Does circular economy mitigate environmental emissions among European Union (EU) countries?

Given the growing concern about the circular economy as a strategy for combating carbon emissions, it is critical to understand its impact on other environmental gases. Hence, this study aims to examine the impact of the circular economy on three main gases that contribute to climate change and global warming, namely carbon dioxide, methane, and nitrous oxide emissions. Further, the current study explores the mitigating effect of the circular economy on the Environmental Kuznets Curve for environmental emissions to provide strong evidence for its existence. This study employs a panel data technique, specifically panel ARDL, for the period spanning from 2000 to 2020 across 27 European Union countries. The empirical results suggest that circular economy practices have a negative impact on carbon dioxide, methane, and nitrous oxide emissions, signifying their role in emissions reduction and confirming the existence of the Environmental Kuznets Curve. Meanwhile, robustness checks with the addition of control variables and alternative estimation techniques also confirmed that the circular economy addresses environmental emissions. Therefore, the governments of other nations, as well as those of the European Union, should implement or expand fiscal incentives to encourage sectors to adopt circular economy strategies, and environmental regulations should incorporate circular economy principles to ensure sustainability and emission reduction.