025:i:c:s0360544225009909
    DOI: 10.1016/j.energy.2025.135348
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0360544225009909
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.energy.2025.135348?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    References listed on IDEAS

    as
    1. Yasmeen, Rizwana & Yao, Xing & Ul Haq Padda, Ihtsham & Shah, Wasi Ul Hassan & Jie, Wanchen, 2022. "Exploring the role of solar energy and foreign direct investment for clean environment: Evidence from top 10 solar energy consuming countries," Renewable Energy, Elsevier, vol. 185(C), pages 147-158.
    2. Napp, T.A. & Gambhir, A. & Hills, T.P. & Florin, N. & Fennell, P.S, 2014. "A review of the technologies, economics and policy instruments for decarbonising energy-intensive manufacturing industries," Renewable and Sustainable Energy Reviews, Elsevier, vol. 30(C), pages 616-640.
    3. Arellano, Manuel & Bover, Olympia, 1995. "Another look at the instrumental variable estimation of error-components models," Journal of Econometrics, Elsevier, vol. 68(1), pages 29-51, July.
    4. Malinauskaite, J. & Jouhara, H. & Czajczyńska, D. & Stanchev, P. & Katsou, E. & Rostkowski, P. & Thorne, R.J. & Colón, J. & Ponsá, S. & Al-Mansour, F. & Anguilano, L. & Krzyżyńska, R. & López, I.C. & , 2017. "Municipal solid waste management and waste-to-energy in the context of a circular economy and energy recycling in Europe," Energy, Elsevier, vol. 141(C), pages 2013-2044.
    5. Mignacca, Benito & Locatelli, Giorgio & Velenturf, Anne, 2020. "Modularisation as enabler of circular economy in energy infrastructure," Energy Policy, Elsevier, vol. 139(C).
    6. Korhonen, Jouni & Honkasalo, Antero & Seppälä, Jyri, 2018. "Circular Economy: The Concept and its Limitations," Ecological Economics, Elsevier, vol. 143(C), pages 37-46.
    7. Patrick Schroeder & Kartika Anggraeni & Uwe Weber, 2019. "The Relevance of Circular Economy Practices to the Sustainable Development Goals," Journal of Industrial Ecology, Yale University, vol. 23(1), pages 77-95, February.
    8. Cumby, Robert E. & Huizinga, John & Obstfeld, Maurice, 1983. "Two-step two-stage least squares estimation in models with rational expectations," Journal of Econometrics, Elsevier, vol. 21(3), pages 333-355, April.
    9. David M. Kaplan, 2022. "Smoothed instrumental variables quantile regression," Stata Journal, StataCorp LLC, vol. 22(2), pages 379-403, June.
    10. David Roodman, 2009. "How to do xtabond2: An introduction to difference and system GMM in Stata," Stata Journal, StataCorp LLC, vol. 9(1), pages 86-136, March.
    11. Ji, Qiang & Zhang, Dayong, 2019. "How much does financial development contribute to renewable energy growth and upgrading of energy structure in China?," Energy Policy, Elsevier, vol. 128(C), pages 114-124.
    12. Kaygusuz, Kamil, 2009. "Energy and environmental issues relating to greenhouse gas emissions for sustainable development in Turkey," Renewable and Sustainable Energy Reviews, Elsevier, vol. 13(1), pages 253-270, January.
    13. Lee, Chien-Chiang & Yuan, Zihao & Wang, Qiaoru, 2022. "How does information and communication technology affect energy security? International evidence," Energy Economics, Elsevier, vol. 109(C).
    14. Taifouris, Manuel & Martín, Mariano, 2023. "Towards energy security by promoting circular economy: A holistic approach," Applied Energy, Elsevier, vol. 333(C).
    15. Mutezo, G. & Mulopo, J., 2021. "A review of Africa's transition from fossil fuels to renewable energy using circular economy principles," Renewable and Sustainable Energy Reviews, Elsevier, vol. 137(C).
