Q&A: The possibilities of green public procurement with Astrid Nilsson Lewis

All these terms relate to when public sector actors buy something, but in a strategic way to fulfill goals beyond buying for a good price, like better jobs or less environmental impacts. In my view, best societal value for taxpayer money should be the overarching vision here.

We focus on green public procurement (GPP), which, according to the European Commission’s definition, is a process whereby public authorities seek to procure goods, services and works with a reduced environmental impact throughout their life cycle when compared to goods, services and works with the same primary function that could otherwise be procured.

To simplify, the aim is to buy an alternative product or service that has a lower environmental impact. Environmental impact here could mean a variety of things. It could go from water pollution, water use, eutrophication to impacts on climate change.

Public procurement represents 10 to 20% of GDP in the countries that we have looked at. If 10 to 20% of the economy basically changes their way of purchasing, that can send strong market signals for suppliers to improve their products and make better societal impact.

In our study, we focus on the impact on climate change, with the idea that green public procurement can be used to accelerate the decarbonization of key industrial sectors and therefore help achieve climate targets.

Within this idea that green public procurement can be used to influence the market towards faster decarbonization, we found that these two sectors, construction and road transport, are very high-emitting sectors. Each represents about 12% of public procurements’ GHG emissions globally.

And, these sectors are also difficult to decarbonize because they rely on deep technological shifts. We’re thinking here of changing modes of transportation, electrifying vehicles, completely transforming the steelmaking processes and developing carbon capture and storage facilities.

These are big industrial transformations that require clear market signals for these investments to feel safe. Basically, the public sector saying, “We have your back. If you make these risky big investments that will mature 10 years down the line, there will be demand for your products: We will be buying them!” And we need these industries to start investing in these transformations now to be able to meet climate targets.

In the case of construction, the public sector represents a large share of their income. Because municipalities, regions and countries buy large infrastructure projects, green public procurement can have an even bigger impact in that particular sector.

This also shows that GPP is a way for the public sector to reduce its own carbon footprint. In my opinion, the public sector should lead by example and decarbonize faster than the rest of society, and GPP is a powerful way to do so.

It’s really a patchwork at the at the moment. Basically, we see that in the EU and most Member States, there is a recognition that GPP is a powerful tool to achieve climate targets, and most countries have action plans and targets in place. But everyone is doing it a little bit differently, and there are large gap between these targets and the actual use of GPP.

At the same time, we see that all kinds of good examples of cities, regions and countries being really creative and innovative in their ways.

To summarize, there are still difficulties making these practices systematic. The real impact of green public procurement comes when you do it at scale and with consistency, and that is not the case today. So in that sense, there’s a lot to do to unlock the full potential of GPP as a tool for decarbonization.

We found quite a few of them, and they come at different levels.

Day to day, public procurement is performed by procurement officers in municipalities and other public authorities. Actually, the majority of public procurements are performed at sub-national levels. So we’re talking about lots of people that have to change their way of thinking about their job, and there we see that there’s still lack of knowledge and awareness at the procurement officer level and in the organizations they work in.

In addition, learning new ways requires time, budget and capacity, to spend more time on each procurement to engage with the market, assess new ways of procuring things and so on. You need to start asking yourself: Do we really need to procure here, or could we rearrange the way we use existing resources? Could we procure it as a service instead of a product? Are there new alternative products on the market that could fit our purpose?

It’s not a small task to demand of procuring organization and their procurement officers. That’s why the lack of resources and capacity is a big limitation.

And then on top of these administrative issues, there’s also lack of standardized data and reporting systems to easily compare and evaluate products. That’s a more systematic problem that we think should be solved that at the EU level.

Another aspect that is important for the procurement officers, is the fear of litigation and disputes, or also the fear of not getting enough offers. When they try something new, what could happen is no one answers your tender, or you get questioned and potentially pushed into disputes. Legally, fair trading and public market rules are a sensitive question.

That is why we find that broader adoption requires giving stronger mandate to procuring authorities and their procurement officers. They need to be told that they have a strategic role to play, and they’re not just administrators.

I’d also like to add that we found that there’s great value in – and not enough – public-private dialogue. That’s with both procurers trying to engage with the market to understand what’s out there, but also in EU policies, there needs to be more engagement with the private sector to understand how green public procurements can be designed to support their decarbonization pathways.

The Netherlands is one country that is often pointed to as best practice, in particular when focusing on the climate impact of public procurement of infrastructure projects. They have developed some great tools to evaluate the carbon footprint of projects combined with a reward system for the best-performing offers. You want to have a minimum threshold where the worst products basically are not getting into the markets, and cannot even be considered, but then you also want to reward projects that are really outstanding in terms of impact. The Netherlands has a good system for that.

Otherwise, there are some great regional and city examples. For example, where I sit in Stockholm, the city set a target of 100% of their car fleet running on renewable energy, and they met their target in 2022.

In Berlin, it’s compulsory for public procurement to use environmental criteria in construction tenders that are valued over a certain amount. And in a study, they found that thanks to their efforts with green public procurement, they cut their greenhouse gas emissions by 47% compared to if they had used conventional products. It really shows that these efforts have a real impact.

Another example is Catalonia, where they have a goal of 100% electric cars in public fleets, similar to Stockholm, but also that the supply of energy to public buildings should be 100% renewable by 2030.

So there are lots of sources for inspiration out there that we hope can be scaled up.

GPP is a legal, technical and behavioral change endeavor, which is quite a complex combination. Hence we have quite a large set of recommendations, with 17. I won’t go through them all. They target a couple of different aspects.

First is to have better coordination of the policies in regions, countries and in the EU. This fragmentation that I described where we have lots of good examples, but everyone is doing it differently, it’s a good start but it’s not having the impact that we want. We would like to see a clear coordinated signal to the markets, with requires consistency and scale.

Then, there’s this aspect of better metrics for evaluating tenders, and measuring progress and impact. In our opinion, that is something that should be done at the EU level or even higher level, so that we have a common language to work with. This would also facilitate the work for companies that could compete in bids internationally with the same type of data requirements.

Third, of course, is more resources, time, funding and support mechanisms. Simply put, this is strategic, and this is something we have to invest in. We need more procurement officers, we need to train them, and we need to give them more time to be innovative along the full procurement cycle.

Finally, we encourage more public-private collaboration. That goes for different levels of governance, like we mentioned before.

Overall, there should be clear incentives, more binding requirements, and enforcement mechanisms – basically, more policy push to make this happen. There needs to be a little kick to move forward, and we are hoping this can be done at the EU level to avoid further fragmentation.