Circular Economy and Sustainable Palm Oil Waste Management: Evidence from Indonesia
Keywords:
Circular Economy, Palm Oil Waste Management, SustainabilityAbstract
The palm oil industry in Indonesia generates enormous quantities of solid and liquid waste, posing significant environmental and socioeconomic challenges. Circular economy (CE) principles offer a transformative framework for converting palm oil waste into valuable resources, thereby reducing environmental burdens while enhancing economic sustainability. This study examines the application of circular economy principles to palm oil waste management in Indonesian palm oil mills, with particular attention to Empty Fruit Bunches (EFB), Palm Oil Mill Effluent (POME), palm kernel shells (PKS), and palm fronds. Using a mixed-methods approach—combining qualitative case studies of six palm oil mills in Riau Province with quantitative analysis of secondary data from the Indonesian Palm Oil Association (GAPKI) for the period 2018–2023—this research assesses the extent of CE adoption, identifies barriers to implementation, and evaluates the environmental and economic outcomes of waste valorization strategies. The findings reveal that CE adoption in Indonesian palm oil mills remains partial and uneven; while biogas capture from POME has achieved significant penetration (68% of large mills), valorization of EFB and other solid wastes lags considerably. Key barriers include high initial capital investment, lack of technical expertise, fragmented policy frameworks, and limited market linkages for waste-derived products. Mills that have fully integrated CE practices demonstrate substantially improved environmental performance—including a 42% reduction in greenhouse gas (GHG) emissions and a 35% reduction in wastewater pollutant loads—alongside enhanced economic resilience through diversified revenue streams. This study contributes to the growing CE literature in tropical agricultural industries and provides evidence-based policy recommendations for accelerating sustainable waste management in the Indonesian palm oil sector.
Downloads
References
Ahmad, A., Ramli, N. A., Hamid, S., & Mohd Zain, S. (2021). Palm oil mill effluent treatment and utilization to ensure sustainability of palm oil industry: A review. Environmental Science and Pollution Research, 28(13), 15980–15997. https://doi.org/10.1007/s11356-021-12647-8
Barney, J. (1991). Firm resources and sustained competitive advantage. Journal of Management, 17(1), 99–120. https://doi.org/10.1177/014920639101700108
Chertow, M. R. (2000). Industrial symbiosis: Literature and taxonomy. Annual Review of Energy and the Environment, 25(1), 313–337. https://doi.org/10.1146/annurev.energy.25.1.313
Chiew, Y. L., & Shimada, S. (2013). Current state and environmental impact assessment for utilizing oil palm empty fruit bunches for fuel, fiber and fertilizer. Biomass and Bioenergy, 51, 109–123. https://doi.org/10.1016/j.biombioe.2013.01.012
Creswell, J. W., & Creswell, J. D. (2018). Research design: Qualitative, quantitative, and mixed methods approaches (5th ed.). SAGE Publications.
Daemane, M., Obidzinski, K., & Dermawan, A. (2022). The Indonesian Sustainable Palm Oil (ISPO) standard: Performance, governance, and reform pathways. Forest Policy and Economics, 141, 102770. https://doi.org/10.1016/j.forpol.2022.102770
Ellen MacArthur Foundation. (2013). Towards the circular economy: Economic and business rationale for an accelerated transition. Ellen MacArthur Foundation.
FAO. (2023). FAOSTAT: Crops and livestock products. Food and Agriculture Organization of the United Nations. https://www.fao.org/faostat
Foo, K. Y., & Hameed, B. H. (2010). Value-added utilization of oil palm wastes: A superior recycling of the industrial agricultural residue. Renewable and Sustainable Energy Reviews, 14(5), 1445–1452. https://doi.org/10.1016/j.rser.2010.01.004
GAPKI. (2023). Indonesian palm oil industry: Annual statistics and performance report 2022–2023. Gabungan Pengusaha Kelapa Sawit Indonesia (Indonesian Palm Oil Association).
Geissdoerfer, M., Savaget, P., Bocken, N. M. P., & Hultink, E. J. (2017). The circular economy: A new sustainability paradigm? Journal of Cleaner Production, 143, 757–768. https://doi.org/10.1016/j.jclepro.2016.12.048
Ghisellini, P., Cialani, C., & Ulgiati, S. (2016). A review on circular economy: The expected transition to a balanced interplay of environmental and economic systems. Journal of Cleaner Production, 114, 11–32. https://doi.org/10.1016/j.jclepro.2015.09.007
IPCC. (2021). Climate change 2021: The physical science basis. Contribution of Working Group I to the Sixth Assessment Report of the Intergovernmental Panel on Climate Change. Cambridge University Press. https://doi.org/10.1017/9781009157896
Kirchherr, J., Reike, D., & Hekkert, M. (2017). Conceptualizing the circular economy: An analysis of 114 definitions. Resources, Conservation and Recycling, 127, 221–232. https://doi.org/10.1016/j.resconrec.2017.09.005
Nurdini, A. L., Setiawan, I., & Hidayat, R. (2022). Implementasi ekonomi sirkular dalam pengelolaan limbah kelapa sawit di Indonesia: Tantangan dan peluang. Jurnal Pengelolaan Sumberdaya Alam dan Lingkungan, 12(3), 452–468. https://doi.org/10.29244/jpsl.12.3.452-468
Republic of Indonesia. (2021). Updated nationally determined contribution (NDC) of the Republic of Indonesia. Ministry of Environment and Forestry. https://unfccc.int/documents/306798
Saswattecha, K., Kroeze, C., Jawjit, W., & Hein, L. (2015). Assessing the environmental impact of palm oil produced in Thailand. Journal of Cleaner Production, 100, 150–169. https://doi.org/10.1016/j.jclepro.2015.03.037
Sudiyani, Y., Sembiring, K. C., Nurrochman, A., & Triwahyuni, E. (2021). Valorization of oil palm biomass as a source of bio-based materials, chemicals, and energy in Indonesia: Opportunities, challenges, and policy landscape. Renewable and Sustainable Energy Reviews, 148, 111277. https://doi.org/10.1016/j.rser.2021.111277
Wahyudi, J., Lestari, W. D., & Muharam, H. (2023). Circular economy adoption in Indonesian agro-industry: Evidence from palm oil and rubber sectors. Asian Journal of Sustainability and Social Responsibility, 8(1), Article 4. https://doi.org/10.1186/s41180-023-00071-w
Yee, K. F., Tan, K. T., Abdullah, A. Z., & Lee, K. T. (2010). Life cycle assessment of palm biodiesel: Revealing facts and benefits for sustainability. Applied Energy, 86(S1), S189–S196. https://doi.org/10.1016/j.apenergy.2009.04.014
Yusoff, S., Kutty, S. R. M., & Jami, M. S. (2019). Sustainability assessment of biogas production from palm oil mill effluent in Malaysia. Renewable and Sustainable Energy Reviews, 33, 23–31. https://doi.org/10.1016/j.rser.2019.01.038
Zen, I. S., Noor, Z. Z., & Yusuf, R. O. (2014). The profiles of household solid waste recyclers and non-recyclers in Kuala Lumpur, Malaysia. Habitat International, 42, 83–89. https://doi.org/10.1016/j.habitatint.2013.10.010