    16. Chernozhukov, Victor & Hansen, Christian, 2008. "Instrumental variable quantile regression: A robust inference approach," Journal of Econometrics, Elsevier, vol. 142(1), pages 379-398, January.
    17. Manuel Arellano & Stephen Bond, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 58(2), pages 277-297.
    18. Cristina Ciliberto & Katarzyna Szopik‐Depczyńska & Małgorzata Tarczyńska‐Łuniewska & Alessandro Ruggieri & Giuseppe Ioppolo, 2021. "Enabling the Circular Economy transition: a sustainable lean manufacturing recipe for Industry 4.0," Business Strategy and the Environment, Wiley Blackwell, vol. 30(7), pages 3255-3272, November.
    19. Blundell, Richard & Bond, Stephen, 1998. "Initial conditions and moment restrictions in dynamic panel data models," Journal of Econometrics, Elsevier, vol. 87(1), pages 115-143, August.
    20. Su, Chang & Urban, Frauke, 2021. "Circular economy for clean energy transitions: A new opportunity under the COVID-19 pandemic," Applied Energy, Elsevier, vol. 289(C).
    21. Emilio Abad-Segura & Ana Batlles de la Fuente & Mariana-Daniela González-Zamar & Luis Jesús Belmonte-Ureña, 2020. "Effects of Circular Economy Policies on the Environment and Sustainable Growth: Worldwide Research," Sustainability, MDPI, vol. 12(14), pages 1-27, July.
    22. Jeffrey M Wooldridge, 2010. "Econometric Analysis of Cross Section and Panel Data," MIT Press Books, The MIT Press, edition 2, volume 1, number 0262232588, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Chen, Wen & Lou, Weiyang, 2025. "Financial connectivity and resource security under the belt and road initiative: An empirical analysis of sovereign debt, FDI, and military expenditure," Finance Research Letters, Elsevier, vol. 86(PB).
    2. Brahim Bergougui, 2025. "Circular Pathways to Sustainability: Asymmetric Impacts of the Circular Economy on the EU’s Capacity Load Factor," Land, MDPI, vol. 14(6), pages 1-27, June.
    3. Chedrak Chembessi & Christophe Beaurain & Geneviève Cloutier, 2025. "Towards an integrated strategic planning framework in the transition to a circular economy: lessons from local circular energy initiatives," Evolutionary and Institutional Economics Review, Springer, vol. 22(2), pages 685-720, September.
    4. Wang, Shaohua & Xu, Jinglei & Cheng, Mengrui & Zhang, Wei, 2025. "Measurement and influencing factors of China’s energy transition level from the perspective of the low-carbon and resilience two-dimensional game," Energy, Elsevier, vol. 338(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ozturk, Ilhan & Ullah, Sana & Sohail, Sidra & Sohail, Muhammad Tayyab, 2025. "How do digital government, circular economy, and environmental regulatory stringency affect renewable energy production?," Energy Policy, Elsevier, vol. 203(C).
    2. Viglioni, Marco Túlio Dinali & Calegario, Cristina Lelis Leal & Ferreira, Manuel Portugal, 2025. "Exploring the link between renewable energy policy and foreign direct investment in promoting renewable energy in Belt and Road Initiative countries," Renewable Energy, Elsevier, vol. 246(C).
    3. Arminen, Heli & Menegaki, Angeliki N., 2019. "Corruption, climate and the energy-environment-growth nexus," Energy Economics, Elsevier, vol. 80(C), pages 621-634.
    4. Bhattacharya, Mita & Okafor, Luke Emeka & Pradeep, V., 2021. "International firm activities, R&D, and productivity: Evidence from Indian manufacturing firms," Economic Modelling, Elsevier, vol. 97(C), pages 1-13.
    5. Rycx, François & Saks, Yves & Tojerow, Ilan, 2016. "Misalignment of Productivity and Wages across Regions? Evidence from Belgian Matched Panel Data," IZA Discussion Papers 10336, IZA Network @ LISER.
