Advancing GPP and low carbon procurement in Europe: Insights

Public procurement provides a key entry point for governments to change the trajectory of their greenhouse gas emissions, and to meet climate goals in line with their international commitments to the Paris Agreement, the Sustainable Development Goals, and - in Europe - to the European Green Deal. In the coming years, it is therefore essential that public procurement, which accounts for 15% of carbon emissions globally, becomes a driver of innovation and commercialization of low-carbon infrastructure, goods, and services. By Laura Turley, Liesbeth Casier and Ronja Bechauf from IISD. Read the original article here.

This is the challenge that the CO2 Performance Ladder was designed to address. Developed in the Netherlands in 2009 in the rail sector, it is now owned and managed by the Foundation for Climate Friendly Procurement and Business, or SKAO. The CO2 Performance Ladder is an instrument that helps organizations structurally reduce their carbon emissions, and is used as both a CO2 management system as well as a procurement tool. Over 4000 organizations are certified on the Ladder and has been used by over 200 public procuring agencies in the Netherlands and Belgium in their tendering processes. Some of the advantages of the CO2 Performance Ladder as a procurement tool are the following:

  • The CO2 Performance Ladder is user-friendly, and has low transaction costs for getting started. Procuring authorities simply give companies the possibility to submit a form along with their bid, attesting to their proposed level of commitment on the Ladder;
  • It is an optional tool in the tendering process, whereby CO2 reduction is rewarded
    with an award advantage for the bidding companies. The higher the ambition level of the company, the higher the award advantage;
  • It requires 3rd party accreditation, which lowers the burden on procurement authorities to verify that companies are doing what they say they will do on their bids; and
  • The CO2 Performance Ladder has been developed and used in compliance with  of the EU Procurement Directive, making it immediately applicable in other EU countries.  

In 2021, IISD began a collaboration with SKAO (funded by the IKEA Foundation) to scale the uptake of the CO2 Performance Ladder beyond the Netherlands. The ultimate goal of the project is to identify potential pilot projects in other European countries (apart from Belgium, where pilots are already underway) that demonstrate its usefulness as a carbon reduction tool that is trialed, tested and ready to support governments with their carbon reduction goals. We hope that these pilot projects will further inspire other countries and regions to look at the CO2PL as an easy-to-use instrument for Green Public Procurement.

In order to reflect a wide range of diversity in terms of GPP implementation, the enabling policy environment, progress on low carbon infrastructure, and also geographic diversity, IISD and SKAO will in the coming months work with 10 countries to identify the building blocks required to implement and use the CO2PL:

Denmark, Sweden, Germany, Austria, Spain, Italy, United Kingdom, Ireland, Poland and Slovenia.

  • GPP frontrunners

Europe’s Nordic countries are generally advanced in green public procurement, and in low carbon procurement specifically. We will explore the extent to which contracting authorities in Denmark and Sweden may find the CO2 Performance Ladder complementary to their ongoing efforts to lower carbon emissions in the construction of public works.

  •  Large European economies with a GPP track record

GPP has been gaining prominence across Europe, and we are looking at Germany, Austria, Spain, and Italy to highlight some of the different approaches to GPP implementation in large EU economies, and to capture the challenges and opportunities in these European countries. For instance, GPP efforts have been mostly decentralized in Germany and Spain, whereas they have been more centralized in Austria.

  • New policy space for GPP countries

The United Kingdom and Ireland currently have quickly-evolving policy and related openings for GPP activity, specifically as it relates to low-carbon procurement. Examples are Ireland’s National Action Plan on Green Tenders and upcoming Circular Economy Bill, and the United Kingdom’s National Procurement Policy Statement (2021) and upcoming procurement reforms. While these countries already have experience with GPP, the quickly-evolving policy and action on procurement as a driver for low-carbon development may be further leveraged with a tool like the CO2 Performance Ladder.

  • GPP ambition countries

We have observed that the GPP policy space in Poland and Slovenia, coupled with recent initiatives such as the Care4Climate Project and the Green City and Climate Action Plan (GCCAP), respectively, demonstrate political willingness to use GPP as a driver for low carbon development. In these countries, the CO2 Performance Ladder could potentially be positioned as a  tool for scaling-up GPP efforts and driving low-carbon infrastructure procurement national or sub-national levels.

Observations on the status of GPP in Europe 

More and more mandatory GPP 

GPP is voluntary for public authorities in the European Union; since the 2014 Public Procurement Directive came into force there is the possibility to procure goods, services and infrastructure based not only on the lowest-cost criterion, but also considering other features such as, for example, quality, innovation, social characteristics, and life cycle costs. This is on the basis of the so-called “MEAT”: Most Economically Advantageous Tender.

However, increasingly European countries and subnational governments are making GPP mandatory. In Austria, Finland, Germany, Norway, the Czech Republic, Italy, Spain, Cyprus and the United Kingdom, GPP is mandatory for central government procurement. In a subset of this group - Norway, Czech Republic, Cyprus, and Italy - GPP is mandatory for all levels of government. Mandatory GPP is implemented in different ways, but could oblige the procuring authority to use minimum GPP criteria in all tenders, oblige procurers to give preference to the most environmentally friendly bid, or mandate the incorporation of life cycle analysis and/or quality considerations.

