Coins, banknotes and climate change

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I have not done any quantified research, because the data are lacking. What is said below is intuitive, but I have tried to stick to generalities.

Making coins contributes to climate change in at least three ways.

Mining metal is a carbon intensive business. It doesn't help much to re-cycle worn coins: it requires large amounts of energy, most probably generated by oil. In a Paris agreement world, that energy would presumably be replaced by electricity, generated by gas or nuclear plants at worst, solar or wind energy at best. There is a strong case for seeking light-weight alternatives to metallic coins. Making all transactions electronic would be even more efficient, but it would be undesirable in view of the social function of coins.

Minting coins doesn't look too bad. Presses are already electric and quite energy-efficient. Still, there is a case for using less oil-based plastics and metal in the machinery. If that entails slower presses, that should not be a big problem. Demand for coins is declining and machines are getting smaller anyway due to miniaturisation.

Coin transport is a big worry. Metallic coins are heavy in large quantities. Transport is one of the most carbon-intensive economic activities. Fortunately, much progress is made or in the pipeline. Hybrid busses are efficient, cheaper than petrol and diesel (even more so when the subsidies to petrol and diesel are taken into account) and fully electric busses are already running, so electric and hybrid trucks should be just around the corner. Still, there is a case for smaller, more dispersed mintage and for cross-border co-operation to minimalise transport cost.

The case for banknotes is much worse. Their only advantage is a relatively light weight, which facilitates transport. Paper production destroys the very plants that can absorb carbon. Ink and paint is more or less oil-based. The paper is too hard to recycle and is often burnt, which is directly turning old banknotes into carbon, spewed into the air, endangering lives and the economy more than COVID-19 does. Moreover, smaller denomination banknotes last only a few months or less.

The plastic notes are even worse. They use oil-based plastics and are hard to destroy, so they have all the disadvantages of paper notes plus extra pollution. There is a most excellent case to stop banknote production altogether and replace them partly with electronic transactions, partly with non-metallic, high denomination coins.

Metallic coins and paper notes are well over 2000 years old inventions. The world has changed since. It is changing even quicker with the threat of climate change approaching. It is high time to think differently about what coins and banknotes should look like. What are your ideas?

Peter