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

Author

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  • Basu, Parantap
  • Jamasb, Tooraj
  • Sen, Anupama
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.

Suggested Citation

  • Basu, Parantap & Jamasb, Tooraj & Sen, Anupama, 2024. "Trilemma or Trinity? The nexus of economic growth, circular economy and net zero," Energy Economics, Elsevier, vol. 138(C).
    • Handle: RePEc:eee:eneeco:v:138:y:2024:i:c:s0140988324005528
    DOI: 10.1016/j.eneco.2024.107844
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    More about this item

    Keywords

    Net zero; Growth; Circular economy; Pollution; Capital; Recycling;
    All these keywords.

    JEL classification:

    • O44 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Environment and Growth
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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