Marketplace is a public service newsroom powered by you. Give Now

How money gets burned

Jed Kim Mar 13, 2015

How money gets burned

Jed Kim Mar 13, 2015

What happens to money after it becomes too old and worn to be useable?

Until just a few years ago, most of it was sent to landfills. Now, as part of a recycling initiative at the Federal Reserve, hundreds of tons of shredded bills are burned each year to generate electricity.

Officials at the Federal Reserve in Los Angeles said that the program — which has increased the percentage of recycled cash from 30 percent to more than 90 percent since 2010 — has multiple benefits for the region.

“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,” says Deborah Awai, a group vice president at the Federal Reserve Bank of San Francisco.

Deep within the Federal Reserve’s cash-processing facility in Los Angeles on a recent Monday morning, employees were loading bundles of currency into sorting machines that determine whether a bill is still fit enough to stay in circulation, is too old and worn, or is counterfeit.

The Los Angeles branch received 3.1 billion notes of currency in 2014. Good bills are set aside to await their return to circulation. Counterfeit ones are sent to the Secret Service. Lousy notes are shredded.

Nationwide, about 5,000 tons of currency are shredded annually. The shredded currency is recycled in various ways, including composting and manufacturing. About one-third is burned to generate electricity.

The Los Angeles branch burns more currency than any of the other 27 cash processing facilities in the nation.

The conversion occurs at the refuse-to-energy facility in the City of Commerce near Los Angeles. Five days a week, trucks back into the plant’s warehouse and dump garbage into an enormous pit inside.

Matt Eaton, a division engineer with the Los Angeles County Sanitation Districts, said that the facility receives about 100,000 tons of waste from various sources each year. The heat generates enough electricity from its steam turbines to provide power for 20,000 homes.

The approximately 535 tons of shredded money from the Los Angeles cash-processing branch only constitutes a minuscule percentage of the total waste the facility receives. Still, Eaton estimated that energy provided by the burned cash is enough to power 100 homes.

The money is also valuable because it acts as kindling for messier garbage.

“It does burn really well, and it helps support the combustion of some waste we get in that may be wetter or doesn’t burn as easily,” Eaton said.

He said the fact that the cash was recently worth millions of dollars doesn’t phase employees when it arrives.

“It’s treated like any other source of waste. People don’t come out running when we see the currency. If it wasn’t shredded, maybe, but because it’s shredded, no. It’s like any other waste,” Eaton said.

There’s a lot happening in the world.  Through it all, Marketplace is here for you. 

You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible. 

Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.