Europe’s circular-economy opportunity

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Adopting circular-economy principles could not only benefit Europe environmentally and socially but could also generate a net economic benefit of €1.8 trillion by 2030.

In this month’ issue of McKinsey Insights the report: “Growth within: A circular economy vision for a competitive Europe” has been published along with an in-depth analysis of the key elements of the the research work. Below you can find parts of the article (points 1 to 9 are excerpts from the article) as well as a link to McKinsey’s website. You can also download the comprehensive research document on the right hand side.

Growth within: A circular economy vision for a competitive Europe

Growth within: A circular economy vision for a competitive Europe

1. The European economy is surprisingly wasteful in its model of value creation and—for all practical purposes—continues to operate a take-make-dispose system.

2. A wave of disruptive technologies and business models could help the European economy improve resource productivity and reduce total annual costs for the three sectors by €0.9 trillion in 2030. However, noncaptured system benefits and rebound effects could constrain the gain (with unclear employment implications).

3. Europe could instead integrate these new technologies and business models into the economy in a way that maximizes value extracted from asset and material stocks, applying the rules of the circular economy—achieving growth within.

4. Shifting toward a growth within model would deliver better outcomes for the European economy and yield annual benefits of up to €1.8 trillion by 2030.

5. Equilibrium-modeling results and a comparative labor study suggest that for the European economy at large, the circular economy could produce better welfare, GDP, and employment outcomes than the current development path.

6. A circular economy could greatly benefit the environment and boost competitiveness and resilience.

7. A transition to the circular economy would involve considerable transition costs but if well managed could create an opportunity for economic and industrial renewal.

8. If Europe wanted to accelerate the shift toward a circular economy, it could build a strong foundation by launching four efforts.

  • Europe-wide quest for learning, research, and opportunity identification
  • development of a value-preserving materials backbone—a core requirement for strengthening European industrial competitiveness
  • initiatives at the European, national, and city levels to enable inherently profitable circular-business opportunities to materialize at scale
  • development of a new governance system to steer the economy toward greater resource productivity, employment, and competitiveness.

9. The timing is opportune.

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