Are Polymer Banknotes: an Eco-Friendly Trend or a Groundswell?

Often touted as a symbol of currency modernization, polymer banknotes have seen an apparent surge in popularity in recent years. However, a closer look reveals that this trend isn’t as universal as initially perceived, and is certainly not greener or safer than traditional paper banknotes.  

We have talked about ways to reduce plastic waste in your own home. However, there are things society needs to do at a larger level to deal with this growing problem.

A while ago, UN member states concluded the 5th session of the Intergovernmental Negotiating Committee on the Global Plastics Treaty in Busan, South Korea.   If the negotiations had been successful, the world could have received the first-ever global, legally binding instrument to end plastic pollution. However, this didn’t happen, as the parties failed to agree on several issues.  

The problem, however, is still pressing. Global production and use of plastics is set to reach 736 million tons (Mt) by 2040, up 70% from 435 Mt in 2020, jeopardizing all inhabitants of the planet and their future generations. Despite the lack of unanimous agreement on the issue of plastic pollution, popular opinion holds that we must continue to reduce plastic consumption. And, given the situation, continued news of newly introduced plastic items seems ever stranger.  

We are talking specifically about new polymer banknotes. They appear every once in a while, and 2025 has already seen the issue of polymer bills in the Philippines. The few issuers justify their choices by saying that polymer banknotes are more environmentally friendly and safer than their paper counterparts. However, most central banks dismiss these debatable arguments and still firmly adhere to traditional banknotes.  

Environmental differences of paper and plastic productions 

While polymer banknotes are often touted for their supposed eco-friendliness, a closer look reveals that this is quite a loose statement. Paper cash is produced using sustainable practices and even incorporates recycled materials, minimizing its environmental footprint. For instance, all euro banknotes printed for De Nederlandsche Bank, the central bank of the Netherlands, are made of cotton scraps, which is essentially cotton waste left after processing cotton balls in the clothing industry. In the process of combing the balls, small bits come off. Otherwise useless, they come in handy for currency paper manufacturers. This process benefits both industries: it solves the problem of waste for the cotton industry and provides banknote printers with a durable commodity that can easily withstand even a washing machine test.  

Polymer banknotes are durable as well, but their main difference lies in another dimension. They are made not from renewable natural material, but from synthetic polypropylene, a petroleum-based plastic notorious for its carbon footprint and the potential for contributing to microplastic pollution. Its manufacturing process has extremely high impacts on global warming potential, fossil resource depletion, human toxicity, and other parameters, with the widespread use of polypropylene expected to contribute 1.3 billion tons of CO2 to the atmosphere.  

The production of cotton and cotton paper also leaves a certain carbon footprint. Nevertheless, the process has great potential for environmental impact reduction: for example, the U.S. cotton industry has recorded a 25% cut in greenhouse gas (GHG) emissions since 1980, with further targets ahead. This is achieved through enhanced production efficiency, regenerative farming, renewable energy, and other innovative practices. For plastics, however, the picture is different: the extraction of raw materials is an energy-intensive process, and its chemical composition and production method cannot be changed to be more environmentally friendly. All of this turns attempts to make the plastic production process greener into an unpromising endeavor.  

Security and lifespan of paper and polymer cash

Next, let’s look at the period of actual use of banknotes. The main argument in favor of polymer bills is their longevity and increased security, which is presented as eco-friendliness. Indeed, plastic generally lasts significantly longer than paper – but not in the banknote industry. For comparison, let’s first look at the estimated lifespan of the U.S. dollar, which is printed on banknote paper and continues to be in active use. The lifespan of small denominations ($1, $5, $10), which happen to be the most popular, ranges from 4.7 to 6.6 years. These figures are achieved due to strict quality criteria that allow for increased durability.  

Now consider the case of the Bank of England, one of the most ardent proponents of polymer banknotes. Longevity in circulation was one of the main arguments for the introduction of the new bills, with up to 10 years of life forecasted for each plastic note. Reality, however, has taken its toll: by 2022, nearly 50 million polymer £5 and £10 banknotes had to be replaced due to wear and tear since they were first launched in September 2016. A simple calculation shows that they have been in circulation for about five years at best—which compares well with the figures for the U.S. dollar.  

The same goes for the supposedly better security: in the case of polymer banknotes, security features are either printed or added through methods and equipment similar to those found in the mass market, which ultimately makes the notes easier for counterfeiters to replicate. Conversely, notes made from paper have their security elements completely integrated into the substrate, whether applied or printed. Replicating this process poses a tough task for criminals, which is proven by the ranking of the world’s most secure banknotes, with the first two places occupied by paper bills.  

What happens after a banknote ends its life

Our final point concerns end-of-life banknotes. Once taken out of circulation, both paper and plastic bills are sent to special plants. For polymer cash, this is often done for recycling: Australian cash, for example, is granulated, melted, and blended into raw material pellets suitable for making new products. Paper banknotes can be destined for a similar path, and modern technologies make it possible to use the recovered cellulose for printing new banknotes as well—as does Casa da Moeda do Brasil, the Brazilian Mint, which employs an advanced high oxidation process and fiber extraction to print new money.  

Generally, recyclability doesn’t matter per se, as both types of banknotes can be repurposed. The difference becomes obvious after the release of the recycled product: after a bank hands over polymer banknotes for recycling, it relinquishes its responsibility for their future. Meanwhile, an item made from recycled plastic pellets re-enters daily circulation and sooner or later ends up in a landfill. There, it starts releasing cadmium, a carcinogen toxic to plants and animals, and becomes a source of microplastics in soil, water, animal and human bodies, and basically everywhere. This is now a concern for governments and ordinary citizens. Let’s remember, however, that the original customers of virgin plastic production were the central banks—and had it not been for the choice they once made, the amount of this environmental pollutant would have been less.  

End-of-life paper banknotes contain approximately 85% cotton by weight. During decomposition, they turn into natural biomass and can be further used as a soil improver through composting.  Banks using paper banknotes often have a higher level of responsibility, sometimes expressed in initiating and sponsoring studies on recycling paper banknotes. For example, the State Bank of Pakistan in 2021 found that the gross calorific value of shredded banknote briquettes is higher than that of coal, making them suitable for energy recovery.   It is common practice for central banks opting for paper cash to sign contracts with sustainable waste management companies, like the Colombian central bank paying the full cost of composting the bills, including transportation. 

Essentially, an examination of the environmental impact reveals that paper banknotes can be an eco-friendlier currency option. This is something eco-friendly investors should be aware of. This conclusion, however, hinges critically on the quality and sustainability of the paper substrate. High-quality paper banknotes, crafted from responsibly sourced and recycled fibers, exhibit durability and security comparable to, or even exceeding, that of polymer notes. By rejecting polymer bills and prioritizing the use of sustainable paper substrates, and by implementing eco-conscious production and waste management practices, central banks and currency manufacturers can ensure that their cash remains a viable and environmentally responsible currency option for years to come.