How sustainable is cash?

Datum 13 juni 2019

As part of their graduation project, trainees Atakan Larcin and Randall Hanegraaf from Utrecht University (UU) studied the sustainability of cash. They looked at the impact of the use of banknotes and coins on the environment and on climate change in particular, using data on cash payments in the Netherlands in 2015.

2.4 million eco points

The impact of cash payments on the environment amounted to 2.4 million eco points in 2015. This equals the environmental impact of all goods and services used by 2,400 Dutch citizens in a year. The impact on climate change in carbon emission equivalents amounted to 19 million kgs of carbon. This equals the emissions of 8,000 cars in a year. The impact on climate change of cash payment systems is relatively modest compared to the impact of the Dutch economy as a whole and amounts to 0.01% of the total impact. Even so, the impact could be brought down even further.

Impact of cash transport

Banknote and coin transports have the largest environmental impact. The main component here is fossil fuel consumption by the trucks that move the cash between ATMs, retailers and cash distribution centres. Next in line is copper ore extraction for coin production. A further key contributor to the ecological footprint of cash is the power consumption of ATMs (see Figure 1).

Figure 1: Use of fossil fuels in cash transports accounts for the largest environmental and climate change impact

a. Environmental impact

Environmental impact

b. Climate change impact

Climate change impact

DNB's sustainability efforts

DNB promotes the exchange and trade of coins with other euro area countries to lower total coin production. For example, we sold 10.5 million 1 and 2 eurocent coins to the central bank of Luxembourg. We also support the Geldmaat (formerly known as Geldservice Nederland) initiative to set up a jointly exploited, nation-wide network of ATMs. This will reduce the number of ATMs required while maintaining the same level of availability, which in turn will help reduce energy consumption and cash transport fuel consumption.

Banknote durability

Banknotes that last longer need to be replaced less often. This will help reduce the environmental impact of new banknote production. We are making efforts to improve the banknote sorting process, enabling a more efficient distinction between suitable and unsuitable banknotes. We also try to lengthen the life cycle of banknotes by making technological improvements, such as applying a protective coating on EUR 5 and EUR 10 banknotes to prevent dirt from accumulating.

Sustainable payments in the Netherlands

In the next few years, we plan to map the sustainability of the Dutch financial core infrastructure (FCI). We conducted several studies into the sustainability of debit card and cash payments. They showed that the impact on the environment and climate change of debit card payments is lower compared to the impact of cash payments. We have shared the outcomes with market operators and central banks to enable them to improve sustainability in their organisations and the FCI.

Would you like to know more?

The study Life cycle assessment of cash payments in the Netherlands by Randall Hanegraaf (UU), Atakan Larcin (UU), Nicole Jonker (DNB), Steven Mandley (UU) and Jelle Miedema (DNB) will be published in the International Journal of Life Cycle Assessment and will be available soon.