1. Introduction
The traditional linear economy approach, based on the principle of Resource Extraction from the environment, through the process of Production, Distribution, Consumption and finally Disposal to the environment has been leading to the depletion of natural resources, increased waste and pollution, and environmental degradation.
The Global Financial Integrity Organization (GFI) estimated the demand for natural resources for human economic activity is now 1.7 times greater than the Earth's capacity. Therefore, without changing the way of development, the depletion of natural resources is inevitable. Regarding waste, it is predicted that by 2050, the total amount of plastic waste would be even more than the total volume of fish in the oceans. (Ellen MacArthur Foundation, 2016). Facing with this fact, many countries are transitioning to the Circular Economy, with the core approach is connecting endpoints to the starting points of economic processes, enabling recovered materials to be returned as inputs for activities; even restore and regenerate matter at the end of each round of extraction, production, distribution, and consumption, keeping the material in use as long as possible in the economic system.
In Vietnam, Article 142 of the Law on Environmental Protection (2020) defines the circular economy as an economic model in which the activities of design, production, consumption and service activities aim at reducing the extraction of raw materials, prolonging the product life cycle, minimizing waste generation and minimizing adverse impacts on the environment. Subsequently, the Scheme for Circular Economic Development in Vietnam (Decision 687/QD-TTg dated June 7, 2022) assigned the Ministry of Natural Resources and Environment to develop and issue a guiding framework for application and evaluate the implementation of the circular economy; Ministries and ministerial-level agencies are responsible for organizing the pilot application of the circular economy model to a number of industries and sectors.
In recent years, the production of natural essential oils has been introduced into Vietnam and developed rapidly, meeting the needs of domestic consumption, especially for export. By 2021, Vietnam's natural essential oil production accounted for 1.16% in quantity and 0.6% in value of the global essential oil market share (Vietnam of Essential Oils Aromas and Cosmetics Association, VOCA). In the context of global market's increasing use of natural compounds, as well as the significant advantages of tropical crops such as mint, melaleuca, lemongrass, cinnamon, anise, coriander, garlic, perilla, holy basil, eucalyptus, basil, orange, lemon, grapefruit..., the production of natural essential oil is truly a potential industry which attracting the interest of many domestic and foreign investors.
However, the production of natural essential oil in Vietnam today mainly follows the traditional linear economic model, consuming a lot of fuel and causing waste of resources and negative impacts on the environment. Some essential oil production stages in various enterprises have begun to shift toward a circular economy, but they are spontaneous, less efficient both in terms of environment and economy.
This paper aims to clarify the contents and opportunities of applying circular economy in the manufacturing of natural essential oil in Vietnam. The application of the circular economy is an essential requirement as well as opportunities to assist firms in achieving sustainable production and consumption goals, effective response to climate change, and contribute to national and global sustainable development goals.
2. Method
Desk review: study reports/ papers published in Vietnam and abroad to clarify the contents of circular economy and the practical experience in applying circular economy in the production of natural essential oils.
Collecting primary data: interviews, discussions (offline and online) with representatives of a number of natural essential oil producers in Vietnam to find out the production and business situation, current status and potential of circular economic application, the enterprise’s advantages and difficulties.
Meta-analysis: to identify resource and environmental problems of current linear economic model as well as potential opportunities to apply circular economy in natural essential oil production in Vietnam, following the elements of the ReSOLVE framework.
Expert method: consult experts who are managers and/or professionals with knowledge and practical experience related to circular economy, environment and sustainable development to assist in identifying potential opportunities to apply circular economy in natural essential oil production in Vietnam.
3. Results
3.1. The concepts and contents of Circular Economy
According to Pearce and Turner, circular economy aims to overcome the limitations of the traditional linear economy by pursuing the recycling and reuse of material flows, energy, and waste in the production, consumption and disposal processes, maintaining the functions of the environmental system with respect to the economic system (David W. Pearce and R. Kerry Turner, 1990).
