Digital Technology Empowering Circular Economy: A Systematic Review and Future Outlook

Based on the systematic review by the University of Birmingham research team, this article sorts through 266 relevant literatures from 2016 to 2025, analyzing the application status, obstacles, and future development directions of key digital technologies such as IoT, blockchain, and AI in the circular economy. Digital technology is the core enabler of the circular economy, but sustainable economic transformation can only be achieved through the coordinated promotion of technological innovation, organizational change, policy support, and cultural transformation.

Against the backdrop of global resource scarcity and increasing environmental pressure, the circular economy (CE) emphasizes the 3R principles of 'Reduce, Reuse, Recycle' and aims to break the linear economic model. However, its implementation faces challenges such as insufficient supply chain transparency, difficulty in tracking full-life-cycle information, and low efficiency of multi-party collaboration. Digital technology is regarded as a key solution, and this review comprehensively presents the panoramic picture of the integration of digital technology and the circular economy.

A rigorous systematic literature review (SLR) method was adopted: literature was retrieved from databases such as Web of Science and Scopus, and after title/abstract screening and full-text evaluation, 266 high-quality papers were finally included (89% published in the past five years). A multi-dimensional analysis framework was constructed: technical dimension (classification of core digital technologies), application dimension (circular economy link scenarios), industry dimension (industry practices), geographical dimension (regional distribution), and obstacle dimension (challenges in technology promotion).

Six digital technologies supporting the circular economy were identified:

1. Internet of Things (IoT): The cornerstone of the perception layer, enabling real-time monitoring of product status, tracking of resource flows, and analysis of usage patterns;
2. Blockchain: A trust mechanism builder, enhancing supply chain transparency, supporting digital product passports, and automatically executing incentive policies;
3. AI and Big Data: A decision optimization engine, used for demand forecasting, predictive maintenance, intelligent waste sorting, and circular network optimization;
4. Cloud Computing and Edge Computing: Computing infrastructure, providing elastic resources and real-time data processing;
5. Digital Twin: A virtual verification tool, simulating product life cycles and planning remanufacturing processes;
6. Additive Manufacturing: A distributed production enabler, supporting on-demand production, localized repair, and reuse of recycled materials.

Manufacturing is the most concentrated research field (accounting for 41%), with applications including industrial IoT platforms, product-as-a-service models, and remanufacturing management; the construction industry uses BIM to record material information and material bank platforms to optimize resource recycling; the e-waste field realizes reverse logistics optimization, automated disassembly, and material traceability.

Multiple obstacles are faced:

• Technical: Poor interoperability of devices/systems, insufficient data quality and standardization, low maturity of some technologies;
• Organizational: Cultural resistance to traditional models, lack of trust in cross-organizational collaboration, gap in interdisciplinary talents;
• Economic: High initial investment, immature new business models, insufficient reflection of resource and environmental costs;
• Regulatory: Incomplete regulatory framework, data privacy and security risks, difficulty in cross-border policy coordination.

Recommendations for promoting digital technology to empower the circular economy:

• Technical level: Promote cross-industry data standards, build integrated platforms, and develop AI algorithms for CE scenarios;
• Organizational level: Cultivate interdisciplinary talents, establish collaboration networks, and provide support for transformation and change;
• Policy level: Improve the regulatory framework, provide economic incentives (tax incentives/subsidies), and promote digital product passports.