Many Unanswered Questions About the Circular Economy in Iceland

What does the term circular economy really mean? How large is the circular economy in Iceland? Is Icelandic society making progress toward a more circular model? These are the questions that Guðmundur Steingrímsson, a PhD student in Environment and Natural Resources at the University of Iceland, seeks to address in a new study on Iceland’s circular economy. “The term circular economy is used to describe many things and seems to serve as an umbrella concept for various methods aimed at reducing resource use, decreasing raw material demand, and minimising waste,” Guðmundur explains.

This vague use of terminology makes it difficult to assess the scope of circularity, whether it’s increasing, and how it might be strengthened. The study therefore has two main objectives: to clarify the concept and to develop ways to measure the size of the circular economy.

“There are few metrics available to evaluate the circular economy, so I'm working on designing and improving such indicators. I also want to clarify the term so that applying it yields a clear environmental benefit and then measure the outcomes of its implementation and use,” says Guðmundur. He is examining the economy as a whole, though the tools and definitions produced in the research will also be applicable to smaller units such as companies and municipalities, both in Iceland and abroad.

Everyone Needs to Pull Together

When asked what inspired the research, Guðmundur says he has long had an interest in environmental issues and recently felt a strong need to contribute more actively. “I want to do something useful and seek solutions. There’s a crisis, and everyone needs to do their part in their own way.”

Guðmundur is also deeply interested in politics and philosophy, particularly questions about how we can live more sustainably and harmoniously with the environment—what can be done and what has already been tried. “It’s also important to consider how to influence behaviour. How do we bring about change? How do we get people on board? That involves politics and communication.”

During the pandemic, he enrolled in a master’s program in Environment and Natural Resources. His master’s thesis examined Iceland’s circular economy, revealing that only 8.5% of materials in Iceland were part of a circular flow. This is a low percentage compared to leading countries, though some fare even worse than Iceland. “The master's research also highlighted many unanswered questions, which I’m now trying to address. For example, we need to better understand whether Icelanders reuse items, repair things, reduce material consumption, and share goods,” Guðmundur says.

“There is a lot of work to be done in order to better assess the scope of the circular economy in Iceland. I really enjoy stepping into an environment like this—where a lot is happening, there’s a bit of chaos, and much remains unfinished. After my master’s studies, I decided, in consultation with my supervisors, to continue on to a PhD; to dive deeper into the circular economy, and I have no regrets.”

Unclear What Materials and Products Iceland Imports

Extensive conceptual analysis is needed before it’s possible to calculate Iceland’s circularity rate again. For this purpose, Guðmundur is investigating the methods Icelanders use—often without realising—to circulate resources and whether circularity might be hiding in everyday practices. “Circularity isn't just about waste re-entering the economy. It also depends on how long materials stay within the system. I’ve been doing extensive research on this, and I’ve defined 33 indicators to help assess the current status. 

Another key issue is that there’s limited transparency about which materials and products are imported. “We’re a consumption-driven society, but what exactly are we importing? Of course, everything is recorded, but we still don’t know enough. Could some of these goods be recycled or sustainably sourced? What can be done to improve that?” Guðmundur asks, and it’s clear that many questions remain unanswered. “I find it both exciting and enjoyable to dive into data like this and see what picture emerges when you start analysing it. What story do the data tell? I feel like I’m searching for some kind of truth, and I’m always amazed at how surprising that truth can be—both in positive and negative ways."

There is also confusion surrounding the circularity of food and biomass. Although organic materials naturally cycle, Guðmundur argues that this doesn’t automatically mean our relationship with the biosphere or biomass production is circular—especially given the environmental harm involved. When is there circularity involved in the production and consumption of biomass? “I need to define a reasonable approach here and investigate whether Iceland’s biomass production in fishing and agriculture aligns with circular economy principles or not and what needs to change so that it may become so.

A Large-Scale Research Project

The project is extensive and involves substantial data collection and analysis. Guðmundur uses both qualitative and quantitative methods, including material flow analysis and interviews with importers to analyse the importation of goods to Iceland.

His supervisors are Brynhildur Davíðsdóttir, professor at the Faculty of Economics and Life and Environmental Sciences, and Jón Geir Pétursson, professor at the Faculty of Sociology, Anthropology and Folkloristics and the Faculty of Life and Environmental Sciences. Additionally, Hafþór Ægir Sigurjónsson from the Sustainability Team at KPMG is a member of the doctoral committee. The study is funded by the Icelandic Research Fund (Rannís) and Reykjavík Energy Science Fund (VOR), and Guðmundur has also received a Fulbright grant to study at Yale University’s School of the Environment. “They’re experts in material flow analysis, and I look forward to working with them this fall to complete the final phase of the research.”

Plastic and Clothing Are Major Obstacles 

Although results are not yet finalized, the master's thesis found that only 8.5% of material flows were circular. For that research Guðmundur focused on 2019 and he is eager to see whether his current study, using better metrics, will yield a higher figure for 2024.

In his first doctoral article, he used the 33 indicators to evaluate whether Icelanders employ circular methods. “I looked at eight material streams: fossil fuels, cars, electronics, cardboard, plastic packaging, clothing, buildings, and food, to see whether Icelanders are minimising consumption in those categories, reusing things, repairing or recycling them. This approach indicated that we’re doing something, in some instances a lot, but there are also major weaknesses. “Plastic remains a persistent issue, and buildings seem to be getting increasingly bigger. Clothing is also highly problematic.”

Guðmundur notes that cars and buildings are among the most reused items. “There’s often a narrative that nothing is working and everything must be radically changed. But this research shows we’re already doing some things well. We can build on those strengths in an encouraging way.”

The study gives a clear picture of the circular economy in Iceland

Greater material circularity is globally significant. The extraction of raw materials for consumer goods is believed to account for about half of all greenhouse gas emissions, while also causing major disruption to flora and fauna and biodiversity loss. “The Earth can’t handle this pressure, and consumption keeps rising—with growing energy needs and pollution. We need to find solutions, and the circular economy is promising—but we must understand what we’re really doing when we talk about promoting circularity and whether we’re actually succeeding,” Guðmundur says.

This research will provide a clear and comprehensive picture of the state of circularity in Iceland—something that currently doesn’t exist. “It identifies what is working and what must improve and will help update existing metrics. Importantly, its insights may also prove valuable internationally for countries, municipalities, companies, and individuals.”