According to the Ellen Mac Arthur organization: “The circular economy replaces the concept of "end of life" of materials with the concept of recovery, shifting towards the use of renewable energy, stop using of harmful chemicals that can limit reuse; shifting towards reducing waste through the design of materials, products, engineering systems and business models within the boundary of that system”. The concept of Ellen Mac Arthur is most widely recognized, referenced and used by many countries and international organizations.
Circular systems apply processes of reuse, repair, refurbishment, remanufacturing and recycling to create closed-loops for resource use in the economic system, to minimize the amount of resources used and waste generated, as well as levels of environmental pollution and emissions (P.T.T.Ha, 2020). All "waste" of one production and consumption process should be considered as raw materials/ inputs of other production and consumption processes or the production and consumption process itself, with the goal of elimination of negative impacts on the environment and regeneration of natural systems.
According to Ellen MacArthur Fund (EMF, 2015), the circular economy is based on 3 basic principles, including:
1, Conservation and development of natural capital through control with a view to the resource efficiency and the regeneration of natural systems; especially, promote the use of renewable energy.
2, Optimizing resource returns by circulating products and materials as much as possible in engineering and biological cycles.
3, Improve the overall efficiency of the whole system by minimizing negative externalities, through waste and pollution design from the very beginning of the production process.
These contents/ principles help to break the usual link between economic development and negative environmental impacts. The circular economy is not about waste treatment, on the contrary, considering waste as a resource that is misplaced, or undervalued.
According to the United Nations Industrial Development Organization (UNIDO), the implementation of a circular economy is "implementation in production and business", following the value chain approach, including activities such as: Product design towards reducing the amount of materials used, reducing/ replacing hazardous chemicals, improving durability/ reusability /upgradability /reparability/ recyclability; Increase the recycled content in the product; Efficient use of energy and other resources; Maximize resource efficiency in production; Optimize the use of products; Allow reproduction; Regenerate biomass and recycle materials. After maximizing the material cycle, energy will be recovered from the waste so that it is not released into the environment. (Le Thanh Thao, UNIDO Vietnam 2020).
The aforementioned principles and contents of the circular economy can be presented as a framework with 6 business operations (called the ReSOLVE framework), including: (1) Regenerate; (2) Share; (3) Optimize; (4) Loop; (5) Virtualise; (6) Exchange.
The circular economy is a general global trend that has proven to be successful in many countries over the world, such as Sweden, Denmark, Finland, Canada, Japan, China, and Singapore...
In Vietnam, the Law on Environmental Protection 2020 (Law No. 72/2020/QH14 dated November 17, 2020) has officially mentioned “Circular economy is an economic model in which the activities of design, production, consumption and services are aimed at reducing the exploitation of raw materials, prolonging the life cycle of products, limiting waste generated and minimizing the adverse impact on the environment”.
Decree No. 08/2022/ND-CP of the Government dated January 10, 2022, detailing a number of articles of the Environmental Protection Law that specified the General Criteria for the Circular Economy in Vietnam (Article 138), including:
a) Reducing exploitation and use of non-renewable resources and water resources; increase efficiency in the use of resources, raw materials and materials; saving energy;
b) Extend the duration of use of materials, equipment, products, goods, and components;
c) Reducing waste generation and minimizing adverse impacts on the environment, including reducing solid waste, wastewater, and emissions; reducing the use of harmful chemicals; waste recycling, energy recovery; reducing single-use products; and green procurement.
In sum, it can be stated that Vietnam has a fairly sufficient policy and legislative framework to encourage and facilitate the implementation of the circular economy by industries, enterprises, communities, organizations, and individuals.
3.2. Natural Essential Oil Production in Vietnam and the Environmental Issues
Vietnam is located in the tropical monsoon climate zone, with rich and diverse plant resources, especially the group of essential oil plants. The number of species containing essential oils in the flora of Vietnam includes about 657 species belonging to 357 genera and 114 families (about 6.3% of the total species, 15.8% of the total genera and 37.8% of the total families). Rich families of genera and species containing essential oils are Asteraceae, Oranges (Rutaceae), Ginger (Zingiberaceae), Mint (Lamiaceae), Camphor (Lauraceae)... Vietnam is considered one of the countries with an enormous source of essential oil plants in the world. The diversity of natural herbal raw materials in Vietnam is compared to the 'green gold mine' of the natural essential oil extraction industry.
