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i24c Memo

LEVERAGING THE POWER OF THE PUBLIC PURSE: USING PUBLIC PROCUREMENT OF LOW-CARBON INNOVATION FOR SUSTAINABLE INFRASTRUCTURE

December 06, 2017

In light of the European Commission launch of a guidance package for public procurers, i24c and International Institute for Sustainable Development (IISD) publish recommendations for the European Commission and member state authorities on how to better leverage the power of the public purse to drive demand of low-carbon innovation in sustainable infrastructure.

Public procurement is a powerful tool for driving markets towards more sustainable production patterns and for creating markets for sustainable goods, services and infrastructure. Effective public procurement is about delivering the best value-for- money for taxpayers. All too often the meaning of value-for- money is reduced to “cheapest price”. Not only is this incorrect, it is also a missed opportunity to use public money to deliver on the goals governments are pursuing on behalf of citizens: low- carbon transition, employment, sustainable development.

The construction industry is a key candidate for increasingly using strategic public procurement: infrastructure assets are the largest area of public spending and their carbon impact is significant during all the stages of the lifecycle. To date public procurement is not used to its full potential to generate sustainable value for society and incentivize the sector to invest in deep decarbonisation.

The European Commissions’ approach to recognise the strategic role of public procurement encourages member states, among others, to adopt a greater uptake of innovative, green and social criteria when awarding public contracts, is very welcome. However, more can be done to effectively enable public procurement of sustainable infrastructure, by considering the following actions:

  • Encourage and scale private sector investment into low-carbon building materials through sector-specific low-carbon targets, supply chain collaboration and bundling of demand for low-carbon infrastructure.
  • Engage with the market early on to identify low-carbon innovation and stimulate collaboration throughout the construction supply chain.
  • Use tender specifications that ask for specific low-carbon materials (technical specifications) or use performance based specifications that refer to the carbon performance of undefined building material, or infrastructure asset.
  • Use holistic award methodologies and tools that make low-carbon performance a competitive element of the bidding process
  • Use innovation brokers to increase capacities among public and private sector actors to engage in procurement of innovation and the deployment of low-carbon infrastructure solutions.

A strong legal and policy framework will allow and encourage this change. More and better information, best practices on how to value sustainability, and information on how to bring that value into the procurement cycle, will help making public procurement a strategic tool. Procuring authorities and their staff should be empowered to use the intervention points along the procurement cycle as a means to better manage, reduce and share risks associated with the procurement of low-carbon infrastructure solutions.

Implementing these recommendations will enable an optimised use of the public procurement process for providing value- for-money to EU citizens and for securing the long-term competitiveness of the EU’s construction and infrastructure industries in a low-carbon future.

This policy brief is based on a larger research project conducted by IISD and i24c of which the full report will be published in January 2018. The full policy brief is accessible here.