Public Procurement's Place in the World

The Charge Towards Sustainability and Innovation

G. Piga, F. Decarolis, M. Frey, G. Piga, F. Decarolis, M. Frey

• Publisher: Palgrave Macmillan
• Year: 2014
• ISBN:
  9781137430649
• Topic: Economics
• Subtopic: Economic Policy
• Index: Economics

This volume addresses different issues related to green innovation procurement as well as exploring the challenges involved in public procurement. It offers a broad array of perspectives, addressing both general, abstract problems of optimal public procurement and concrete cases of national or even local public procurement systems.

Part I

Green Procurement

The Contribution of Green Public Procurement to Energy Efficiency Governance in Buildings

Eleonora Annunziata^*	Marco Frey
Sant’Anna School of Advanced Studies, Pisa	Sant’Anna School of Advanced Studies, Pisa and Bocconi University, Milan
Fabio Iraldo	Francesco Testa
Sant’Anna School of Advanced Studies, Pisa and Bocconi University, Milan	Sant’Anna School of Advanced Studies, Pisa

Public authorities will play a crucial role fostering demand for energy efficient buildings through Green Public Procurement (GPP) and contributing to energy efficiency governance at local level. Using an econometric analysis, this study investigates which factors influence the development of GPP practices in the building and construction sector as supporting instrument for energy efficiency governance by the municipalities in Tuscany (Italy). The results highlight that GPP practices in the building and construction sector can contribute to the energy efficiency governance at local level if municipality undertakes a path which integrates increasing energy and environmental awareness and technical know-how and expertise.

[JEL Classification: H57; M48; Q58].

Keywords: green public procurement; local authorities; governance; energy efficiency; building and construction sector.

1. - Introduction

The building and construction sector can contribute to sustainable development generating social and economic benefits to society and reducing related environmental impacts (UNEP, 2007). In fact, buildings account for about 40% of the world’s energy use. Therefore, the building and construction sector has to face the challenge of improving energy use in buildings and consequently minimizing greenhouse gas emissions. This challenge involves all stakeholders of the complex supply chain of the building and construction sector (Lovins, 1992). For this purpose, public authorities can play a crucial role in the sector, not only as regulators but also as building owners, tenants, developers and financiers. Then, public authorities can foster a demand for energy efficient buildings that can have a positive impact directly on the market. According to the United Nations Environment Programme (UNEP) «governments should seek to explore this opportunity to influence the building sector not only as a regulator, but also as an actor, putting up a good example for others to follow» (UNEP, 2007).

The importance of public institutions as market players is confirmed by the great impact of public procurement on Gross Domestic Product (GDP): between 8 and 25% in OECD countries and 19.7% in EU-27 countries (OECD, 2000; European Commission, 2010). The magnitude of public purchasing power could concretely stimulate production and consumption trends towards a demand of energy efficient and environmentally friendly products and services (Li and Geiser, 2005; Edler and Georghiou, 2007; Ambec and Lanoie, 2008). In particular, buildings belong to a product group which represents one of the biggest share of GPP budget and consequently the public procurement associated with the building and construction sector can exert a considerable impact on the market (Kahlenborn et al., 2011).

In general, the integration of green criteria (e.g. energy saving criteria) in public tenders could produce environmental benefits (Parikka-Alhola, 2008). For instance, the selection of greener energy supplies in public sector could bring savings for 60 million tons of greenhouse gases, i.e. 18% of quotas assigned to the European Union by the Kyoto Protocol. The adoption of energy-efficient computers in all EU public authorities could achieve the reduction of 830 thousand tons of CO₂ released in the atmosphere (Ochoa and Erdmenger, 2003). The study of PricewaterhouseCoopers et al. (2009) estimates an average reduction of CO₂ emission of 25% related to adoption of Green Public Procurement (GPP) practices in 2006-2007 in seven European countries (Austria, Denmark, Finland, Germany, Great Britain, the Netherlands and Sweden) for ten product groups¹ analysed. The adoption of GPP practices could also increase the development of innovations, because it fosters the deployment of solutions to satisfy a “new” demand for products and services (Geroski, 1990). Consequently, GPP could be a policy instrument able to improve environmental and competitive performance in firms (Testa et al., 2011). Furthermore, the adoption of GPP practices could support public institutions during their purchase decisions from an economic point of view, because a careful analysis of initial capital costs and long-run operating costs among possible solutions would favour the more energy-efficient and the greener one (PricewaterhouseCoopers et al., 2009).

These benefits have fostered the adoption of GPP policies and national plans in many countries including countries in the EU (Bouwer et al., 2006; DEFRA, 2007; Kahlenborn et al., 2011) but also the United States (McCrudden, 2004; Swanson et al., 2005), Canada (Brammer and Walker, 2011), South Africa (Bolton, 2006, 2008), Asia (Ho et al., 2010), Australia (Chang and Kristiansen, 2006) and Japan (Brammer and Walker, 2011). These GPP policies are more frequently focused on some product groups and particularly on the building and construction sector (Kahlenborn et al., 2011).