According to statistics from the Vietnam of Essential Oils Aromas and Cosmetics Association (VOCA), there are about 300 types of plants used to extract essential oils in Vietnam, of those there are about 50 most used types namely lemongrass, incense, eucalyptus, melaleuca, mint, anise, cinnamon. Some types have recently been used for essential oil extraction but rapidly developed such as coriander, garlic, patchouli, basil, and perilla. These plants are quite easy to grow, do not take too much time to care for, and are less susceptible to pests and diseases than other plants. Therefore, the production and extraction of natural essential oils is gradually being interested in development.
Another potential source of raw materials for the natural essential oil industry is agricultural by-products from the citrus peels. According to the Department of Crop Production (Ministry of Agriculture and Rural Development), citrus trees throughout the country have continuously increased in recent years, with a high growth rate. Citrus trees are currently the group of fruit trees with the largest area and output; in which mainly oranges (about 100,000 hectares, output over 840,000 tons) and grapefruit (over 105,400 hectares, output nearly 950,000 tons). Therefore, the source of orange and grapefruit peels is discharged at citrus extraction/ juices production facilities is a lot. In addition, it is necessary to mention the source of pruned young grapefruit from gardeners or cooperatives. The pruned young fruit is also a source of raw materials for extracting essential oils.
Although the natural oil production industry has just been introduced to Vietnam in recent years, it has rapidly developed, accounting for a significant proportion of our country's export turnover. As of 2021, Vietnam has successfully exported essential oils, accounting for 1.16% in volume and 0.6% in value of the global natural essential oil market share. It can be clearly seen that Vietnam's natural essential oil production and extraction industry has been making positive changes and is an extremely potential industry.
A typical process of the traditional value chain in the production of natural essential oils from oil plants is presented in the diagram in Figure 2. The process starts with the raw materials in the oil plant growing area, then harvested and becomes raw materials for extracting essential oils in factories. The obtained essential oil will be packaged and distributed to consumers (directly used or used as raw materials for the production of food, pharmaceuticals, cosmetics, etc.). After being consumed, bottles/ containers of essential oil are often discarded along with other types of household waste.
Resource and environmental issues arise in all stages of the traditional value chain, involving both inputs and outputs of each stage.
In raw material growing areas: Growing raw material plants often requires quite large areas of land, using a lot of water for irrigation and fertilizers, pesticides… The improper use of pesticides, the non-guarantee of type, dose and isolation period, and sometimes the abuse of pesticides causes great harm to the environment such as: unbalance the ecosystem due to killing many beneficial natural enemies like parasitic wasps or predatory insects; cause soil pollution and land degradation if intensive farming and long-term and continuous use of pesticides causes toxic substances to accumulate gradually in the soil. The amount of chemical residue left in the soil for too long will produce a new compound, which is often more toxic than the original chemical itself. Many growing areas are currently facing poor soil conditions due to unsustainable farming.
The pesticides that have not yet penetrated into the soil will overflow in the field, canals, or through the soil and seep into groundwater; the pesticides packaging or bottles that farmers throw away in the fields, or when cleaning the pesticides containers and then pouring them into nearby water sources - causing severely water pollution, directly affecting the health of the animals that live in the water. At the same time, it seriously affects human life and health.
Solid waste - generated due to many types of materials using only one or a few parts of the plant, so the remaining parts such as stems, branches, leaves, flowers, etc. or damaged and redundant materials - are often thrown indiscriminately or burned, continue to pollute water, soil and air, emit CO2 causing climate change impacts.
