Starting in 2020, the European Central Bank (ECB), together with the national central banks (NCBs), has been measuring the environmental footprint of the second series of euro banknotes as a means of payment in the Eurosystem using 2019 as the base year. The environmental study is based on the Product Environmental Footprint (PEF) methodology. This is a standardised European Commission methodology of a life cycle assessment for identifying the environmental impact of products throughout their life cycle. The environmental impact is summarised as a single environmental indicator expressed in micropoints (µPt) in order to quantify the overall environmental impact of a product and to draw comparisons with other products and activities. 

The PEF study for euro banknotes finds that the overall environmental impact of the average annual value of cash payments per euro area citizen in 2019 is very low, equivalent to a euro area citizen driving a standard car for 8 kilometres or only 0.01% of the total environmental impact of an EU citizen’s annual overall consumption activity. To further illustrate just how small the impact of banknote payments is, the results are also compared those of everyday products:

1. the production of a T-shirt that is washed once a week for a year is comparable to driving 55 kilometres, and
2. the number of plastic bottles consumed by a euro area citizen in one year is equivalent to driving 272 kilometres.

The score for the PEF study is 101 µPt. The main activities contributing to the environmental footprint of banknotes are the powering of ATMs (37%), transportation (35%), NCBs’, CIT companies’ and banks’ processing activities in the distribution stage (10%), paper manufacturing (9%), and energy consumption of the authentication of banknotes at the point of sale (POS) in the use stage (5%). For the banknotes’ end-of-life stage, the contribution to the overall result is even negative (-0.15%), as the incineration of banknotes involves energy recovery and thus has a positive PEF impact.

Banknote production and distribution account for, respectively, 13% and 87% of the score. The comparatively low production share is due to the long lifetime of banknotes and the fact that banknotes are used for many payments.

Since euro cash was first introduced, efforts have been made to reduce the euro’s environmental footprint. For example, in 2014 the Eurosystem launched the Sustainable Cotton Programme, under which conventional cotton fibres were to be progressively substituted with 100% sustainable cotton fibres in banknote production by end-2023. In addition, ATM manufacturers have also been making significant efforts of their own. Improvements in the energy efficiency of ATMs have contributed to a 35% decrease in the score between 2004 and 2019.

Even though the environmental impact of payments with euro banknotes is overall very low, the Eurosystem will continue to work on reducing it further whilst ensuring that cash remains widely available and accessible to the public. In addition, this environmental study will also inform the development of the future series of euro banknotes with a view to making them as environmentally friendly as possible upfront. Similar or partial studies will be carried out by the Eurosystem again in due course.