Linking energy-based circularity with environment in high-income economies

Abstract

A circular economy is a regenerative approach that emphasizes resource efficiency, waste reduction, and the reuse of materials for a sustainable world. By adopting circular practices, we can reduce the negative impact of traditional linear economic models on the environment. According to the International Renewable Energy Agency (IRENA), the world is generating only 26% of total energy production from circular practices, which positively impacts environmental health. Therefore, this study aims to evaluate the empirical estimation of circular practices regarding energy on the environment. The current study focuses on the association between the circular economic index, economic growth, trade, digitization, energy use, and the financial development index on the environment in 29 high-income countries from 1990 to 2019. The study employs the second-generation econometric technique Driscoll-Kraay to empirically estimate the association among the variables of interest after confirming cross-sectional dependency within the data set. The study findings reveal that circular practices improve high-income countries' environmental conditions. Furthermore, the study confirms the association between economic growth, financial development index, energy use, trade, and digitization on the environment, and it leads to a more sustainable situation. Policies are drawn based on findings for policymakers toward a sustainable world.

Keywords: Circularity; Driscoll-Kraay; Environment; Sustainable, Energy.