In extracting essential oil process: Raw materials are preliminarily processed, cleaned, minced and put in a pot with a lot of water. Given the fact that many production facilities still use outdated technology, simple equipment, and inefficient boilers, the consumption of water and energy inputs (electricity, wood, coal, oil, etc.) as well as the output emissions are quite large, including CO2 emissions which cause the greenhouse effect.
It takes tens or even hundreds of a cubic meter of water and hundreds of kilograms of raw materials to produce 1 liter of lemongrass or cinnamon essential oil. Due to the low percentage of essential oil in the plant, even only 0.03 to less than 1%, the amount of waste residue from the distillation process is quite large. According to the estimates of Thuy Moc Viet Company, 1 ton of lemongrass leaves can extract 3 kg of essential oil, and 1 ton of grapefruit peel can extract 4-5 kg of grapefruit essential oil. According to Hanoi Natural Essential Oils Joint Stock Company, for every 1 ton of lemongrass, it can extract about 2 to 3 liters of pure lemongrass essential oil. Regarding red lemongrass, it takes about 100-120 kg of raw materials to extract 1 liter of essential oil. Looking at the number of input materials, it is clear that the extraction of essential oils will generate a large amount of waste residue. This amount of waste is essentially organic compounds rich in carbon and multi-trace mineral elements, but there is no effective treatment solution. Many businesses do not consider the opportunity to take advantage of this waste source at all, so this amount of solid waste is often disposed of or burned directly, which continues to cause air and water pollution.
In the packaging and distributing process: Essential oils are usually packed into small dark glass bottles (brown, blue colors), with a capacity of only 5 - 10 or 15 ml, and a storage time (expiry date) is two years on average, so the number and volume of bottles to use is a large amount. On average, 1 hectare of lemongrass can extract 13 - 15 liters of essential oil, so it is possible to calculate that average of one ha of lemongrass requires 1,300 - 1,800 bottles/year. For example, in Tan Phu Dong district, Tien Giang province, there are about 1,600 hectares of lemongrass planting for essential oils production, we can calculate the number of bottles used annually from 2 to 3 million.
Essential oils as production materials can be stored in plastic containers/ cans with a capacity of 10 - 20 - 50 liters. Containers/ cans storing raw essential oils are usually made of organic polymers of chemical origin which are created during the process of extraction, distillation, refining and petrochemicals. Notably, essential oils stored in plastic containers usually have a short shelf life, only 3 to 6 months.
In addition, to deliver products to consumers, distributors and e-commerce platforms (for example: Shopee, Lazada or Amazon ...) use a lot of "extra" packaging made of paper, foam or plastic boxes which are not biodegradable, and they can persist in the environment for hundreds of years and decay into extremely toxic microplastics, causing water pollution, ocean pollution and adverse effects on human health and creatures.
In the process of circulation and distribution, the operation of transportation vehicles also consumes petroleum and generates large amounts of emissions, which are the main risks of air pollution, fine dust and greenhouse gasses.
Post-consumption disposal: The amount of glass bottles, plastic containers/ cans and other types of plastic paper packaging ... after use is quite huge. If not properly managed, it will be a source of extremely polluting solid waste. It is the fact that most of the after use glass bottles and packaging materials are usually thrown directly into the household trash along with other types of solid waste. Glass bottles which are used for store oil still have a concentrated amount of essential oil remaining. When they are thrown together with household waste, there is a potential risk of catching fire or causing burns, blistering of hands and mucous membranes if people accidentally touch them.
Thus, the production of natural essential oils according to the traditional linear model has been causing loss, wasting resources and putting negative impacts on the water, soil, air environment, and causing the problem of climate change as well. The transition from the traditional model of natural essential oil production to circular economy model is urgently needed to overcome all the challenges that businesses are facing in terms of economy as well as environmental and social responsibility towards sustainable development.
3.3. Opportunities for Circular Economy application in natural essential oil production in Vietnam
Based on the principles and contents of circular economy, lessons learnt from practical experience in the world, combined with consultation with economic and natural resources- environment managers, technical experts in essential oil production as well as experts on cleaner production, our research team proposed opportunities to apply circular economy in the natural essential oil industry according to the approach of the ReSOLVE framework, summary as shown in Table 1.
