Circularity and Climate Mitigation in the EU27: An Elasticity-Based Scenario Analysis to 2050

This study quantifies the decarbonisation potential of enhanced material circularity in the EU27 by integrating material flow data with elasticity-based emissions modelling. Using panel regression and logarithmic mean Divisia index (LMDI) decomposition, we evaluate the influence of recycling rate acceleration and material intensity decline on material-embedded emissions over the 2015–2022 period. The findings indicate that although recycling rates increased by 42% during this time, virgin materials remain re-sponsible for over 97% of emissions. Decomposition results reveal that intensity im-provements (−0.867 ln units) offset most of the upward pressure from growing materi-al demand and shifting composition. Scenario projections to 2050, based on empirically derived elasticities, show that aggressive circular economy pathways can reduce emis-sions by over 90%, while baseline policies fall short of net-zero targets. Sensitivity analysis confirms that policy ambition dominates parameter uncertainty in shaping future emissions trajectories. The study highlights the critical role of combined de-mand-side and supply-side measures in aligning material consumption with climate goals.