There are some other noteworthy updates. In Ireland, the incorporation of green criteria will be mandatory in all public procurement from 2023 onwards. In Croatia, GPP becomes mandatory in central procurement “where feasible” in 2022. In Switzerland, from 2021 onwards public authorities are obliged to award based on consideration of the most “advantageous” tender and not the most “economically advantageous” tender, and to consider price and quality equally in their procurement. Interestingly, another country outside of the EU, the United Kingdom, is planning on similar revisions to procurement legislation in the future, transitioning from MEAT to MAT - the “Most Advantageous Tender” approach in awarding contracts, in order to give more flexibility to qualitative and sustainability objectives.

In many other countries in Europe, GPP is mandatory in certain product and service categories only. Examples of countries and some of the mandatory GPP categories include: Denmark (wood products), Estonia (furniture, cleaning products, IT), Slovenia (buildings, roads), Latvia (street lighting, food), France (energy efficiency and waste requirements), Greece (transport, road lighting), Malta (office buildings, roads) Slovakia (roads) and Norway (construction, food catering). Another approach is that of Lithuania, where GPP must account for an increasing share of public procurement, aiming for 100% from 2023 onwards.

Wide variation in implementation levels

Across Europe there are wide variations in the level of implementation of GPP, as well as in levels of ambition. In some countries, such as Poland, Romania and Slovakia, less than 5% of public sector contracts include any kind of GPP criteria. Desk-based research revealed little to no GPP activity in some countries such as Bulgaria and Romania (though language barriers may have impeded getting a fuller picture). Similarly, while other countries may demonstrate a higher share of contracts using GPP, its application can be limited to minor spend categories such as office paper or cleaning products. While all efforts to incorporate GPP are worthwhile, the scale of the environmental and climate challenges will require greater efforts in the years ahead.

At the same time, there are national or local governments blazing very ambitious GPP trails, and some with an explicit focus on reducing carbon emissions. Examples are Norway where they are focusing on completely decarbonizing the transport and construction sectors, or the Carbon Footprint Registry for public procurement in Spain, the extensive use of Environmental Product Declarations in Germany, or the wide range of sustainability criteria and LCC tools that are regularly employed in procurement in Sweden. These are merely a few examples out of many from our database, but will hopefully become more commonplace in procurement in the near future, especially in carbon intensive sectors. Compiling lessons learned from successful and unsuccessful attempts to lower carbon emissions in public procurement will be extremely valuable for countries currently scaling-up their efforts.

Cities that stand apart 

It should be mentioned that in many cases it is particular cities that stand out for their advanced GPP activities at a municipal level. Examples include Oslo and their ambitious “zero emission construction sites”, Helsinki's projects to advance climate neutrality through public procurement, Copenhagen’s rigorous standards for construction and civil works, and Stockholm’s goal to become the European leader on sustainable public procurement (SPP) in the coming years. Outside of the Nordic region, we have the city states of Berlin, Hamburg, and Bremen that have made GPP mandatory, as have the cities of Vienna and Barcelona. Recently, Tallinn won the 2023 European Green Capital City Competition, based in part on their use of environmentally-friendly public procurement.

Monitoring GPP activity: a common challenge

Across Europe, governments are finding it challenging to monitor and report on GPP activity systematically. For most countries, a rough indication of GPP as a percentage of total government procurement is usually available, deduced from information on e-procurement platforms such as the number of contracts awarded that include some environmental criteria. Beyond that, however, there does not seem to be systematic data collection, aggregation nor reporting on, for example, avoided carbon emissions or avoided waste, for even the most advanced or “frontrunner” GPP countries. While further research is needed to understand the nature of the challenge, it likely comes at least in part from the difficulty of finding shared baselines and indicators across many levels of government. This should be an area of focus for the GPP community in coming years, as it will also represent an important way for governments to report against their commitments to international agreements such as the Paris Agreement, or the Sustainable Development Goals.

Countries that seem to have the most robust GPP monitoring systems in place are France, which has mandatory reporting for Ministries against standardized SPP targets, Germany with annual GPP monitoring at the federal and state levels (including on CO2 emissions impacts), and Croatia where the Ministry for the Environment must publish CO2 savings generated by the implementation of GPP annually. These might be countries to look to for inspiration and good practices on GPP monitoring and reporting, particularly for carbon, moving ahead.

Plans to improve GPP monitoring and reporting are already foreseen in Ireland, Greece and Malta, in the next few years.

Opacity regarding uptake of GPP tools 

Our desktop research revealed a plethora of GPP tools that exist across Europe and are available to procurement authorities. The most common tools referenced are life-cycle costing (LCC) based tools or calculators, ISO standards, and sector/product-specific GPP criteria (either the EU GPP criteria directly or bespoke GPP criteria at the national or subnational level). Other tools mentioned include other carbon footprint tools, Environmental Management Systems (EMS), eco-labels for specific categories of products or services, Environmental Product Declarations (EPD), and Environmental Spend Analysis (ESA).

Apart from citing the existence of these tools in policies or action plans on GPP, however, it is difficult to discern how often these tools are used, at what stage of the procurement process, and what their specific applications to infrastructure procurement are. It may also be the case that procurement authorities are still searching for the most appropriate tools to use to meet their needs. As such, in the next phase of research for this project, IISD and SKAO will work with the procurement agencies, at national or sub-national level, as well as with buyer networks and other stakeholders, to understand the use of GPP tools in practice and the value added of the CO2 Performance Ladder in implementing GPP across Europe.  

If you are interested in learning more about the CO2 Performance Ladder or would like to pilot the CO2 Performance Ladder in your jurisdiction, contact us! We would be keen to explore options for how the tool can add value to your Green Public Procurement journey!