(1) Regenerate
It is applicable to use renewable energy sources in some activities such as in irrigation, drying of raw materials and distillation of essential oils or the operation of corporate offices. The source of biomass waste from processing and from popular agricultural by-products such as rice husks, sawdust, and solar energy (using solar panels) are the most available and accessible energy input sources from the perspective of natural essential oil producing enterprises.
Secondly, it is necessary to ensure the requirements of soil protection throughout the process of planting in material growing areas: do not use chemical fertilizers or chemical pesticides. Using chemicals can only improve yields in the first few years but not guarantee future sustainability because of the potential adverse impacts over time (degraded land, dead plants, and reduced yields). After the exploitation, it is necessary to preserve and spend time for restoring soil in the material growing area.
Using organic fertilizer (compost) made from the waste of the essential oil extraction process for the material growing area is a safe solution for the environment and helps enterprises to lower the cost buying chemical fertilizer.
(2) Share
Share involves the activity to optimize resource use by sharing them among users and reusing them throughout the life cycle, extending the life of the product through maintenance, repair, or upgrading.
Natural essential oil producers can use agricultural by-products from other industries as a share of raw materials. For example: make use of by-products from the production processes of juice, dried fruit… which discharge a lot of fruit peels with high essential oil properties or after harvesting, pruning trees and young fruits... create excess by-products (branches, rotten roots, leaves, young fruits ...).
Second, manufacturers can recall used bottles and packaging and transfer them to glass recycling plants for alternative uses. By doing this, used bottles/ packaging have extended their life cycle in other production processes instead of being destroyed.
(3) Optimise
Optimization is about finding the solution with the cost - effective performance or highest operational efficiency according to the given constraints, by maximizing the desired elements and minimizing the undesirable elements. Optimization opportunities in natural essential oil production may include:
First, research to establish the regions for material growing or material procurement with better raw materials quality - that are plants with higher essential oil content, higher ability to extract essential oils than existing conventional plants.
Second, optimize the extraction/ distillation process of essential oils (heat, water, boiler...) to increase the efficiency of using input materials, water and energy, both saving energy and water costs and reducing waste.
Third, optimize the process of raw materials harvesting and transporting to the production (extraction) site to minimize the rate of loss and damage of input materials.
(4) Loop
Opportunities for material reuse and recycling are more evident in packaging recall and waste management.
It is necessary to establish packaging/ bottles collecting systems at dealers and product distribution places for reuse and recycle. In addition, it is needed to introduce policy to encourage consumers (for example, apply deposit - refund schemes), encourage dealers and distributors to aim for 100% of used product packaging/ bottles to be recycled and reused.
Waste residues from extraction/ distillation process should be recycled and reused, for example in the form of animal feed or organic (compost) fertilizer. Organic (compost) fertilizers can be applied directly at the raw material growing area or supplied to the market. Waste residue also be processed to line livestock barns, used as a substrate for plant growth (typically as mushrooms) or as fuel pellets.
The water used for the extraction/ distillation process can be recovered to be used for the distillation of the same essential oil to take advantage of the heat as well as the essential oil properties left over from the previous distillation. This water source can also be used to wash raw materials or water the trees in the material growing areas.
The water obtained after distillation will be separated into essential oils and scented water. This liquid has gentle properties, should not be discarded but used to make products such as mouthwash, toner.
(5) Virtualise
Digital transformation in production and business aims at changing the way business models operate and bringing higher efficiency, and newer production values. The opportunity of using e-commerce platforms to bring products to consumers is increasing, both helping enterprises affirm their position in the market with trade recorded by the system while also helping to more easily control revenue and costs. Digital transformation also brings convenience in terms of conveying messages to consumers and to enterprises themselves. Digital transformation also helps reduce costs for businesses through easy management of inventory and monitoring of important production processes.
