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Energy efficient public procurement allows the improvement of energy efficiency in the public sector by setting it as a relevant criterion in the tender and decision-making process. It is a powerful instrument with the opportunity to create a high demand for energy efficient appliances (demand-pull effect). With ambitious energy efficiency requirements the public sector can lead by example and make a major contribution towards market transformation.
Worldwide, government procurement accounts for between 10 and 20% of national GDP, respectively from industrialised to developing countries (Harris 2005). In nearly every instance public money is spent for government operations. Therefore, public procurement has a high purchasing power and market influence. Consequently, the public sector can play a leadership role in implementing energy efficiency policies when it acts as a purchaser (Energy Charter Secretariat 2008).
Energy efficient public sector programmes aim at redirecting public procurement towards energy efficient products. In this process public authorities may also seek to procure products with a more widely reduced environmental impact. This means that the purchase price is no longer the only criterion in the selection process. Energy efficient procurement considers the whole life cycle cost of a product. This means purchasers take into account the purchase price, but also the energy consumption of a product and other consumables and disposal costs (Patteuw et al. 2009).
An energy-efficient procurement as part of a “green” procurement initiative has several benefits. These benefits are primarily energy savings and a reduced energy bill, simply by redirecting the financial resources that will be spent anyway to buy and replace appliances (Harris 2005). Furthermore, stringent procurement requirements can reinforce the position of energy-efficient products (Borg&Co. AB 2003; Oosterhuis 2006). The public sector demand has the opportunity to stimulate the production of more energy-efficient products and to introduce, accelerate and expand the market for these products. By setting efficiency requirements for the energy performance of appliances, public sector requirements can benefit from economies of scale and then shift the market towards the production of more energy-efficient products. This will then make these products more attractive for other investors and end-users (Oosterhuis 2006; Borg&Co. AB 2003; Mäkinen & Neij 2010; Öko Institut 2007; Van Wie McGrory et al. 2002; pro-EE 2011).
The USA was one of the first countries to introduce energy efficient procurement initiatives in the early 1990s and many other countries and cities have followed since. In the 1990s it became mandatory for the US federal government to purchase only Energy Star labelled products. This has led to a rapid market transformation.
Today there are several governments worldwide, which have established energy-efficiency public procurement, including guidelines and techniques to support this concept.
The aim of the policy is (1) to use the significant market influence of the public sector and to introduce, accelerate, and expand the market for energy-efficient products; and (2) to achieve energy and cost savings for the public sector, so as to also avoid lost opportunities and lead by example.
Worldwide implementation status
In several countries worldwide, energy efficient public procurement programmes (often part of a green public procurement initiative) already exist.
Some states have already introduced procurement programmes with ambitious targets, for example the Dutch government aims for a 100% sustainable procurement. A similar role for the public sector has been promoted in China, the USA, South Africa or Russia where government actors strive for a resource efficient procurement (Mäkinen & Neij 2010). Energy efficiency is mostly part of a broader strategy, which includes all dimensions of a sustainable development. The same is true for the many cities around the world that have energy-efficient and ecological procurement policies, often with support from networks such as the International Council for Local Environmental Initiatives (ICLEI).
The governance level of public sector activities varies among countries. Procurement programmes commonly include authorities at national, regional and local levels and agencies at different levels.
In this description the focus is appliances. Most procurement programmes focus on office equipment like computers, monitors, and imaging equipment (copiers, printers, scanners, faxes, multifunctional devices). However, public bodies also sometimes purchase residential appliances such as refrigerators and freezers, dish or clothes washers, and TV sets.
The policy works perfectly with mandatory and voluntary energy labels. One striking example of how labels can complement public procurement successfully is the procurement policy in the USA. A law obliges all federal agencies to purchase only Energy Star labelled computers and office equipment (Harris 2005).
This makes it easy and transparent for public purchasers and manufacturers to take into account the energy-efficiency requirements without enormous efforts.
Another example of additional policies are the information campaigns for public purchasers and for people working in the public sector. They can be informed about cost- and energy-efficient alternatives and saving options during the use-phase (Mäkinen & Neij 2010). One example was the European “Campaign for No-cost Measures in Offices”, a programme that emphasises energy-efficient procurement and energy-saving behaviour by office workers (www.energyoffice.org; Harris 2005).
Other policies, which work perfectly with procurement programmes are tools to support public purchasers like purchase specifications, databases with energy efficient products, LCC calculation methods, examples of tender documents etc. (Borg & Co AB 2003).
