The 15 circular steps for cities.
Date: 2021-04-30
Institutions: European Investment Bank
Subjects: EU environmental policy, European Investment Bank, circular economy, economic development, economic instrument for the environment, environmental economics, environmental protection, financing, sustainable development, town, urban area, waste recycling

The 15 circular steps for cities 
Second edition

The 15 circular steps for cities 
Second edition 

April 2021 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The 15 circular steps for cities – Second edition 
© European Investment Bank, 2021. 

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pdf: 
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eBook:  QH-02-21-486-EN-E 

ISBN 978-92-861-4965-8 
ISBN 978-92-861-4969-6 

DOI 10.2867/665692 
DOI 10.2867/053396

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Why a circular economy? 

With  a  quickly  growing  global  population  and  prosperity,  the  increasing  consumption  and 
related extraction of often scarce and finite resources is unsustainable. This prompts a shift 
from  our  current  linear  take-make-use-dispose  production  and  consumption  approach  to  a 
more  circular  economy,  where  we  maximise  the  use  and  utility  of  resources,  products  and 
assets, and minimise resource consumption and wastage in all forms. 

In its most simple form, the circular economy transition can be depicted in the following way. 

The transition from a linear to a circular economy 

The  transition  to  a  circular  economy  not  only  conserves  resources,  but  also  reduces 
environmental  and  climate  impacts.  At  the  same  time,  it  fosters  innovation  and  thereby 
increases competitiveness and creates new jobs. 

While this approach may seem new and revolutionary, the “Waste Not” mantra of the circular 
economy was a central principle in our society until the industrial revolution introduced a culture 
of mass production, consumption and disposal. In a sense, the transition to a circular economy 
therefore involves going forward to the past. 

The 15 circular steps for cities – Second edition 

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What problems are facing cities today? 

On a global scale, cities use about 1% of the land area1, and house about 55% of the world 
population (almost 75% in Europe). With increasing urbanisation, the share of the population 
living in cities is expected to increase to 70% on a global scale by 2050, and up to 85% in 
Europe2. 

Cities  generate  about  85%  of  global  GDP.  In  doing  so  they  consume  about  70%  of  global 
resources and 70% of all energy generated. Furthermore, they emit 70% of all greenhouse 
gases and generate about 50% of all waste. Cities also waste assets, resources, utilities, space 
and time. For example, a car is parked more than 90% of the time on average, 30% of food is 
wasted, and the average office is used only 35-50% of the time. 

Therefore, many cities suffer from so-called linear externalities, for example emissions to air 
and water, noise and congestion. They are also exposed to the linear risks related to increased 
demand  for  resources  and  diminishing  supplies.  This  shows  that  linear  cities  are  not 
sustainable, and makes a good case for change. 

Examples of wastage and linear externalities in today’s linear cities 

Why are cities relevant in the circular transition? 

Cities have a density and concentration of producing businesses and consuming citizens that 
generate material and resource flows with circular potential. Most cities also have a scale that 
on the one hand enables quick decisions, building on the autonomous power to regulate and 
incentivise, and on the other hand is large enough to enable the establishment of new circular 
city  functions  and  services,  and  circular  business  models.  Cities  also  have  infrastructure, 
utilities and services with circular potential. 

1  http://www.newgeography.com/content/001689-how-much-world-covered-cities 
2  https://population.un.org/wup/Download 

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The 15 circular steps for cities – Second edition 

 
 
 
 
 
 
 
 
 
 
 
 
                                                      
City administrations can define and communicate a circular vision, define a circular strategy 
and embed circular principles in city functions and services, and thus create a good framework 
for the circular transition. City administrations can also lead by example, e.g. offering and/or 
procuring circular solutions and services. Finally, city administrations have the ability to build 
circular awareness and promote a culture of collaboration among all stakeholders. 

In summary, a circular city is not the sum of its circular activities. It must also fully realise and 
exploit its potential to be a cradle for circular development, and use its governance tools 
and levers as catalysts for circular change. 

Cities as cradles and catalysts for circular change 

What will a circular city look like tomorrow? 

A circular city conserves and reuses resources and products, shares and increases use and 
utility of all assets, and minimises resource consumption and wastage in all forms. 

Circular cities have modular and flexible buildings designed for reuse/repurposing, to enable 
effective  utilisation,  and  for  disassembly  rather  than  demolition,  to  facilitate  reuse  and 
recycling.  They  use  renewable,  local  energy  production,  e.g.  powered  by  the  sun,  wind  or 
secondary resources to the extent possible. 

Citizens use shared, clean and effective mobility systems, powered by renewable energy to 
the extent possible, and where possible automated with sharing and on-demand services. 

