Circular economy (CE) is currently a popular concept promoted by the EU, by several national governments and by many businesses around the world. However, the scientific and research content of the CE concept is superficial and unorganized. CE seems to be a collection of vague and separate ideas from several fields and semi-scientific concepts. The objective of this article is to contribute to the scientific research on CE. First, we will define the concept of CE from the perspective of WCED sustainable development and sustainability science. Second, we will conduct a critical analysis of the concept from the perspective of environmental sustainability. The analysis identifies six challenges, for example those of thermodynamics and system boundaries, that need to be resolved for CE to be able to contribute to global net sustainability. These six challenges also serve as research themes and objectives for scholars interested in making progress in sustainable development through the usage of circular economy. CE is important for its power to attract both the business community and policy-making community to sustainability work, but it needs scientific research to secure that the actual environmental impacts of CE work toward sustainability.