Structural pre-conditions are an agency and a standard test procedure or a well-prepared labelling scheme. Furthermore, financing of the co-ordination programme and the procurement itself might be needed to counteract the increased investment costs.
Agencies or other actors responsible for implementation
Agencies can be an important actor for public sector programmes. They can take over a part of the process including financing, tools, awareness raising etc.
Agencies can act as intermediaries between the public purchaser and the industry. The agency can provide information about the requirements of the public sector and about the technical details (Platteuw 2009).
Public procurement practice is often based on the lowest product purchase price. The use of life-cycle criteria is still not very common in the public procurement process.
To realise energy efficient procurement public sector actors can pursue multiple funding possibilities for efficiency measures, including both redirecting existing budgetary funds as well as acquiring additional funding specifically for energy efficiency improvements (e.g. grants, loans, external finance) (Mäkinen & Neij 2010; Energy Charter Secretariat 2008).
In case there are no well-established energy labels or environmental labels with energy information for a product group, it may be necessary to develop a standard test procedure for energy consumption.
A labelling scheme can be very useful to identify energy-efficient products. An established labelling scheme can simplify the procurement process.
Energy-efficient public procurement spans the whole procurement process, from selection of products, through supplier selection, to the delivery of the required appliances.
It is essential that procurement planning is carried out prior to the purchase of appliances. Procurement plans should include information about the budget, the current market situation and the selection criteria. The selection criteria can be chosen in accordance with labelling requirements or can be adapted to an analysis of the best available technology in the specific country. Energy efficiency must become a standard criterion in this procurement process.
In this context it is important to guarantee a fair and open procurement process, guarding against corruption (OGC 2008). Energy management schemes can take over some steps of this design and implementation process.
For the overarching co-ordination programme, research on the market situation, energy saving potentials, life-cycle costs and cost effectiveness, and existing energy or environmental labels may be needed in the development phase. A clear mandate and funding must be provided to a co-ordination agency. When the programme concept is developed, a legal basis is usually the next step, requiring the individual agencies of a national, regional, or municipal government to follow the rules of energy-efficient procurement. The co-ordination agency for the energy-efficient procurement should provide assistance and easy-to-use tools to the other agencies. Compliance and impacts should finally be monitored and evaluated.
The policy can and should have quantified targets. These procurement targets should be in accordance with the energy savings potentials of the public sector. It is essential to underline the relevance of energy efficiency in appliances and to lead by example (Borg & Co AB 2003). Targets can be overall (e.g. reduced energy intensity) or specific (e.g. reduced energy use of appliances) (Harris 2005).
An example for an overall target is the Dutch government, which aims for 100% sustainable procurement.
Concrete energy efficiency improvements of appliances should be based on the best 25% products. If the requirements are too “soft” the procedure has no significant market relevance and would not support a market transformation towards energy efficiency (Borg & Co AB 2003).
Co-operation of countries
Several countries worldwide have already introduced voluntary or mandatory energy efficiency procurement programmes. Therefore co-operations are helpful for countries, which plan to implement similar measures.
Furthermore, additional helpful policies are voluntary or mandatory labelling schemes like the European energy label or the Energy Star label. Public purchasers can use these labelling requirements for their own purpose. This makes it easy and transparent for purchasers and manufacturers to define and follow the requirements.
In order to be effective, the process and design of public sector programmes should be monitored. The results of this process should be reported regularly to responsible authorities (e.g. an agency or the national government). Afterwards the authority should analyse the success or failure of the programme and make suggestions for improvement (Borg & Co AB 2003).
Responsible authorities like energy agencies or research institutions should carry out an evaluation of the energy and cost savings from, and the cost-effectiveness of, public procurement programmes. Key information includes: an overview of the products purchased, the changes in the product range of suppliers and the resulting development of the market. Other factors are the number, variety and (additional) costs of energy saving measures and the costs for all market actors.
Other sustainability aspects and environmental impacts can (and should) be part of an energy efficient procurement programme, e.g. health aspects or other resources such as water and detergents. Other criteria are the consideration of SMEs, working conditions etc.
Including these sustainability aspects in an energy-efficient public procurement programme will yield the corresponding co-benefits. In addition, energy-efficient appliances often also provide a better service quality and may thus improve employee productivity, e.g. modern computer displays.
The following barriers are possible during the implementation of the policy:
Delays in legislation and/or weak requirements due to political processes and lobbying.
Lack of compliance and/or resources for ensuring it.
Public procurement is often complex and decentralised. This makes it difficult to establish binding requirements or guidelines for all public purchasers. Furthermore, the monitoring and evaluation process can be difficult with numerous actors and political changes (Borg & Co AB 2003).