A local urban bio-economy ensures that all organic waste and by-products are recovered and 
used as feedstock for nutrient or chemical recovery, with residues used for energy generation 
and later returned to the soil. Urban farms recycle organic waste and by-products, reuse water 
and waste heat and produce vegetables for the local market. 

Waste and wastewater generation is minimised, with maximum value recovery, and residues 
are processed for return to soil or use in urban farming. 

The 15 circular steps for cities – Second edition 

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Production and consumption is localised to the extent possible, with local product and material 
return loops and residue recovery. Companies are located in industrial clusters and matched 
to facilitate and enable industrial symbiosis where residues, by-products or waste heat/water 
generated by one company can be used by another, thereby saving feedstock costs for one 
company and waste management costs for the other. 

Transport  companies  increase  the  efficiency  of  their  operations  by  engaging  in  reverse 
logistics  for  take-back  and  returns  of  products  for  reuse,  repair  and  remanufacturing  for 
products and recycling for materials. 

Circular test-labs, repair shops and sharing centres are available throughout the city to enable 
and  encourage  citizens  and  entrepreneurs  to  test  and  practice  their  new  circular  ideas  and 
business models. 

Digital tools facilitate asset/material tracking, and product/material/service exchanges facilitate 
sharing applications, industrial symbiosis and monitoring of circular progress. 

Circular cities are regenerative and resilient to diminishing resource supplies and to climate 
change.  They  are  also  clean,  prosperous,  liveable,  and  therefore  attractive  for  citizens  and 
companies, and for city planners and decision-makers. 

A circular city tomorrow 

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The 15 circular steps for cities – Second edition 

 
 
 
 
 
 
 
 
 
The 15 circular steps for cities 

For  a  city,  the  journey  towards  circularity  involves  planning,  acting  on  different  levels  and 
mobilising stakeholders, as elaborated in the 15 steps below. 

Plan 

As an important first step, the city administration together with all relevant stakeholders should 
look at the current linear issues and future circular potential, and then map out a circular way 
forward. This comprises the following three steps: 

1)  Characterise  and  analyse  local  context  and  resource  flows,  and  identify  idle 
assets: The focus of a circular transition must be on the economic and industrial profile 
of a city, targeting the sectors with highest wastage and potential for increased product 
and asset use/utilisation, waste minimisation and closing of material loops. An urban 
metabolism  study  can  help  to  map  all  resource  flows.  Some  cities  have  employed 
resource  brokers  to  help  companies  identify  wastage  and  possibilities  to  increase 
circularity in local value loops, including idle or underutilised buildings and other assets. 

2)  Conceptualise  options  and  prioritise  among  sectors  with  circular  potential: 
Trying  to  pursue  circularity  on  all  fronts  at  the  same  time  may  be  challenging,  and 
successful circular cities usually identify a few target sectors that are important in their 
socio-economic context and have a high potential for creating and closing local value 
loops and increasing use of idle assets. Commonly targeted sectors are construction, 
food and beverages, trade, electric and electronic equipment, and textiles. 

3)  Craft a circular vision and strategy with clear circular goals and targets: A circular 
vision for the transition will serve as a guiding light for further strategic planning and 
implementation. The circular vision provides the basis for preparing a circular strategy 
with goals and targets, covering all city functions, services, target sectors and business 
activities  with  circular  potential.  The  preparation  of  the  strategy  should  involve  all 
relevant  stakeholders  (for  example  citizens,  businesses,  research  and  teaching 
institutions,  media  and  civil  society)  to  build  awareness  and  foster  a  culture  of 
collaboration. 

Act 

With the circular potential of a city translated into a vision and strategy for circular development, 
the  city  administration  and  relevant  stakeholders  can  start  the  implementation  through 
a number of key actions. 

4)  Close loops by connecting waste/residue/water/heat generators with off-takers 
and  users  of  such  secondary  resources:  This  is  one  of  the  central  themes  in  a 
circular  city  and  should  be  at  the  core  of  the  journey  towards  circularity.  The  urban 
metabolism study prepared as a basis for the strategy will identify local value loops. 
Material brokers may interact with companies to help them identify residue streams, 

The 15 circular steps for cities – Second edition 

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wasted heat or water that could be used as feedstock or inputs for other companies. 
Efforts should also be made to increase the collection and recycling of organic waste 
streams and by-products for use in bio-refineries, urban farms or for energy production, 
with residues returned to soils. 

