Life Cycle Assessment of Cash Payments

31 Pages Posted: 18 Oct 2018

See all articles by Randall Hanegraaf

Randall Hanegraaf

Independent

Nicole Jonker

De Nederlandsche Bank (DNB); De Nederlandsche Bank

Steven Mandley

Independent

Jelle Miedema

De Nederlandsche Bank

Date Written: October 9, 2018

Abstract

Purpose: This study quantifies the impact of the Dutch cash payment system on the environment and on climate change using a life cycle assessment (LCA). It examines both the impact of coins and of banknotes. In addition, it identifies areas within the cash payment system where the impact on the environment and on the climate can be reduced. Methods: The ReCiPe endpoint (H) impact method was used for this LCA. The cash payment system has been divided into five subsystems: the production of banknotes, the production of coins, the operation phase, the end of life of banknotes and the end of life of coins. Two functional units were used: 1) cumulative cash payments in the Netherlands in 2015 and 2) the average single cash payment in the Netherlands in 2015. Input data for all processes within each subsystem was collected through interviews and literature study. Ten key companies and authorities in the cash payment chain contributed data, i.e. the Dutch central bank, the Royal Dutch Mint, a commercial bank, a cash logistic service provider, two cash-in-transit companies, two printing works, an ATM manufacturer and a municipal waste incinerator. Results and discussion: The environmental impact of the Dutch cash payment system in 2015 was 2.35 MPt (expressed in eco points) and its global warming potential (GWP) was 17 million kg CO2 equivalents (CO2e). For an average single cash transaction the environmental impact was 637 ┬ÁPt and the GWP was 4.6 g CO2e. The operation phase (e.g. energy use of ATMs, transport of banknotes and coins) (64%) and coin production phase (32%) had the largest impact on the environment, while the operation phase also had the largest impact on climate change (88%). Finally, scenario analysis shows that reductions of the environmental impact (51%) and the impact on climate change (55%) could be achieved by implementing a number of measures, namely: reducing the number of ATMs, stimulating the use of renewable energy in ATMs, introducing hybrid trucks for cash transport and matching coins with other countries in the euro area. Conclusions: This is the first study that investigates the environmental impact and GWP of the cash payment system in the Netherlands, by taking both the impact of banknotes and coins into account. The total environmental impact of cash payments in 2015 was 2.35 MPt and their GWP was 17 million kg CO2e.

Keywords: Cash payment system, coins, banknotes, LCA, environmental impact, GWP

JEL Classification: E42, Q54, Q56

Suggested Citation

Hanegraaf, Randall and Jonker, Nicole and Mandley, Steven and Miedema, Jelle, Life Cycle Assessment of Cash Payments (October 9, 2018). De Nederlandsche Bank Working Paper No. 610. Available at SSRN: https://ssrn.com/abstract=3267868 or http://dx.doi.org/10.2139/ssrn.3267868

Randall Hanegraaf

Independent

No Address Available

Nicole Jonker (Contact Author)

De Nederlandsche Bank (DNB) ( email )

P.O. Box 98
Amsterdam, 1000 AB
Netherlands

De Nederlandsche Bank ( email )

PO Box 98
1000 AB Amsterdam
Amsterdam, 1000 AB
Netherlands

Steven Mandley

Independent

No Address Available

Jelle Miedema

De Nederlandsche Bank ( email )

PO Box 98
1000 AB Amsterdam
Amsterdam, 1000 AB
Netherlands

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