In our office toilets, we have paper towels and a hand dryer.
Is it better for the environment to use the towels or the dryer to dry hands?
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I have often wondered the same thing. This video by ASAPScience finally answers the question in a satisfying way.
Hygiene: If you do it right, both options are the same in terms of hygiene - but paper towels are faster.
Environment: Dryers win - the energy used is less than what it takes to produce an equivalent amount of paper towel, and of course no trees were cut down.
I think it really depends. For instance, for the towels, are they recycled, composted or what? Are the trees used for the paper easily regrown? For the hand dryer, is it solar powered, or does it rely on something worse for the environment? Hand dryers can be loud and produce more noise pollution than paper towels, but some are quieter. Some paper towel dispensers use electricity, too. Paper towels require disposal, which requires some work from humans.
I think it's pretty tough to tell which is better in the average scenario. Using paper towels actually has the potential to be good for the environment (if the towels are made and disposed of well), however, they also have the potential to be bad. For instance, if they're cutting down rain forests to get paper, that's really bad, because rain forests are said to be difficult to renew. If they're growing poplar trees for paper, that's pretty good and sustainable. Poplars grow like weeds if you let them. Just stick of piece of a branch under the ground and it should grow.
It takes energy to mass produce paper, as they do today, I assume, but I'm not sure how much.
As solar power gets more popular and effective, I would think the hand dryer would be more sustainable, so long as the solar power is, but I think paper isn't necessarily a bad option even then, if they do it right.
I usually just dry my hands on my pants, personally.
Edit: In light of THelper's comment to your question, I would think that hand dryers are generally more sustainable than paper towels. However, if they're solar powered, I would say so for sure, so long as the paneling didn't need to be replaced frequently. Solar power is getting better regularly, these days. If you invest in some panels, I would advise looking for newer technology, since it should be a whole lot better.
I would propose an alternative option, which is to bring a small hand towel with you to the office. You can keep it at your desk and just bring it with you when you need it, taking it home to wash it once in awhile.
I got mine from a company called People Towels, but any small handkerchief-sized towel would probably do.