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Page 4 of 18 Tong et al. Carbon Footprints 2025;4:2 https://dx.doi.org/10.20517/cf.2024.44

Extensive socio-economic impacts of low-carbon transition through circular economy
The socio-economic ramifications of the technological shifts and business model innovations in the circular
[31]
economy remain uncharted territory due to the complexity of the economic system . The economic
impact of circular economy practices on traditional industrial structures is crucial in addressing the broad
impact of technological change in a single industrial sector toward net-zero emission, which could lead to
[32]
complex feedback effects in economies heavily reliant on linear economic models .

Furthermore, the policy and regulatory framework plays a pivotal role in shaping the socio-economic
outcomes of technological shifts and business model innovations in emerging technologies that could bring
radical change to human society, such as autonomous technology . Governments and regulatory bodies
[33]
are developing policies to incentivize circular practices, address potential market failures, and ensure a fair
playing field for all stakeholders . These measures include extended producer responsibility (EPR)
[34]
[35]
[38]
policies , subsidies for green innovation [36,37] , and tax incentives for sustainable practices .
In summary, while the technological advancements and business model innovations inherent in the circular
economy present promising pathways for achieving a low-carbon transition in the automotive sector, their
socio-economic implications are intricate and multifaceted. To fully leverage the potential of the circular
economy, a comprehensive and inclusive approach is imperative, one that considers economic, social,
[39]
policy, and global dimensions . This approach should prioritize actions that promote both closed-loop
recycling within the automobile supply chains , and inter-sectoral flows of recyclable materials for general
[40]
durable products, as these elements are crucial for reducing the lifecycle GHG emission in both the
automotive industry and the broader manufacturing landscape .
[34]

Quantifying the GHG emission reduction potential of circular economy strategies
Existing research on the circular economy within the automotive sector acknowledges the considerable
potential of circular practices in mitigating GHG emissions throughout the lifecycle of automotive products.
However, it also recognizes the substantial uncertainties surrounding the actualization of this potential,
largely driven by the dramatic technological change in this sector . These uncertainties are intricately
[41]
woven with a myriad of complex factors, encompassing governmental macro-policies, corporate
competitive strategies, and individual travel behaviors . As such, quantifying these discrepancies carries
[42]
immense significance.

Therefore, this paper conducts a quantitative assessment of the potential of various circular economy
strategies in reducing GHG emissions during the low-carbon transition of the automobile industry. This
assessment links sector-specific efforts to national low-carbon policies. The input-output subsystem method
is employed to dissect the underlying driving mechanisms behind GHG emissions in automobile
manufacturing within economic systems. This method views a single industrial sector or a cluster of sectors
as a subsystem within the broader economy. It has previously been utilized to investigate the overarching
carbon emission driving mechanisms in China . By examining the input-output connections between this
[43]
subsystem and other industry sectors in the economy, it differentiates the resources consumed and
pollutants emitted by the subsystem according to distinct driving mechanisms, considering final demands
such as consumption, investment, and exports .
[44]

Compared to traditional research methods, this approach presents two distinct advantages for emissions
analysis: