Good Plastic, Bad Plastic: Good Paper, Bad Paper
Dr Nikki Strickland, Group Director Marketing & Strategy
There are some facts that are undisputed. Single use plastic is bad. We should eliminate the plastics we don't need whilst innovating to ensure that the plastics we need are reusable, recyclable or compostable. This is true of all materials, not just plastics.
There are also some statements that need challenging. Plastic isn't automatically bad. Things labelled as 'natural' aren't necessarily good. The supply chains that service all aspects of global needs are nuanced and complex. Everything we buy and consume has some type of environmental impact. There are environmental trade-offs we make (either consciously or without realising) when we purchase any goods.
As an example, not all cotton used in banknotes is sustainable - cotton cultivation uses a lot of water, severely degrades soil quality and conventional production practices involve the application of substantial fertilizers and pesticides.1 The Eurosystem began to replace standard cotton with sustainable cotton in banknote paper in 2014, targeting 100% sustainable by 20232 but many banknotes are still based on standard cotton and even organic cotton requires agricultural land to grow. Paper substrate production is then an energy and water intensive process, despite recent efforts to reduce its impact.
A force for good
And plastic can be a force for good and an enabler of innovation when used, designed and managed responsibly. You are probably wearing clothing, shoes or glasses with some type of plastic component. Your car is more fuel efficient because it has plastic components that weigh less than the alternatives. The water carried to the sink in your house is carried in plastic pipes because plastic pipes are strong and don't rust. Your phone, television and computer all have plastic components. Plastics enabled the COVID19 vaccine to be developed and stop medicines/vaccines becoming contaminated. It provides protection that extends the growing window of food and packaging that increases the lifetime of food - cucumbers last an extra 14 days when wrapped in plastic and plastic bags reduce the amount of potatoes thrown away by two-thirds3. If you are holding a paper banknote it will also contain plastic in its security features.
Using all materials responsibly
Put simply ... we need to use ALL materials responsibly and it's hard to get away from the fact that plastic is a necessary part of our world. Using materials responsibly means that we need to move towards circular economy principles whereby the value of materials is constantly maximised, rather than wasted, which requires substantial change.
The Ellen Macarthur Foundation agrees:
"Bringing about complete system change isn't a small task. But for companies keen to embrace this thinking, the place to start is upstream innovation - reimagining a product, packaging or business model to design out waste in the first place. Downstream innovations like recycling are still necessary, but it is the upstream efforts that are likely to deliver the widest-reaching changes."
And polymer banknotes are an example of such 'upstream innovation.' Banknotes have been reimagined to produce dramatically less waste in the cash cycle of a country. Polymer banknotes last significantly longer and need replacing less often. So central banks require fewer banknotes over time. Fewer raw materials are consumed and the transport required to replace used notes is also reduced. The banknotes are used hundreds or thousands of times during the lifetime of the banknote and can last for years, making them the exact opposite of single use plastic.
Polymer banknotes are also an example of 'downstream innovation.' It is possible in theory to recycle or compost all banknote substrates with the right equipment and conditions. Cash cycles are perfectly designed to maximise responsible end-of-life disposal - people do not throw away banknotes so they ultimately return to the central bank at the end of their useful life. However, considerably more central banks recycle polymer banknotes, in part because the infrastructure for polymer recycling is more ubiquitous.
Recycled polymer banknotes ultimately become glasses, flowerpots, building materials, pallets and other necessary materials that would have otherwise required virgin plastic.
The discussions in our industry need to move beyond plastic = bad and natural = good. This simplification distracts from the real discussions on how to make our cash cycles more sustainable and causes confusion. Polymer banknotes are NOT single use plastic. They DO NOT end up as waste in the ocean. They are NOT microplastics. Instead they are enabling modern banknotes and have helped some central banks transition from a linear take-make-waste model and move a step closer towards the circular economy.
"We should eliminate the plastics we don't need whilst innovating to ensure that the plastics we need are reusable, recyclable or compostable."
The bigger picture for banknotes
And discussions on banknote substrates should be put into bigger picture context that the environmental impact of all banknotes is relatively low compared to the physical goods they are used to purchase5. In fact, the IMF's recent report 'Digital Currencies and Energy Consumption' includes analysis that suggests banknotes are a very sustainable part of the payments landscape6.
There's more we can do as responsible suppliers, but discussing all the nuances and entering into the next level of debate feels like a good start.
This article first appeared in the July 2022 edition of Currency News.
5. Cash - a Roadmap to Sustainability
6. Annex I: Energy Consumption of the Current Payment System calculates the global annual energy consumption of cash as 8.3 TWh per annum (compared to debit and credit card payments at 39 TWh and Bitcoin at 144 TWh).