The Toolkit for Policymakers Report identified the following categories of barriers to circular economy opportunities. These barriers can be overcome by specific policies or packages of policies.
Barriers that relate to the economic concerns of businesses assessing circular economy opportunities. This barrier can take the form, most fundamentally, of a challenge to profitability (for example, recycling plastics when oil prices are low). It can also be a lack of capital (if the opportunity is capital intensive or has an uncertain payback time) or a problem of the necessary technology not yet being available at low enough cost and large enough scale.
‘Classic’ market failure barriers taken from standard economy theory and specifically drawn from the EU Impact Assessment Guidelines. This barrier can take the form of, for example, externalities (for example, if the full environmental cost of agriculture and food production were reflected in food prices there would be a greater incentive to reduce food waste) or split incentives (for example, food producers have an incentive to shorten use-by dates to encourage greater sales, while customers would benefit from longer dates to reduce waste).
As with market failures, regulatory failures are taken from standard economic theory and draw heavily on the EU Impact Assessment Guidelines. This barrier reflects shortcomings of government policy and its implementation and can take the form of poorly defined targets and legal frameworks, implementation failures and unintended consequences (for example regulations can restrict a company using by-products of another company as its inputs).
A circular economy opportunity, especially one that makes use of a new business model, can run into the barrier of social factors. This barrier can be the deeply ingrained customs and habits of customers and businesses (for example people’s food shopping and cooking habits) or take the form of a lack of capabilities and skills, either in the business itself or in the economy as a whole.