Circular Economy and Decarbonisation: Synergies and Trade-offs

This research study explores how decarbonisation strategies, combined with different ambitious approaches for reducing and slowing resource use, can meet the goals of Austria's circular economy strategy and contribute to carbon neutrality. The study examines the biophysical and economic impacts of different scenarios, taking into account two rebound effects: a goods-oriented and a service-oriented use of financial resources freed by narrowing, slowing, and closing loops. A strictly mass-balanced biophysical model (CeAT) was integrated with a macroeconomic model of the Austrian economy (WIFO.DYNK) for the impact analysis. The focus is on the building, transport, and electricity generation sectors. The findings indicate that only a robust circular economy scenario aligns with resource conservation targets, specifically by preventing further expansion of buildings and roads on undeveloped land. This strategy is crucial for reducing processed materials in these sectors. When this scenario is paired with a service-oriented rebound effect and a constant savings rate, it also results in the highest average GDP growth rates.