Green Public Procurement Within The Irish Construction Industry Construction Essay

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For one to understand the term "Green Public Procurement," one must first understand the term "Public Procurement." Van Weele (2005) defines procurement as encompassing purchasing, storing, logistics, inspection, quality control and assurance. Public Procurement is defined by The National Public Procurement Policy Unit as the acquisition, whether under formal contract or not, of works, supplies, and services by public bodies. It ranges from the purchase of routine supplies or services to formal tendering and placing contracts for large infrastructural projects by a wide and diverse range of contracting authorities (Department of Finance, 2004).

A key principle of public procurement is that in general, a competitive process carried out in an open, objective and transparent manner can achieve best value in public procurement. This is in line with EU Treaty principles and EU directives on public procurement. Principles such as equal treatment, non-discrimination, transparency, mutual recognition, proportionality, freedom to provide services and freedom of establishment are essential when conducting the procurement function. It must also be noted that there are certain thresholds which determine whether a public contract falls under the EU Procurement Directives, for example, for work contracts (building and civil engineering contracts) on which this thesis is concerned with, the amount is €4,845,000 exclusive of VAT as of 1st of January 2010. This threshold applies to Government Departments and Offices, Local and Regional Authorities and other public bodies (Etenders, Public Procurement website, January 2010).

2.3 What is Green Public Procurement?

Over the years the term procurement has been extended to accommodate other concepts. "Green Public Procurement" is now a widely discussed issue and is defined by the EU as a process whereby public authorities seek to procure goods, services and works with a reduced environmental impact through their life cycle when compared to goods, services and works with the same primary function that would otherwise be procured (EU 2008). It covers areas such as the purchase of energy efficient computers and buildings, office equipment made of environmentally sustainable materials such as timber, electricity stemming from renewable energy sources, and air conditioning systems complying with state of the art environmental solutions (Buying Green, 2004). Spending by public authorities in Europe accounts for 16% of the European Union's gross domestic product (The Value of Green 2008), and thus by using their purchasing power to opt for greener goods and services, public authorities can make a substantial contribution towards a more sustainable economy, both environmentally and socially, this is known as sustainable procurement. By investing in greener goods and services, public authorities will also set an example for corporate and private consumers.

Contrary to common belief, GPP does not mean spending more money. When discussing the price of a purchasing a particular item, it is important to undertake a life-cost cycle appraisal. Purchase price, usage and maintenance costs, and disposal costs must all be considered and when these are considered, the greener option is more often than not the more financially advantageous in the long run.

2.4 Benefits arising from the use of Green Public Procurement

Due to the large market power (16% of the EU's GDP) of the purchasing power of European public authorities, GPP can make an important contribution to reducing environmental impacts and to changing unsustainable production and consumption patterns. The European Commission has co-funded a research project, called RELIEF to scientifically assess the potential environmental benefits if GPP were to be widely adopted across the EU.

Findings from this research project include:

If all public authorities across the EU used green electricity, 60 million tonnes of CO2 would be saved, i.e. 18% of the EU's greenhouse gas reduction commitment under the Kyoto Protocol.

Again, if all public authorities were to demand more efficient toilets and taps in their buildings, water consumption would be reduced by some 200 million tonnes, i.e. 0.6% of total household consumption in the EU. (Sustainable Public Procurement in Ireland, 2009)

830,000 tonnes of CO2 emissions could be reduced if the public sector purchased energy efficient computers. 2.8 million PCs are bought every year in the public sector in the EU and these savings would bring us an extra 0.25% closer to the Kyoto goal.

More benefits can be seen by looking at the GPP approach to environmental impacts. GPP aims to maximise the energy performance of buildings, ensure high energy standards for electronics, water, heating, cooling and ventilation systems.This approach alone will help reduce utility bills and increase quality standards in buildings. It also encourages the use of non toxic materials to be used in the construction process, thus increasing health and safety standards for workers, which may result in a reduction in accident rates which in turn can make savings in the health sector and insurance industry. GPP encourages the installation of high-end water saving technologies and reduce the use of freshwater during the construction process. Water saving technologies in buildings could prove to be extremely beneficial, as during the recent floods in Ireland, water saving was extremely important and a lack of fresh water affected many parts of the country. Such future problems could be eradicated with the introduction of improved water saving technologies.

Given the current economic climate and the collapse of the construction industry, GPP could prove to offer a glimmer of hope in Ireland. In December 2008 the EU agreed to reduce CO2 emissions by 20% by 2020, from 1990 levels, however, in January 2010 it was agreed to increase this to 30% on 1990 levels. Given the large emphasis put on reducing CO2 emissions it may prove to be a market of opportunity. There will be an increased market for environmentally friendly technologies and practices possibly resulting in new job opportunities.

Finally, the biggest misconception regarding GPP is that many believe it is much more costly than regular procurement. While some products may be more expensive initially, once life cycle costs are considered they will in fact save money and are certainly the better choice. For example while an energy efficient light bulb is more expensive than its counterparts it is roughly four times more energy efficient and will last ten times longer, thus proving to be cheaper in the long run.

2.5 Potential Barriers to a successful implementation of GPP in Ireland.

A study carried out by the Take-5 consortium in 2005 found five major obstacles to a successful implantation of Green Public Procurement, (European GPP Website, Jan 2010) they are:

Perception of financial burden: It is a common belief that GPP is a more costly process than traditional procurement. If we look at the construction industry in particular, we know that traditional construction tender prices have fallen dramatically in Ireland since 2007, and as opting to construct with green objectives in mind is more expensive at the offset of a project, clients may decide to opt for the cheaper traditional construction methods now. However, as mentioned before, taking the whole life cycle costing into account, green construction will save money in the long run.

Lack of knowledge about the environment and how to develop environmental criteria: It is possible to overcome this barrier in certain aspects by using technical standards and the underlying criteria of certified Eco-labels. However, at present it may be difficult to overcome this barrier in the construction industry as Eurogypsum has recently released a document stating that the eco-label does not currently make the link between the product (plasterboard) and the system ( a wall made of plasterboards). As a result there is a challenge to devise the criteria for construction products that are able to link the eco-label (European) with the building regulations (National) (Eurogypsum 2008).

Lack of management support: As there is no one Department for Public Procurement in Ireland, it is very hard for the required departments to liaise with one another to properly implement Green Public Procurement. It would seem that a head official must be put in place to ensure the required support is given.

Lack of training: Again, as there is no direct department dealing with public procurement in Ireland, there is no adequate training programme in place to make sure all standards are adhered to. Also due to the lack of training there is often a lack of technical knowledge and legal expertise to apply sustainable procurement standards.

Lack of practical tools and information: Communicating, disseminating and providing training is extremely important if a country is to increase its GPP quotient. The recently published 'Handbook on Green Public Procurement' is an important tool in this regard; however, training must first be done at a far more a national and basic stage.

The UK's Sustainable Procurement Task Force has also identified important barriers such as;

Insufficient supply: It can be difficult to find suppliers who are able to provide the necessary good or services required for GPP. And even if a supplier is found, there may be little or no competition resulting in no price competition which means higher prices. This may in fact be seen as a potential area of growth in the economy however, which may see prices fall in the future.

Implementation gaps: A high level of commitment