To increase competitiveness and for meaningful climate leadership, the requirement for environmental sustainability should be made a mandatory condition in public tenders, not an optional add-on. Otherwise, companies building clean steel plants or producing low-carbon cement will lose out to competitors with higher greenhouse gas emissions but cheaper products.
Heavy industry is important for European competitiveness and job creation. And these industries are doing exactly what European strategies require: they are decarbonizing production chains, investing in innovation, and creating skilled jobs in the regions. But they need stable incentives that reward them for decarbonization and create reliable markets for environmentally friendly products. As the German Steel Industry Association warns, Europe risks losing its competitiveness if public procurement does not create reliable demand for low-carbon products.
While many public procurers are trying to incorporate green criteria, the current legal framework is still too fragmented and complex for strategic, climate-oriented procurement to become commonplace. As a result, greener companies face volatile demand and uncertain expectations.
The situation is exacerbated by the fact that competition in the EU public procurement market as a whole is declining, especially for smaller tenders. The European Court of Auditors found that the number of contracts with a single bidder has increased from 24% in 2011 to 42% in 2021, although a recent European Commission analysis found that large contracts still attract many bidders. Simplification is necessary, but not to lower standards, but to make the green procurement process easier and more consistent.
The reform of public procurement – if properly implemented – will increase the competitiveness, consistency and sustainability of public spending without increasing the budget. For this purpose, contracts should be awarded on the basis of real value for money, and green public procurement should become the default norm. As a result, markets will receive a clear signal that the quality of the product, the sum of its full life cycle costs, and the broader public benefit are more important than the lowest initial price. It is also necessary to agree on common environmental criteria and robust standards for the EU single market, so that buyers and suppliers follow the same rules. This would make them easier to enforce and make competition fairer. Finally, we need to harmonize requirements in key sectors, reducing complexity for public procurers and giving companies the certainty they need to plan and invest.
Some countries have already shown what is possible. Lithuania has increased green public procurement from 5% to over 90% of contract value in just three years by combining clear criteria with training and oversight. Portugal has introduced mandatory environmental standards in priority sectors. And Ireland takes emissions targets into account to ensure that commissioned public buildings are cleaner and more efficient. The first Irish tender using theCO2Performance Ladder (a best practice tool for green public procurement) reduced emissions by 21% compared to conventional approaches. This proves that the right criteria help to achieve measurable results.
The EU already has the tools to do better. Not only can they be used to stimulate green innovation in industry. For example, it is estimated that air pollution costs Europe around €600 billion annually. According to the consulting firm Carbone 4, bringing government procurement in line with the principles of sustainable development would reduce carbon dioxide emissions by 34 million tons per year, attract 86 billion euros in green industries, and create 384,000 quality jobs. At the local level, similar dynamics can be observed: when the French city of Dinan added green and social criteria to its contract for garbage collection services, it reduced costs by 20%, reduced water consumption, and created jobs for unemployed residents.
Lisbeth Kasier,
lead specialist in public procurement and sustainable infrastructure
at the International Institute for Sustainable Development (IISD).
Jøren Vershave,
Coordinator at the Alliance for Low Carbon Cement and Concrete.
Christoph Deboff,
Partner at Neo-Eco, a consulting firm specializing in the circular economy.
The article was also signed by Paolo Campanella and Geis Termeer.
© Project Syndicate, 2025.
www.project-syndicate.org
