Globally, countries are waking up to the imminent and very real threat of climate change. There’s no denying it’s a rapidly escalating crisis that every country is, in part, responsible for. But, as is naturally the case, not every country is as caught up in the whirlwind of panic over the ticking-climate-timebomb that others seem to be so hyper-aware of. For a world that, until a decade ago, refused to accept the risk global warming poses to our planet, desperate changes are being made in every industry to ensure the pace of climate change is slowed. An area of note is that of manufacturing, and as green procurement methods are being introduced, the manufacturing sector is placed under a spotlight to judge the success of such methods in helping the industry ditch high-polluting technology.
Procurement measures in place to pull back on emissions
In a drastic attempt to stimulate a sense of urgency, the European Parliament has recently signed the first dedicated climate law, echoing previous measures independent countries have implemented such as carbon taxes, emissions trading systems and carbon border agreements (CBA) - a method which applies a tax on imported goods in proportion to their carbon emissions.
The EU’s new law will require importers to purchase emissions certificates for carbon-intensive commodities, calling for traders to pay for their products’ CO2 emissions on top of electricity emissions as a result of production. An individual certificate will be required for every tonne of emissions, costing up to an impressive €50.
Subsequently, low-emitting industries within the EU are at an advantage, having to fork out less money due to their products being responsible for a lower rate of emissions. The tactic, while controversial, aims to provide the necessary incentive for companies to make an increased effort to decrease their carbon footprint, coercing industries towards a greener future through a backhanded but essential form of business blackmail.
The power of incentive within the procurement industry
The CBA’s foundations are rooted in the idea that the manufacturing sector being subjected to a ‘cleanse of emissions’ is inevitable should climate change continue to be placed at the forefront of the industry’s transformative goals and the goal of achieving net-zero emissions remains. Agreements such as these are effectively governments’ way of telling the private sector to get their manufacturing systems into gear, and it does so in two ways:
- Offering subsidies to low-emission businesses
- Incentivising manufacturers enough to make them switch themselves
This is where Green Public Procurement (GPP) comes in. Used as a device by governments to capitalise on their purchasing power to select services, goods and industries with a decreasing environmental impact, GPP is the systematic integration of norms that ensures the manufacturing industry reduces emissions and aligns its practices with the green standards required in the production processes.
The potential GPP holds to aid in the reduction of emissions for countries who currently emit the highest amount of CO2 is hard to downplay. India, for example, boasts 20-25% of the country’s gross domestic product accountable to public procurement, witnessing a high interface between the public and private sectors. GPP in India holds the possibility to harness this area and ensure greener measures are implemented, in theory, resulting in a radical decline in the country’s CO2 emissions.
And yet, GPP isn’t without its hindrances. As the OECD points out, as of this moment, the procurement method remains relatively unexplored, meaning the lack of technical knowledge and uncertainty over the method’s capacity to embed greener goals in the procurement process makes GPP somewhat easy to dismiss. Deficient in monitoring mechanisms for green procurement evaluations, and the already prominent perception that green commodities and services carry a higher price than conventional ones means that GPP is struggling to advance with the vigour some within the manufacturing sector may have first hoped it would.
Regardless, you can’t deny GPP does offer an appealing opportunity for manufacturers worldwide to seize the potential to shift their policies in anticipation of the global sustainability overhaul. While controversial, the process drives innovation with powerful incentives and the goal of cutting carbon emissions, targeting high-emitting countries to accelerate decarbonisation. Additionally, the opportunity to supply financial savings for public authorities and companies onboard adds a further level of coercion.
GPP could be the sustainable way forward, but the question remains as to whether those with the power to make it a reality within the sector will embrace it or remain stubborn in the face of environmental innovation.
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