UK carrier O2 said Monday it will offer customers up to £100 if they opt to hang onto their old handset instead of upgrading when their contract is up for renewal.

The move is being billed as an environmental initiative aimed at reducing individuals’ carbon footprints. O2 estimates that the total CO2 emission from the production and distribution of the average mobile handset is at least 7.5kg.

Under the scheme, customers have the option of receiving a £100 inducement, or £95 plus a £5 donation, which O2 will double, to the O2 Energy Saver fund.

The programme is part of a wider environmental campaign being run in conjunction with UK businesses and retailers called ‘We’re in this Together’.

Environmentally motivated the scheme may be but it clearly stands to benefit O2 as well. A credit of £100 per customer who elects to participate may sound like a fair amount but a cynic would note that it is considerably cheaper than subsidising the latest multimedia handset to the extent that it is provided to the consumer for free.

O2 spokesman Steve Bartholomew maintains, “It’s a win-win situation,” for all concerned. “It’s good for the customer, it’s good for the environment and it does help with our retention and acquisition costs,” he said.

The deal is available to new customers who are happy to carry on using their old handset. “Businesses need to find ways to approach these things in a sustainable manner,” he said.

But if successful, it is unlikely the idea will be such a winner with the handset manufacturing community. Sony Ericsson declined to comment, while a Nokia spokesman expressed puzzlement: “When you’re entering a 3G environment and pushing services like Mobile TV and navigation that need new handsets, this is an interesting thing to do,” he said.

There is no indication from O2 of how many of its 18 million UK customers it expects to take advantage of the offer. According to Bartholomew, however, “a reasonable amount of customers see this as a way of reducing their environmental impact.”

He concedes that the market has historically been handset driven, and that people will always want new phones. “Mobile phones are a great thing and we are driven to have the best range in the market,” he said. “But they should last a lot longer than the 12 months that we are currently seeing.”