Cash and payments
4.3 Environmental impacts of cash supply in 2020: less transport kilometres
Cash supply is one of the most operative tasks of central banks, and therefore it also creates emissions. With the escalation of environmental problems and the climate crisis, central banks, too, have examined the impacts of their operations more closely. On the level of the economy as a whole, cash supply is not a very significant source of CO2 emissions.
The largest environmental impacts of cash supply are generated outside the central banks
The environmental impacts of cash supply are created in production, transport, processing, counting and sorting, and also in storage.
The environmental impacts of banknotes and coins start in the production of the raw material, followed by the production of banknotes and coins, and end in their destruction at the end of their life cycle.
Euro banknote paper is produced from cotton, which consumes natural resources. The Eurosystem is therefore examining the possibilities of replacing the raw material of banknotes in the next series.
The Eurosystem has taken a decision that as of 2022, destroyed banknotes will no longer be taken to landfills but be destroyed by incineration.
The European Central Bank (ECB) will conduct by July 2021 a preliminary study of the total environmental impact of euro banknotes, in accordance with standards approved by the European Commission.
Studies by central banks show that the production and printing of coins and banknote paper account for slightly less than one third of the environmental impact of cash supply.
About half of the environmental impacts related to cash supply by central banks is created in energy consumption in connection with the processing, sorting and storing of banknotes.
The environmental impacts of cash supply are small on the level of the economy as a whole
The largest environmental impacts in cash supply are created in energy consumption outside the central bank: in the production of coins, in private retail transport between stores and the sorting centres of cash management companies, as well as in the electricity consumption of the cash ATM network.
The environmental impact of energy consumption in connection with cash supply is, however, very small in relation to the economy as a whole.
A study conducted in the Netherlands shows that the CO2 emission levels in cash and card payments are similar.
The greenhouse gas emissions of the Finnish economy totalled in 2019 some 52.8 million tonnes of CO2 equivalent. The emissions from cash supply account for approximately 0.03% of the greenhouse gas emissions of the Finnish economy.
The overall volume of cash transports and emissions declined further on 2020. We were constantly seeking solutions to prolong the life of our banknotes.
Total kilometres in cash transports decreasing
The emissions related to cash transports in Finland are estimated separately. The kilometres travelled in cash supply in Finland annually amount to over 9 million, which is 0.02% of the total road transport kilometres covered in Finland.
Total kilometres have been on a downward trend in 2017–2020, most recently due to the COVID-19 pandemic. Over 4/5 of cash transports are local, and their volume has declined in recent years.
The launch of the Notes Held To Order (NHTO) custodial system for cash, together with active measures taken by the parties involved in cash supply, have further reinforced the economical nature of cash processing and reduced the transport kilometres in the entire cash supply chain.
Environmental responsibility is an essential part of the cash supply governance process. The objective is to make more efficient use of energy and extend the lifespan of banknotes.