5)  Consider options for extending use and life of idle assets and products: This can 
be achieved by establishing reuse and repair centres, helping companies to go from 
linear  sale  of  products  to  new  sharing,  leasing  and  product-as-service  business 
models, and by repurposing or promoting the sharing of idle and abandoned buildings 
and other assets. Such measures will not only save costs, but also extend the life and 
utility of assets and products and facilitate value recovery at end-of-life. Supporting the 
set-up  of  reverse  logistic  networks  is  key  to  facilitate  the  return  and  take-back  of 
products for repair and remanufacturing. 

6)  Construct  and  procure  circular  buildings,  energy  and  mobility  systems:  Many 
cities have a steady influx of new citizens due to urbanisation and migration, and the 
building  stock  is  also  aging,  which  creates  demand  for  new  buildings,  energy  and 
mobility systems. The demand for new buildings should be met by planning, procuring 
and constructing circular buildings. Such buildings are flexible and modular, designed 
for repurposing to extend their life, and as material banks for disassembly instead of 
demolition to facilitate reuse and recycling. Energy systems should be planned on the 
basis of renewable energy sources and local generation to the extent possible. Mobility 
systems should be planned with a view to increasing efficiency, reducing congestion 
and reducing emissions. They should be shared and where possible automated and 
on-demand. 

7)  Conduct  circular  experimentation  –  address  urban  problems  with  circular 
solutions: There is not one formula for circularity in cities, and developments can and 
should  not  follow  a static  circular  blueprint.  City  administrations  should  instead 
encourage  testing  and  experimentation  with  new  circular  concepts,  approaches  and 
business  models.  Circular  labs  and  a  flexible  regulatory  framework  facilitate  the 
development and testing of new business models. By establishing circular support hubs 
or similar, cities can encourage and help entrepreneurs to develop their circular ideas 
into viable businesses. 

8)  Catalyse  circular  development  through  regulation,  incentives  and  financing: 
Regulatory sticks and incentive carrots should be used as tools and levers for circular 
change. Charging the full cost, including externalities, for waste management and other 
environmental services is a good start. Ideally, this should include a differentiated fee 
structure that incentivises reduction, reuse and recycling over disposal. 

Providing  or  subsidising  land  for  circular  clusters  is  an  effective  way  of  promoting 
industrial symbiosis, as is introducing circular requirements in licensing and permitting. 

City  administrations  may  see  a  need  and  reason  to  support  circular  start-ups  in 
securing access to financing. This may include providing or facilitating access to grants, 
subsidies, or guarantees. 

9)  Create markets and demand for circular products and services – be a launching 
customer: Public procurement amounts to about 15% of gross domestic product in the 
European  Union.  By  applying  circular  principles  and  criteria  in  procurement  of 
construction, products and services, city administrations can contribute to demand and 
help establish best practice. Cities can also encourage the inclusion of secondary raw 
materials in packaging and products by setting such requirements in their procurement 
criteria or through voluntary pledge programmes. 

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The 15 circular steps for cities – Second edition 

 
 
 
 
 
 
 
10) Capitalise  on  new  ICT  tools  supporting  circular  business  models:  Digital  tools 
include  material  and  asset  exchanges  where  supply  and  demand  can  be  matched. 
These  tools  help  clients  share  underutilised  materials,  products  or  assets.  Many 
product-as-service business models also require asset tracking to facilitate return and 
take-back.  The  internet-of-things  and  other  forms  of  smart  development  enable  and 
facilitate many aspects of circular developments. Circular and smart city developments 
should therefore progress in parallel. City administrations are key to identify needs and 
demand for such tools and services and to help establish the required infrastructure 
and tools. 

Mobilise and monitor 

11) Coach  and  educate  citizens,  businesses,  civil  society  and  media:  Progress 
towards a circular economy does not happen solely in city administration offices, but 
also  in  homes,  offices  and  companies.  To  mobilise  these  creative  ideas  and 
entrepreneurial efforts, city administrations can help disseminate the circular vision and 
strategy,  and  then  build  awareness  and  understanding  among  their  citizens  and 
businesses so that they take part in and further the circular transition. 

Mobilising education and research institutions, media and civil society will facilitate and 
increase the efficiency of such efforts. 

12) Confront  and  challenge  linear  inertia,  stressing  linear  risks  and  highlighting 
circular opportunities: Many individuals and companies are firmly rooted in their old 
linear patterns and business models, and benefit from not having to pay the full costs 
of linear externalities. This disincentivises companies to explore circular models. 

However, with increasing awareness about the implications of resource scarcity, rising 
prices  and  volatility,  competition  from  innovative  circular  companies,  increased 
customer concerns and awareness, and potential regulatory changes, companies will 
have  to  pay  more  attention  to  future  linear  risks  and  value  current  linear  benefits 
differently.  This  will  focus  attention  on,  and  support  the  transition  to,  more  circular 
alternatives such as product-as-service business models. 

