Demand stimulation policies: Green public procurement

Current status of implementation and existing gaps

Prioritising zero-emission trucks for publicly procured vehicles and transport services is essential to accelerate the shift towards decarbonised heavy-duty road transportation. Different economies are exploring the development and implementation of green public procurement legislation and guidance to support the implementation of these sustainable procurement principles.

Examples and initiatives

The EU’s Clean and Energy-Efficient Road Transport Vehicles Directive requires businesses and consumers to consider variables such as energy consumption, CO₂ emissions, hazardous pollutants in purchase decisions, with the intent making the bloc’s transport sector more sustainable.

Current status of implementation and existing gaps

Green public procurement aimed at promoting zero-emission shipping can take various forms. One approach that has been implemented for biofuels is government defence departments awarding contracts for supplying low-carbon fuels such as biofuels for naval ships.

Examples and initiatives

The US Navy’s Great Green Fleet initiative, established in 2009, aimed to take 50% of its energy requirements from alternative renewable sources by 2020 (Stolark, 2016).

Current status of implementation and existing gaps

Current SAF mandates are generally carrier agnostic, but green public procurement can be a useful instrument if implemented for national air carriers in regions where such mandates do not exist.

Examples and initiatives

Canada’s Low-Carbon Fuel Procurement Program aims to secure the supply of SAF for aircraft operated by the government (ICAO, 2022b).

Current status of implementation and existing gaps

Public procurement accounts for approximately one-quarter of global steel demand. Only a few green public procurement schemes currently include steel products, and California is the only jurisdiction with a mandatory green public procurement policy that considers steel emissions. The Industrial Deep Decarbonisation Initiative (IDDI) announced the Green Public Procurement Pledge at COP27. As part of this pledge, at COP28 Austria, Canada, Germany, Japan, the United Arab Emirates, the United Kingdom, and the United States committed to low-emission procurement within a set time frame to achieve net-zero emissions in all public construction projects (UNIDO, 2024). Prioritising green steel in public projects can create market demand and reduce financial risks for producers.

Examples and initiatives

The European Commission has encouraged its member states to develop green public procurement programmes by 2030 (non-binding), and Germany and the United Kingdom are developing green public procurement targets under the IDDI (UNIDO, 2024). The Kingdom of the Netherlands sustainable public procurement policy is yet to be implemented (ITA, 2024).

Canada also aims to reduce the embodied carbon of structural materials used in major public construction projects by 30% through public procurement, starting in 2025 (Government of Canada, 2024).

Current status of implementation and existing gaps

The private sector has a higher share of direct consumption than the public sector in the chemical and petrochemical industry. However, the government can still create initial markets for chemicals, particularly ammonia in the form of fertilisers, through large-scale procurement and supply planning.

Examples and initiatives

The Solar Energy Corporation of India has issued tenders under its SIGHT programme to produce 539 000 tonnes of green ammonia annually, acting as an intermediary procurer for ten years, with fertiliser companies guaranteed a ten-year offtake.

Current status of implementation and existing gaps

Where green public procurement is applied in relation to the cement sector, it primarily focuses on standard performance indicators (e.g. compressive strength) and seldom on embodied carbon targets. Embodied carbon thresholds for public infrastructure are starting to appear in some regions (e.g. California’s Buy Clean initiative, France’s low-carbon building requirement), but coverage is inconsistent. Without consistent specifications and robust verification, low-carbon options remain underused. The introduction of mandatory quotas for green public procurement, instead of remaining voluntary, can be a good option to trigger the use of sustainable materials in public construction and infrastructure projects.

Examples and initiatives

Under the Industrial Deep Decarbonisation Initiative’s Green Public Procurement Pledge, Austria, Canada, Germany, Japan, the United Arab Emirates, the United Kingdom and the United States committed to adopting low-emission procurement practices (ITA, 2024).

Canada’s Greening Government Strategy includes targeting a 30% reduction in the embodied carbon of structural materials in major public construction projects by 2025. Additionally, it aims for net-zero emissions by 2050 in all government-owned and leased properties, influencing procurement standards for low-carbon cement and other materials (ITA, 2024).

The EU Public Procurement Strategy encourages member states to develop and implement green public procurement programmes by 2030 (Cembureau, 2024).