Green Public Procurement (GPP)
Policies to encourage public entities to procure goods, services and other works with a lower environmental footprint.
Green Public Procurement (GPP)
GPP programmes can be used to create demand for lower carbon products, helping to scale production of these goods. As of 2018, public procurement accounted for around 12% of global GDP and comprises a high share of the demand for construction materials - 40-60% for concrete and approximately 25% for steel.
This creates huge potential for GPP of green building materials. In the transport sector, many of the world’s major ports and many airports are publicly owned, providing opportunities to support the development of enabling infrastructure via GPP, however government demand for aviation and shipping services themselves is a much lower share. Some countries have large state-owned fertiliser companies that could procure or produce green ammonia as a chemical feedstock.
Demand creation potential rating by sector
We have developed an indicative rating of the green demand creation potential of each policy by sector, based on the share of a typical country’s demand it can apply to - and its potential impact on a business case. Depending on local or national context this may be more or less impactful in different sectors. Based on this analysis, GPP is assessed to be most critical for cement and steel given the high share of public sector procurement of these commodities.
Sources: Mission Possible Partnership: Low-Carbon Concrete and Construction (2022) , World Resources Institute Next Steps on the US Journey Toward Industrial Decarbonization (2023),OECD: Local Governments and Ports, Aviation Learnings, Bloomberg NEF: Scaling Up Hydrogen: The Case for Low-Carbon Ammonia (2024)
Key Attributes: Green Public Procurement (GPP)
Carbon leakage risk
Public procurement policies are typically accompanied by a set of product or project requirements that determine eligibility. There is a low risk of public entities circumventing the policy by procuring materials that are excluded from the list. To avoid carbon leakage risks, importers of materials would need to demonstrate that they meet these requirements.
Technology agnostic
There is some flexibility in how GPP policies are set. For example, in the construction sector, this can be done at the product level (specific) or by setting emission limits at the project level (agnostic). A hybrid approach could be to set minimum standards at product level, with overall limits set at the project level.
Ability to ramp up over time
GPP policies can be reviewed over time and be made more stringent as low and near-zero products and services become cheaper and more widely available.
Burden of cost
Because some low or near-zero carbon products and services are more costly than carbon intensive incumbents, the burden of cost falls on the government to increase spending to afford these products.
Long-term stability
GPP policies are dependent on public funding, but have shown longevity as instruments (e.g. more than 20 years). For example, Japan’s Act on Promoting Green Purchasing was first established in 2001 and remains in force today.
Complexity
To ensure the success of these policies, adequate funding is needed to procure green materials. A strong foundation of standards, emission accounting methodologies and certification needs to be in place. Furthermore, responsibility for decarbonisation and procurement is often split across different departments and bodies requiring co-ordination.
Sources: World Bank, WRI, Japan Ministry of the Environment, Japan’s Act on Promoting Green Purchasing
Deep Dives & Case Studies
Decarbonisation levers incentivised by policy
(see further details of sectoral decarbonisation levers in Annex 1)
1: Cement Efficieny of use: refers to the optimal use of the material in construction projects to reduce the overall embodied emissions of a building.
Key considerations
- Underpinning foundations: GPP programmes need to be underpinned by robust evidence, including a foundation of life cycle assessment standards and calculation tools. Environmental Product Declarations (EPDs) are becoming an increasingly mainstream tool to demonstrate and verify the environmental impact of products and underpin GPP programmes such as US Buy Clean. One barrier to accessing, particularly to small and medium enterprises, is the cost and time associated with creating EPDs.Governments can consider measures to make it easier to produce EPDs (e.g. subsidising their production). Similarly, non-state actors are producing tools to simplify their creation (e.g. Global Cement and Concrete Association’s EPD tool). EPDs are not the only system, and in some cases additional information may also be needed.
- Eligibility criteria: emission limits could be set on the key materials used (e.g. near-zero or low emission cement and steel). Limits on emission intensity could alternatively be set at the project level, with overall emission limits for projects as a whole. Ideally, GPP programmes
should consider emissions over the whole life cycle of construction projects (in line with IDDI’s GPP pledge), including: the production and sourcing of materials; construction; use and maintenance through to end of life; as well as the overall resilience of the project when evaluating a its carbon footprint. This avoids the risk of increasing emissions inadvertently (e.g. when substituting materials).
- Financial cost to the government: low and near-zero carbon materials are expected to command a premium. Hence, the government must allocate extra budget to finance GPP programmes, and in return benefit from incentivising future job growth and the creation of new industries. However, these could present constraints for certain governments (e.g.in developing economies and trade-offs with other priorities).
- Implementation over time: GPP programmes can be gradually phased in. Initially, policymakers can focus on information gathering, mainstreaming the use of EPDs by suppliers, and commencing pilots at relatively small scale. Mandatory requirements can then be introduced and strengthened by progressively increasing the share of low and near-
zero carbon products targeted, or increasing the scope of materials, projects and the number of public entities covered.
- Virgin steel production: for most applications involving steel use in the public sector, recycled steel is likely to be appropriate, where this is widely available it is likely to outcompete virgin steel production. Therefore, sub-quotas for virgin green steel, or complementary policies in other lead markets, may be necessary to drive this demand.
- Most applicable countries: although public procurement of construction materials is high in many countries, GPP programmes will have higher green demand creation potential in countries where public procurement accounts for a larger share of demand. This is often the case in developing and emerging economies.
Sources: BloombergNEF, Stockholm Environment Institute, European Commission, Breakthrough Energy, Rocky Mountain Institute, WEF, Sustainability by Numbers, GCCA EPD tool
Case study: Canadian Policy on green procurement
Examples of key enabling initiatives/ detailed studies