City  administrations  can  have  a  role  in  building  awareness  about  linear  risks  and 
circular  opportunities  and  thus  encourage  innovation  and  transition  from  linear  to 
circular business models. 

13) Connect  and  facilitate  cooperation  among  circular  stakeholders:  Circular 
developments  and  business  models  rely  on  cooperation  among  entities  along  value 
chains.  City  administrations  are  well-positioned  to  connect,  mobilise  and  involve 
stakeholders in the circular planning and to establish circular hubs and support centres 
that facilitate exchanges and collaboration. 

Waste,  material  or  reuse  exchanges,  discussed  in  step  10,  facilitate  value  chain 
cooperation,  as  does  the  active  matching  and  co-localisation  of  companies  with 
potential for circular synergies to establish circular clusters built on industrial symbiosis. 

The 15 circular steps for cities – Second edition 

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14) Contact and learn from circular pioneers and champions: Cities that have reached 
higher levels of circularity can act as a model and help starting cities taking their first 
circular  steps  and  navigate  around  obstacles.  It  is  also  important  to  identify  circular 
champions  in  the  local  community  that  can  drive  and  inspire  circular  change  with 
insight, energy and passion. 

15) Communicate  on  circular  progress  based  on  monitoring:  This  will  help  circular 
stakeholders follow the progress and focus their efforts. It will also mobilise new circular 
stakeholders and encourage further circular developments. 

Monitoring and communication on circular progress enables tracking of achievements 
towards the objectives and targets set in the circular vision and strategy, and may point 
at the need to change or intensify efforts on particular fronts. 

The 15 circular steps for cities presented in the preceding sections are summarised in the 
table below. 

  1.  Characterise and analyse local context and resource flows, and identify idle assets 
N
A
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2.  Conceptualise options and prioritise among sectors with circular potential 

3.  Craft a circular vision and strategy with clear circular goals and targets 

4.  Close loops by connecting waste/residue/water/heat generators with off-takers 

5.  Consider options for extending use and life of idle assets and products 

6.  Construct and procure circular buildings, energy and mobility systems 

7.  Conduct circular experimentation – address urban problems with circular solutions 

8.  Catalyse circular developments through regulation, incentives and financing 

9.  Create markets and demand for circular products and services – be a launching 

customer 

10.  Capitalise on new ICT tools supporting circular business models 

11.  Coach and educate citizens, businesses, civil society and media 

12.  Confront and challenge linear inertia, stressing linear risks/highlighting circular 

opportunities 

13.  Connect and facilitate cooperation among circular stakeholders  

14.  Contact and learn from circular pioneers and champions 

15.  Communicate on circular progress based on monitoring 

T
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A

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O
M

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The 15 circular steps for cities – Second edition 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
The EIB supports cities in their circular transition 

As the EU bank, we provide lending on attractive terms to both public and private promoters, 
including for  smaller  and  riskier  circular  projects.  For  cities,  we  offer  municipal framework 
loans,  which  are  multi-scheme  credit  lines  that  can  finance  a  city’s  circular  investment 
programme. We  also  offer  intermediated  lending  through  other  banks,  which  can  finance 
investments  in  the  city  itself,  its  utility  companies  and  private  sector  municipal  service 
providers. We can also finance Urban Development Funds, which can be purely private or 
blended with European Union or other public funds to invest in circular city projects, including 
through  revolving  funds.  For  projects  promoting  the  commercialisation  of  circular  economy 
innovation, the EIB has special instruments supported by the European Commission. 

In addition to lending, the EIB provides financial and technical advisory to cities, in particular 
through the European Investment Advisory Hub, URBIS (a facility to support urban investment 
in the European Union), Innovation Finance Advisory and JASPERS. 

More information can be found in the EIB Circular Economy brochure and the EIB Circular 
Economy Guide, which can be downloaded on http://www.eib.org/circular-economy. 

In  the  context  of  the  Urban  Agenda  Partnership  on  Circular  Economy,  the  EIB  and  the 
European Investment Advisory Hub launched a Circular City Funding Guide, a web-based 
tool that provides guidance to circular fund-seekers and funders in cities. 

EIB support to circular cities 

The 15 circular steps for cities – Second edition 

9 

 
 
 
 
 
 
 
 
 
 
 
www.circularcityfundingguide.eu 

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The 15 circular steps for cities – Second edition 

 
 
 
 
The 15 circular steps for cities
Second edition

The 15 circular steps for cities 

Second edition

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