The role of public purchases as a stimulus for energy efficient and environmental friendly products and services has been a recent strand of research (Mc-Crudden, 2004; Weiss and Thurbon, 2006; Nissinen et al., 2009; Walker and Brammer, 2009). Furthermore, studies of green procurement carried out in the public sector are only few compared to studies on environmental and sustainable supply chain management in the private sector (Walker and Brammer, 2012). Walker and Brammer (2012) have made a review on existing studies of sustainable public procurement and found that previous studies have analysed the level of adoption of GPP in social housing (Hall and Purchase, 2006) and the development of tools to assist the adoption of GPP in the building and construction sector (Molenaar et al., 2010; Willis, 2010; Tarantini et al., 2011). This study investigates which factors influence the development of GPP practices in the building and construction sector as supporting instrument for energy efficiency governance by the municipalities in Tuscany, one of the Italian Region with more advanced policies on public procurement. In fact, Tuscany Region has promoted GPP practices since the nineties through some regional laws on recycled materials and energy efficient practices in buildings and renewable sources for hot sanitary water in all local authorities (e.g. municipalities) (Rete delle Agende 21 locali della Toscana, 2007).

The analysis considers GPP practices in buildings at municipal level because they are an effective instrument in order to achieve energy efficiency improvements in the building and construction sector and can contribute to carry out an energy efficiency governance at local level. As Laponche et al. (1997) argue, the implementation of energy efficiency improvement is a decentralized activity and consequently municipalities have an essential role to support the use of related measures.

The paper is structured as follows. Section 2 introduces the relation between governance of energy efficiency and GPP in the building and construction sector at local level. Section 3 addresses research design and data description. Section 4 presents the main results of the analysis. Finally, Section 5 addresses implications of the results for policy issues and future research.

2. - Governance of Energy Efficiency and GPP in buildings

There is a worldwide consensus on the need for energy efficiency and particularly energy efficiency in buildings. According to European Energy Efficiency Plan (2011) buildings along with transport have the greatest energy saving potential. Therefore, widespread energy efficiency policies are put in place, but their implementation proceeds very slow and energy efficiency potential is not maximized (Gupta and Ivanova, 2009; Jollands and Ellis, 2009). Some studies argue that it is crucial to deploy a suitable energy efficiency governance which is not only technocratic but also integral and socially oriented (Gupta and Ivanova, 2009; Jollands and Ellis, 2009; Golubchikov and Deda, 2012).

Drawing on the governance literature and the characteristics of energy efficiency (Rhodes, 2000; Bulkeley, 2005; Murphy and Yanacopulos, 2005; Hisschemoeller et al., 2006; Biermann, 2007; Improvement and Development Agency for local government, 2008), energy efficiency governance can be defined as «use of political authority, institutions and resources by decision-makers and implementers to achieve improved energy efficiency» (Jollands and Ellis, 2009). This definition crosses many spatial dimensions (local, regional, national and international) including a wide range of actors (government and non-governmental organisations/subjects). Jollands and Ellis (2009) state that a governance system consists of two components: resources and structures for governance and governance activities. The former ones can be identified as institutional structures, human and financial resources, human capacity and training, and political support/mandate. The latter ones are represented by actions associated with the governance system such as: energy efficiency strategies, policy development processes, funding mechanisms, monitoring programmes, compliance and enforcement, and R&D activities. This framework needs a multi-level governance (Bulkeley and Betsill, 2005; Smith, 2007) in order to develop an effective energy efficiency governance. For instance, energy efficiency targets established by national institutional structures influence local level actors and related resources and capacity. Then, an effective articulation of energy efficiency governance framework supports the success of energy efficiency policy efforts (International Institute for Energy Conservation, 2007; Laponche et al., 1997; Limaye et al., 2008).

A multi-level approach in energy efficiency governance is fundamental to implement energy efficiency in buildings, because the building and construction sector has a high energy efficiency potential and is a complex sector (Lovins, 1992). Then, the deployment of energy efficiency in the building and construction sector requires “a strong institutional milieu” which stimulates the deployment of energy efficient solutions, informs consumer choice concerning these options, foster behavioural change and balances different interests (Golubchikov and Deda, 2012). In fact, progress towards energy efficient buildings needs not just technical solutions but also social and institutional support (Rohracher, 2001). Furthermore, energy efficiency policies have to be integrated in the whole policy mix to increase energy efficiency policy effectiveness in buildings (Hoppe et al., 2011; Golubchikov and Deda, 2012).

Gupta and Ivanova (2009) underline the importance of a global energy efficiency governance, but the improvement of energy efficiency especially in the building and construction sector is a decentralized activity and is supported by a network of partners (e.g. enterprises, local authorities, government services, households, etc.) (Laponche et al., 1997). In this context local authorities, such as municipalities, can ensure conditions and solutions for energy efficiency improvements (Rezessy et al., 2006). Local authorities can assume several roles in order to support energy efficiency in the building and construction sector. In particular, they can be market initiators, buyers, borrowers and i...

Table of contents

• Cover
• Title
• Introduction
• Part   I Green Procurement
• Part   II Innovation Procurement
• Part   III Challenges in Public Procurement
• Index