4. POLICY DESIGN
Public procurement for carbon reduction – the case for sector specific and general policies ANNA KADEFORS AND STEFAN UPPENBERG
There is growing awareness of the direct impact that public procurement practices and requirements have on the performances of important supplier markets. Consequently, procurement is increasingly seen as an important policy tool to reduce carbon emissions. The construction sector is pinpointed due to the large volumes of public construction in combination with the substantial carbon emissions that arise from the use of fossil fuels for transport and construction equipment, and that are embodied in cement, steel, and asphalt. Construction procurement is complex, and measures to reduce carbon emissions must fit with the general contracting strategy chosen for a project. In a study of procurement practices used by leading infrastructure clients worldwide, we have identified the following requirements, criteria and incentives to promote carbon reduction: • Qualification and award criteria, to reward suppliers for carbon competence or, potentially, the carbon footprint of a tendered design for a design-build contract. • Specific requirements relating to various aspects such as: the use of cement replacement, fuel or type of vehicles; Environmental Product Declarations (EPDs) and other carbon-related documentation; compliance of the facility with environmental assessment schemes; and organizational competence and processes, including standards for carbon management. • Requirements and bonuses for reducing the carbon footprint of the constructed facility in relation to a baseline. Our research further shows that all these types of requirements and measures are associated with drawbacks and limitations. On a basic level, there must be enough suppliers that tender for a contract. This limits the applicability of qualification criteria, as well as of any measures that substantially increase the cost of developing tenders. To drive development without reducing competition, clients with a long-term perspective may raise requirements stepwise based on continuous and active communication with the market.
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Some clients, however, have policies that prescribe performance requirements and design-build contracts. In such cases, specific requirements may be ruled out on principle. Another option is to reward carbon reductions with bonuses or penalties. The downside to this is that reduction requirements typically entail substantial work to calculate baselines and update them to reflect scope changes. This means that key engineering resources may be tied up during the short period available to investigate the most important design options. In a temporary and unique project, significant options for carbon mitigation may never be investigated due to lack of time. Other limitations relate to client time and resources for evaluating tenders based on award criteria and following up contract performance. Sector-specific policies based on contextual knowledge Changes in procurement policies and practices are undoubtedly essential to promote carbon reduction in the demand-driven construction sector. However, designing adequate procurement policies for carbon reduction is a complex process that relies on competences in procurement law, carbon mitigation methods and supplier market maturity, and construction project management and contracts. Our research has shown that policies, practices and tools need to be sector-specific and should address also capability development and learning among clients and other actors in the supply chain. Thus, formulating policies in terms of very general concepts, such as Green Public Procurement and Sustainable Public Procurement, is less helpful, since the
