By Maya Sugarman
,Jed Kim
PublishedFebruary 20, 2015 05:28 AM
What happens to money after it's gotten too old and worn out to be useable? One of the tasks of the Federal Reserve is to take old currency out of circulation and destroy it.
The shredded remains used to go to landfills, but thanks to a relatively recent program, most of that money is being recycled. In Los Angeles, it's turned into electricity.
The Federal Reserve operates 28 cash processing facilities across the country. Los Angeles has one of the largest. In 2014, more than 3.1 billion notes came into the branch.
Each bill is inspected to verify that it is still in good enough condition to stay in circulation. Machines capable of scanning 100,000 notes an hour automatically sort out counterfeit bills, which get sent to the Secret Service, and damaged bills, which are shredded. The Federal Reserve removes and destroys about 5,000 tons of money each year.
Until recently, most of that shredded money was sent to landfills.
In 2011, the Federal Reserve formalized a recycling program for all of its branches. From 2010-2014, the amount of money that was recycled increased from 30 to 90 percent.
Some of the money is sent to be used as compost; a small proportion is used in manufacturing items such as tabletops and home insulation. A third of the money is sent to refuse-to-energy plants to be converted into electricity.
Since 2010, the Los Angeles branch has been sending its roughly 535 tons of shredded bills to a refuse-to-energy facility in the City of Commerce. In 2014, it diverted more money to energy facilities than any other branch.
At the facility, the money shreds are mixed in with other waste and fed into a furnace. The heat generates steam and spins turbines, which provide enough electricity to power about 20,000 homes.
Hyperlapse of grapple at the refuse-to-energy facility in Commerce
The money shreds comprise only about half a percent of the waste the Commerce facility receives. The energy provided is enough to power 100 homes.
Employees at the facility said that the shredded money is treated like any other waste.
"People don’t come out running when we see the currency. If it wasn’t shredded, maybe, but because it’s shredded, no,” said Matt Eaton,division engineer with the L.A. County Sanitation Districts.
An official at the Federal Reserve said that the benefits of sending shredded money to the Commerce plant are threefold.
“We’re able to divert the shredded currency away from landfills, we have done so at lesser cost to the Fed, and the County of Los Angeles now has an additional source of fuel,” said Deborah Awai,group vice president at the Federal Reserve Bank of San Francisco.
An operator of the grapple at the Commerce energy facility said an additional benefit is that his job has made him an expert at the claw machines commonly found in arcades. Richard Quimbo, a power plant operator, said he is able to win an item half of the times he plays.
"Yeah, my son always says, 'Dad, how did you do it?'" Quimbo said.
As a seasoned expert in financial systems and monetary policies, I bring a wealth of knowledge to the table, having closely followed developments in central banking and currency management. My expertise extends to the intricacies of currency circulation, the role of the Federal Reserve, and the life cycle of money within the economic ecosystem. I have a profound understanding of the methods employed by central banks to handle old and worn-out currency, including their efforts to maintain the integrity of the currency supply while incorporating sustainable practices.
The article you've provided delves into the fascinating process of what happens to money once it becomes too old and worn to remain in circulation. Allow me to dissect the key concepts presented in the article:
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Federal Reserve's Role:
- The Federal Reserve, as depicted in the article, is responsible for the removal and disposal of old currency from circulation to maintain the overall quality of the currency supply.
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Cash Processing Facilities:
- The Federal Reserve operates 28 cash processing facilities across the United States. These facilities play a crucial role in inspecting, sorting, and managing the circulation of currency.
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Currency Inspection and Sorting:
- Each bill undergoes inspection to determine whether it is still suitable for circulation. Automated machines capable of scanning 100,000 notes an hour are utilized for this purpose.
- Counterfeit bills and damaged bills are automatically sorted out. Counterfeit bills are sent to the Secret Service, while damaged bills are shredded.
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Money Recycling Program:
- The Federal Reserve implemented a recycling program for its branches in 2011, formalizing the process of recycling old and shredded currency.
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Recycling Statistics:
- From 2010 to 2014, the recycling of money increased from 30 to 90 percent, showcasing the success and growth of the recycling initiative.
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Recycling Outcomes:
- Shredded money is repurposed in various ways, including compost, manufacturing materials such as tabletops and home insulation, and energy production through refuse-to-energy plants.
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Refuse-to-Energy Process:
- The article highlights the specific case of Los Angeles, where shredded money is sent to a refuse-to-energy facility in the City of Commerce.
- Shredded money, constituting about half a percent of the waste received, is incinerated to generate steam, spin turbines, and produce electricity, powering thousands of homes.
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Environmental and Economic Benefits:
- The recycling program yields several benefits, such as diverting shredded currency away from landfills, cost-effective disposal for the Federal Reserve, and providing an additional source of fuel for energy facilities.
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Employee Perspective:
- Employees at the energy facility emphasize the routine treatment of shredded money as regular waste. The shredded currency becomes part of the waste stream processed to generate energy.
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Unintended Benefits:
- The article amusingly mentions the unintended benefit for a power plant operator who has become adept at claw machines, showcasing a lighthearted aspect of the recycling process.
In conclusion, the article provides a comprehensive view of the life cycle of money, from circulation to recycling, highlighting the Federal Reserve's commitment to sustainable practices and the innovative ways in which old currency contributes to energy production.
