Paper production, transportation, electricity consumption for authenticity checks, and the operation of ATMs or waste products generated by cash handlers and financial institutions: This list suggests an immense ecological footprint for banknotes. However, when thinking of the somewhat worn-looking bills in one's own wallet, a counter-argument quickly arises. Banknotes can boast a long lifespan. How their overall environmental impact stands is shown in a study by the European Central Bank.
Regularly in Focus: Environmental Impact
At the end of 2023, a study on the environmental impact of euro banknotes was published. The focus was on the entire lifecycle of a banknote, from raw material procurement and manufacturing to the distribution and circulation of euro banknotes, and finally to their end of life, incineration. To effectively assess this network, the ECB relied on the Product Environmental Footprint (PEF) method of the European Commission. Its advantage: The standardized approach for various products and activities allows for comparisons. More on that later.
For the first time, the ECB did not scrutinize its euro banknotes in recent years. As early as 2004, the notes were subjected to a life cycle assessment. The results at the time revealed initial optimization potentials, which those responsible implemented by switching to sustainable cotton for banknote paper (Sustainable Cotton Programme). However, the two studies cannot be compared since they are based on different units of analysis and methods.
A Matter of Comparison
But what result did the study, which refers to the year 2019, ultimately reach? What is the size of the ecological footprint of euro banknotes? The answer: quite small. Here, the previously mentioned comparisons help. The environmental footprint resulting from the use of notes per person per year corresponds to an eight-kilometer drive. Of an EU citizen's annual consumption behavior, the environmental impact of EU banknotes accounts for only 0.01 percent.
To delve into the scientific once again:
- – The environmental indicator, which can be calculated using the PEF method, is 101 µPt (micropoints) for annual cash payments per person in the euro area.
- – 1,003,686 µPt are the total annual environmental impacts per person.
This comparison also gains clarity via the driving distance metaphor. Thus, the annual environmental impact of an EU citizen can be converted into 79,575 kilometers traveled, which is almost two circumferences of the globe.
The question of whether banknotes are more environmentally friendly than other means of payment remains unresolved. Comparable analyses of alternative payment options are missing here.
Cash: More than Ecological!
The ECB does not rest on these results. To continue offering cash as securely and sustainably as possible while ensuring availability and public accessibility. For those pleased by the good news that cash performs well ecologically: It can do more! Security, transparency, and efficiency can easily be integrated into cash management. Whether at the point of sale, in terms of cash recycling, or regarding cash logistics and traceability – there are many sensible approaches.
Environmentally friendly, secure, transparent, efficient: Discover what cash can achieve!