Work

A Systems Policy Framework for Accelerating the Circular Economy Transition Through Upcycling: Linking Verified Material Flows and Consumption-Tax Incentives

Year: 2026

Type: article

Abstract: Accelerating the circular economy transition requires policy arrangements that connect recurring resource-conversion activities, economic incentives, and credible verification across production systems. This study develops a systems policy framework for upcycling by linking consumption-tax incentives to verified circular material flows. Upcycling is conceptualized as a multi-actor material-conversion system integrating interdependent material, fiscal, and information-verification flows. The study combines qualitative comparative policy analysis and framework synthesis. Statutes, official policy documents, government guidance, and international-organization reports are analyzed by the policy functions they perform within the circular material-conversion system, including intervention stage, target activity, support basis, timing and refundability, and verification requirements. The analysis identifies a relative functional gap at the recurring acquisition-input-conversion stage: reviewed instruments commonly support specific products, transactions, capital investment, taxable income, or virgin-material disincentives, rather than verified and repeated resource conversion after commercialization. The proposed framework links incentives to verified acquisition, actual production input, and value-enhancing conversion. It establishes activity-based eligibility criteria and incorporates traceability requirements, safeguards against duplicate claims and excessive fiscal exposure, ex post verification, recapture, and periodic review. The resulting principles can be translated into VAT/GST-linked credits or refunds, separate business tax credits, environmental-tax mechanisms, and other fiscal architectures.

Source: Systems

DOI: 10.3390/systems14111417

Authors: Kyung-In Lim, Seong-Ick Hong

Institutions: Kangnam University, Kyungdong University

Language: English

Topic: Sustainable Supply Chain Management

Subfield: Strategy and Management

Field: Business, Management and Accounting

Domain: Social Sciences

SDGs: Responsible consumption and production, Industry, innovation and infrastructure

Open Access status: gold

Estimated APC paid: $2,896