Circularity Governance Under Strategic Incentives: A Stackelberg Model of Wind Turbine Blade Recycling

Abstract

Circular economy goals under the European Green Deal require business models that make recyclability financially attractive, yet this alignment becomes fragile when eco-design effort is hidden and secondary-market prices are volatile. This paper develops a formal model of the wind-turbine blade (WTB) value chain to examine when closed-loop systems can internalise eco-design incentives. In a Stackelberg game between a manufacturer and a recycler, we show that reintegrating recovered glass fibre reinforced polymer (GFRP) into new WTBs can endogenously reward eco-design by linking material recovery to cost savings. However, this self-alignment weakens under risk aversion and competitive leakage, when recyclers divert material to more profitable external markets. We derive a robustness-adjusted subsidy threshold that ensures closed-loop stability and quantify how it varies with eco-design leverage, price uncertainty and technology choice. Numerical results for pyrolysis and solvolysis highlight how technological maturity and market risk shape feasibility.