Good Practice
The Path To A Low-Carbon Economy Is Paved By Central Purchasing Bodies

We welcome this guest post from Philipp Tepper, who works for ICLEI Europe, an international association of local governments and national and regional local government organisations that have made a commitment to sustainable development. Philipp is also coordinator of the GPP 2020 Project.

Sustainable public procurement is big news these days. The long-projected economic and social impacts of climate change are making themselves felt across the European Union. A clear example of this is increased flooding, which between 1980 and 2011 affected more than 5.5 million people across Europe and caused losses of over €90 billion. Combine these alarming occurrences with the difficult financial climate currently hitting the public purse, and politicians are left scrambling for a silver bullet.

The answer could lie with procurement departments. Well managed, imaginative public procurement can help reduce costs, minimise negative environmental impacts and increase social returns. There is a lot of room for more socially and environmentally sustainable tenders within the EU procurement Directives, and often these can be undertaken in a way that saves money as well.

A recent energy performance contract tendered by the Catalan Institute of Oncology specified guaranteed cost and energy savings. The impacts are tangible: at least 16 percent in energy cost reduction and 10 percent in water cost reduction annually.

Vitally, a provision was included in the contract for the installation of monitoring equipment and production of an annual monitoring report with clearly defined penalties for not meeting efficiency targets. As well as reducing the organisation’s carbon footprint, this model was able to save them money.

Francesc Vidal from the Catalan Institute for Energy, who advised on this procurement, explains the benefits of such an approach: “Energy Performance Contracting (EPC) can help the building owner to enjoy guaranteed cost savings and strongly reduce the COemissions of the building through reduced energy consumption with little or no required investment.”

This procurement was carried out under the GPP 2020 project, which is funded by the Intelligent Energy programme of the European Union. The project is made up of key central purchasing bodies (CPBs) that have committed to mainstreaming low-carbon procurement across Europe.

Changing behaviour within big organisations takes time, but the ripple effects created by even the smallest changes in the culture of these institutions can be significant. The tenders released by the GPP 2020 project so far have managed to save the equivalent of over 72,000 tonnes of carbon dioxide. To put this in more concrete terms: it amounts to more than the total COproduced by 12,000 average European households.

One of the major benefits of working with CPBs is the impressive impact their procurements have. For example, a four year framework contract awarded by the Slovenian Ministry of Finance in 2013 was able to save the equivalent of 15,277 tonnes of carbon over the contract lifetime. This remarkable saving was achieved with just a 10 percent increase in energy derived from renewable sources.

This success is in large part due to the nature of such contracts. The use of a framework contract allows smaller authorities to get on board. In the case of Slovenia, the contract was for electricity provision to 210 authorities spread across 2,918 sites. The Ministry selected a ‘most favourable bidder’ based on pre-defined award criteria. Individual framework agreements were then signed between the different contracting authorities and the chosen supplier. Other framework contracts for green vehicles and thin client IT solutions awarded by the Italian CPB Consip and the German Central Procurement Agency were able to make CO2 savings of 19,303 tonnes and 29,500 tonnes respectively.

Introducing low-carbon criteria into tenders is often seen as an obstacle to reducing costs, but this impression couldn’t be further from the truth. Reducing carbon in practice means improving efficiency, increasing product life cycles and taking a fresh look at what your procurement options are. As well as making tenders greener, these measures should make them more cost-effective too.