The following measures can be undertaken to overcome the barriers:
The changes brought by adopting the policy can be enhanced with sound arguments concerning the benefits to the public body concerned. Compliance monitoring and enforcement will improve compliance, and it should be evident that the necessary resources should be provided. A strong co-ordination agency is all the more necessary in complex situations.
Nevertheless, the variety of activities in the public sector offers multiple opportunities for energy savings. A 2003 PROST study (not specific for appliances) estimates that public administration in EU member states (EU-15) could save up to 20% of their energy use (defined as heat and electricity) by 2020 (Borg & Co AB 2003). In Russia, audits conducted in 1998-1999 indicated that low-cost measures in federal buildings could potentially save 30-60% of heat and 14-40% electricity (Sorokina 2002).
The potential for energy savings in selected sectors (like transport, office equipment, buildings) and regions is illustrated in the next table. The table attempts to provide a very simple overview (Energy Charter Secretariat 2008). While these examples provide only an initial profile of the range of potential, they do indicate that there is great room for improvement.
Data on public sector energy use is limited in many countries. The public sector is often not analysed as a separate entity. Therefore detailed analysis of public sector energy use and efficiency improvements in the appliance sector are difficult to find. To improve the performance of energy efficient public procurement programmes, monitoring and evaluation efforts need to be improved.
|Transport||22% improvement in efficiency from vehicle procurement (EU) 5% improvement from tire pressures maintenance in vehicle fleet (all countries|
|Public buildings||20-30% improvement (Denmark)|
20% improvement (Germany)
7% by 2010 relative to 2002 (Japan: for commercial and tertiary sector)
|30% + in schools (Russia)|
40% in schools (Bulgaria)
up to 50% (ProCool)
|Procurement||21% improvement (Germany)|
|Office equipment||34% improvement (EU)|
|Public lighting||33% improvement in street lighting (Germany) |
72% improvement in traffic lights (Germany)
|Heat sector||Potential savings of 80 bcm annually;|
26% of Russian DH boilers operate at less than 60% efficiency (Russia)
|Electricity||28% improvement (Denmark)|
|Overall public sector potential||20% (EU-15)|
7% (Russia, public administration)
|In Russia, audits conducted in 1998-1999 indicated that low-cost measures in federal buildings could potentially save 30-60% of heat and 14-40% electricity (Sorokina 2002)|
Source: Energy Charter Secretariat 2008
Experiences have shown that energy efficient public procurement programmes are cost-effective and can ensure low cost energy savings. In most cases, it is possible to set procurement requirements at levels which require higher purchase costs but which are paid back from saved energy costs (EC 2008).
However, the lack of available money for energy efficiency improvements in the public sector is one of the most common and visible barriers to scaling up energy efficiency programmes in many countries.
If the public procurement guidelines are based on a life-cycle cost calculation public sector programmes will lead to net benefits.
The European PROST report (2003) found that through procurement, investment, management measures the public sector in the EU could yield between €9-13 billion in savings per year with annual investments of €80 million until 2020 (in EU-15) compared to baseline trends. The savings compared to the 2001 level, would be 4-8 billion Euro. These figures do not account for the investments needed, but using a conservative payback time of 5 years. The energy bill of the public sector could thus drop by up to 0.8% annually if going for stronger energy efficiency criteria in the purchasing practice (Borg & Co 2003) (To compare these calculations: the total use of heat and electricity in the public sector in the EU-15 region was 628 TWh/yr in 2001. The value of the heat and electricity used by the public sector was about 47 billion euro).
For the CIS, the potential is at least as large. Russian federal government facilities spent 70 billion roubles for energy in 2005 (USD 2.1 billion). While the potential for saved energy could total USD 700 million annually, it would be necessary to invest 500 billion roubles into the modernisation of these facilities to realise these gains overall (Bashmakov, cited in Energy Charter Secretariat 2008).
In the USA the federal government runs the energy-efficient public procurement programme (EEPP) as a part of the Federal Energy Management Program (FEMP). “Potential Annual Savings from EEPP [can amount to] […] $270 million” (DOE & FEMP p. 13).
Other data suggests “assuming there is 100% market penetration of the FEMP-designated products purchased by 2010 by the federal government, there is a potential for $1 billion dollars in energy savings” (Jeff Harris, quoted in: Lawrence Berkeley National Laboratory 2008).
Refrigerator exchange 2:1
Type: Energy efficient public procurement
Energy-Efficient Product Procurement
Type: Energy efficient public procurement
Curve Breaker Agreement
Type: Voluntary Agreements with commercial or public organisations