    6. Joseph L. Dieleman & Michael Hanlon, 2014. "Measuring The Displacement And Replacement Of Government Health Expenditure," Health Economics, John Wiley & Sons, Ltd., vol. 23(2), pages 129-140, February.
    7. Deleidi, Matteo & Mazzucato, Mariana & Semieniuk, Gregor, 2020. "Neither crowding in nor out: Public direct investment mobilising private investment into renewable electricity projects," Energy Policy, Elsevier, vol. 140(C).
    8. Peter Eshak Nashed Soliman & Reham Salah Beram, 2026. "Sustainable Development Goals and Unemployment: Worldwide Evidence," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 17(2), pages 3555-3605, April.
    9. Kyuho Jin & Joowon Lee & Sung Min Hong, 2021. "The Dark Side of Managing for the Long Run: Examining When Family Firms Create Value," Sustainability, MDPI, vol. 13(7), pages 1-20, March.
    10. Armey, Laura E. & McNab, Robert M., 2018. "Expenditure decentralization and natural resources," The Quarterly Review of Economics and Finance, Elsevier, vol. 70(C), pages 52-61.
    11. Theodoros V. Stamatopoulos & Stavros E. Arvanitis & Dimitris M. Terzakis, 2017. "The risk of the sovereign debt default: the Eurozone crisis 2008–2013," Applied Economics, Taylor & Francis Journals, vol. 49(38), pages 3782-3796, August.
    12. Jiatao Li & Haoyuan Ding & Yichuan Hu & Guoguang Wan, 2021. "Dealing with dynamic endogeneity in international business research," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 52(3), pages 339-362, April.
    13. Frondel, Manuel & Kaestner, Kathrin & Sommer, Stephan & Vance, Colin, 2022. "Photovoltaics and the solar rebound: Evidence for Germany," Ruhr Economic Papers 954, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    14. Ejike Udeogu (a) , Uzochukwu Amakom (b) and Shampa Roy-Mukherjee (a), 2021. "Empirical Analysis of an Augmented Schumpeterian Endogenous Growth Model," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 46(1), pages 53-84, March.
    15. Jules-Eric Tchapchet Tchouto & Loudi Njoya & Tii Nchofoung & Isaac Ketu, 2024. "Investigating the effects of environmental tax regulations on industrialization in African countries," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 26(1), pages 2153-2182, January.
    16. Simper, Richard & Dadoukis, Aristeidis & Bryce, Cormac, 2019. "European bank loan loss provisioning and technological innovative progress," International Review of Financial Analysis, Elsevier, vol. 63(C), pages 119-130.
    17. Alexandra Lavinia Horobeț & Irina Mnohoghitnei & Emanuela Marinela Luminița Zlatea & Alexandra Smedoiu-Popoviciu, 2023. "Determinants of E-Government Use in the European Union: An Empirical Analysis," Societies, MDPI, vol. 13(6), pages 1-17, June.
    18. Thomas Stubbs & Bernhard Reinsberg & Alexander Kentikelenis & Lawrence King, 2020. "How to evaluate the effects of IMF conditionality," The Review of International Organizations, Springer, vol. 15(1), pages 29-73, January.
    19. Filippo Berti Mecocci & Amir Maghssudipour & Marco Bellandi, 2022. "The effect of cultural and creative production on human capital: Evidence from European regions," Papers in Regional Science, Wiley Blackwell, vol. 101(6), pages 1263-1287, December.
    20. Isaac Ketu & Jules-Eric Tchapchet Tchouto & Arsene Mouongue Kelly, 2022. "Does infrastructure development drive economic complexity in African countries?," Economics Bulletin, AccessEcon, vol. 42(4), pages 2043-2053.

    More about this item

    Keywords

    ;
    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:energy:v:320:y:2025:i:c:s0360544225009909. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.journals.elsevier.com/energy .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.