Coal-fired thermal power plants must implement circular economy practices to overcome environmental issues associated with their emissions. There are various challenges in the path of the adoption of the circular economy concept. This study examines the challenges in the multi-criteria environment to explore the cause-and-effect relationships between them. Also, the challenges were ranked based on their significance. The findings of the study highlighted causal factors, namely 'regulatory difficulties', 'technological challenges', and 'energy efficiency' as the significant ones, whereas 'cultural shift' and 'socio-economic factors' were found to be dependent factors. The results also offer implications for academics, researchers, and practitioners. Adopting circularity concepts helps to reduce the negative impact on the ecosystem and creates jobs which addresses the social dimension of sustainability.