Facts on circular economy in the EU & worldwide: what, where, who & how

5. What are the main obstacles towards a circular economy?

For the Club of Rome report¹⁶, market forces by themselves are not able to move towards a more decoupled structure of the economy by adjusting overall efficiency and resilience in the availability of resources. Policy transformation and changes are needed, as well as investments in available resources, at the level of infrastructures, construction and industrial production.

The Club of Rome report also points out that certain market trends, such as the growing shortage of non-renewable resources, which are sometimes considered to be underestimated, could lead to the development of alternatives, while some of the regulations currently in place to promote an economy such as support systems for renewable energy, emissions trading, the eco-design directive, energy efficiency standards, targets for recycling of materials, etc…, are still ineffective and hamper their competitiveness.

However, as EASAC¹⁷ points out, if one of the material obstacles to circularity is, for example, the lack of systems for the collection of products to be recycled and industrial infrastructures capable of reusing by-products, the key factor remains that prices do not reflect the real and overall value (including "external" hidden costs) of products and services and therefore do not play their essential role in informing about real impacts and resource scarcity. There is thus the need to truly co-ordinate demand with possible supply and to provide full financial compensation for the value of the goods and services that are produced and consumed.

A further important obstacle is the existence of environmentally harmful subsidies (EHS)¹⁸ like subsidies to the extraction of fossil fuels, which on the one hand provide livelihoods for people like fishermen or farmers, but on the other hand have negative impacts on the environment or health without, however, valuing the circular dimension of these activities.

For the UNEP working group report, the major challenges of decoupling thus include:

1. Explain how the understanding of global resource flows may allow to better make the link with related challenges,;
2. Convince policymakers (and the general public) that the absolute physical limits to non-renewable natural resources impose to act;
3. Accelerate resource decoupling that has already started to happen;
4. Develop appropriate market signals;
5. Promote cities as privileged spaces to generate practical decoupling in the ways these produce and consume;
6. Make agreed that decoupling is a necessary precondition for reducing the levels of global social inequalities

¹⁵ This corresponds to a “functional economy”offering to “hire” the products instead of having to buy them : it is was is called “functional economy  www.eesc.europa.eu/resources/docs/panel-1-alejandro-salcedo.pdf or
weconomyindex.ruhosting.nl/what-is-the-weconomy/the-functional-economy  and
 www.frdo-cfdd.be/sites/default/files/content/download/files/rapport_final_ef_cfdd_201505.pdf
¹⁶  www.clubofrome.org/wp-content/uploads/2016/03/The-Circular-Economy-and-Benefits-for-Society.pdf
¹⁷  www.easac.eu/fileadmin/PDF_s/reports_statements/EASAC_Circular_Economy_Web.pdf
¹⁸ ec.europa.eu/environment/enveco/taxation/pdf/Harmful%20Subsidies%20Report.pdf