(6) Exchange
In order for packages and bottles containing essential oils to be recycled more easily after being collected, enterprises need to innovate the process of designing packages and bottles; switch to environmentally friendly packaging and bottles that are easy and multiple recycle and reuse.
Second, enterprises can use the type of refrigerators which eliminate greenhouse gas emissions and low ozone depletion in products store.
Third, in the process of transportation and distribution, it is necessary to switch from gasoline/ petrol trucks and forklifts to environmentally friendly electric energy vehicles and vehicles using lithium batteries instead of lead-acid batteries. Using such types of vehicles may help significantly reduce greenhouse gas emissions and harmful substances (lead, acid) discharged into the environment.
The diagram in Figure 3 clearly presents the flows of materials and goods in the direction of circular economy in the natural essential oil production: Blue arrows indicate goods that are in normal circulation; red is the waste/ residual flows; green is the material circulation flows.
4. Conclusion and Recommendations
Natural essential oil production is an industry with a lot of potential in both the global and Vietnamese markets. In the general trend of global and Vietnam to transform from traditional linear economic models to circular economic models, aims at connecting economic processes, ensuring materials to be recovered, restored and regenerated, and keeping the materials in use as long as possible, Vietnamese essential oil producing enterprises should be aware of their responsibilities and seize this opportunity. The transition to the circular economy not only helps enterprises in sustainable business, extending the ability to penetrate the global market but also contributes to practicing corporate social and environmental responsibilities.
Enterprises producing natural essential oils in Vietnam should take the following things into account:
- Implementing the transformation to circular economy model in a proactive way, seeking out advanced technology and potential financial sources, carrying out product marketing, improve production and sales skills towards friendly products and efficient business;
- Be aware of the Extended Producer Responsibility (EPR) in the concern of the recall for recycling or treating of all types of packaging, bottles and jars; proactively innovating product and packaging design to make it easier, more convenient, and cost-effective to collect, simultaneously creating a more friendly image for customers;
- Based on the circular economy model to build a Circular Economy Business Model (CEBM) which is suitable to the conditions, circumstances, needs and corporate culture.
In order to orient and promote enterprises to apply the circular economy, the government needs to focus on a number of solutions as follows:
- Quickly complete and promulgate mechanisms and policies to promote the circular economy, complete the guiding policy framework and criteria for the circular economy for production and business sectors and fields; introduce incentive mechanisms related to corporate income tax, value added tax, soft loan and land incentives, increase incentives for businesses to use renewable energy;
- Promoting communication to raise awareness of businesses and stakeholders in the value chain of natural essential oil production as well as public awareness about the need, requirements, models and benefits of natural oil production circular economy; diversifying communication channels, reaping benefit of internet and 4.0 industry;
- Planning and publicizing the planning of raw material growing areas/ regions in order to contribute to strengthening linkages in the production value chain, facilitating enterprises to be proactive in production; localization of supply to reduce transportation distance in order to save costs, reduce fuel consumption, reduce the rate of material loss and damage;
- Promote the development of the recycling industry and the market for recycled products, specially emphasis on recyclable packaging and products in order to promote packaging collecting and recycling activities;
- Boost R&D of high-yield oil harvesting plant varieties as well as technical solutions in a circular economy model to reduce amount of waste/ residues in manufacturing process, reduce negative impacts to resources and the environment;
- Design, build and operate social infrastructure systems in accordance with the requirements of the circular economy;
- Implement effectively the roadmap of greening in the field of transportation, improve emission standards for vehicles, and convert means of transportation in the natural essential oil production industry - an industry of the “material-intensive”, which has a huge demand for transportation.
Le Thu Hoa,hoalethu@neu.edu.vn
Nguyen Quang Huy,huynguyen2002.neu@gmail.com
Vu Tuong Vi,tuongvi8055@gmail.com
Nguyen Dinh Hung,hungsong2119@gmail.com
Lam Thi Bich Ngoc,ngongngoc.bpt@gmail.com
Faculty of Environmental, Climate Change and Urban Studies,
National Economics University, Hanoi, Vietnam
(International Conference ICSEED2023)
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