The Bank of England is considering using palm oil or coconut oil in the production of the new 20- pound note, following criticism of the use of animal fats in the plastic 5-pound notes from Hindus, Sikhs and vegetarians.
The new 20-pound note is due to be introduced by 2020, but the tender for production has been put on hold, the BBC reported today.
The Bank said it was now assessing whether palm oil or coconut oil should be used instead.
Hindus, Sikhs, Jains, vegetarians and others in the UK have objected to the tallow used in plastic notes. Tallow is a hard, fatty substance made from rendered animal fat. It is commonly used to make soap and candle.
The Hindu Council UK members had met BoE representatives last month to explain that as Hindus see the cow as a symbol of grace and veneration, the use of tallow made from beef fat in the notes went against their beliefs.
Meanwhile, the BoE's new announcement has been opposed by conservation groups, who warned that palm oil production can wreck rainforests and displace people living in them, the report said.
"It would depend on where the Bank of England source it," said Rachel Agnew of the Rainforest Foundation. "Whether it is sustainable is the issue."
Palm oil production was responsible for 8 per cent of the world's deforestation between 1990 and 2008. Palm oil has been blamed for deforestation in countries like Indonesia.
However, in its statement, the Bank of England says it is committed to using sustainable levels of palm oil, should that eventually be chosen for the new notes.
It says that the amounts of oil needed are so small that there would be no need for an increase in global production.
The BoE has also published an independent report on the separate environmental impacts of palm oil, coconut oil and tallow.
Nevertheless the Rainforest Foundation takes issue on how sustainability is certified.
Doug Maw, who started a petition about the use of animal fat in the fiver, said he was disappointed by the Bank's decision to consider palm oil.
He met the Bank's chief cashier, Victoria Cleland, in January to discuss the issue.
"In my meeting I highlighted palm oil as something they should avoid doing," he said.
"The destruction of habitat caused by over-production of palm oil is contributing to the near-extinction of the orangutan."
The existing 5-pound plastic note, and the new 10-pound note due for release in September, will continue to use trace amounts of animal fat, the report said.
The Bank has said it is not practical to change the way such notes are made.
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