Using green procurement coordination across countries and between public and private sectors to create lead markets for low/zero carbon products
How can government coordinate amongst each other and with the private sector to rapidly scale up demand to create lead markets for low carbon industrial products? What are challenges and promising strategies for key actors?
• Nancy Gillis, First Movers Coalition
• Rainer Quitzow, RIFS and TU Berlin
• Fiona Skinner, UN Industrial Development Organization/Clean Energy Ministerial Industrial Deep Decarbonisation Initiative
• Kay Tor, UK Infrastructure and Projects Authority
Well my name is Fiona Skinner I coordinate the industrial deep decarbonization initiative or iddi um and the iddi is an initiative of the clean energy ministerial uh which is coordinated by unido the United Nations Industrial Development organization where I sit uh the iddi was launched in
20 21 under the leadership of the UK and India and has since grown to 10 government members so beyond UK and India we have uh Brazil Canada Germany Japan Saudi Arabia Sweden the UAE and the United States currently as members and we also bring together over 70 stakeholders from a variety of different
Sectors across Academia the private sector government and civil society and broadly speaking we aim to to deliver concrete action um in support of both developed and developing countries efforts to decarbonizing the heart to Abate sectors starting with steel cement and concrete we do that by on the one hand advocating for public
Procurement commitments to stimulate demand for green products and then on the other hand by harmonizing systems for carbon reporting and the benchmarking of Industrial Products um so again with the focus of Steel cement and concrete so in September 2022 we launched an updated green public procurement pledge to which we have been
Calling on governments to sign up to uh the pledge crucially uh is open to National but also subnational governments and is structured uh as four levels which build on one another so those four levels uh range from a level one which focuses on uh the disclosure of embodied carbon in cemented concrete
And steel procured for public construction projects and so really there we’re looking at the disclosure uh via environmental product declarations which we heard a lot about earlier um or any other thirdparty verified digital format that covers the same aspects as as an epd um and this is all really
About making sure that we understand the Baseline we understand um what we are measuring and making sure that you know you can’t manage what you what you can’t measure so we need that data first of all uh level two is really about um conducting whole Project Life Cycle assessments for all public construction
Project um and at the same time also making sure that uh by 2050 we achieving net zero emissions in all public construction projects and and here we’re really talking about aligning uh policy and Net Zero goals uh making sure that the broader governmental goals um that that governments have been making under
The Paris agreement are also really trickling down to procurement and making That explicit commitment to procurement as well and then levels three and four are about actual commitments to procuring low and near zero emissions steel cement and concrete for public construction projects so we leave the level of ambition um to the the
Committing countries in terms of the emissions reduction that they can achieve for low emissions uh according to a series of banss um and then near zero emissions we’re really focusing on the procurement of near zero emissions materials for Signature projects only as a first step uh so at the moment where
We stand is that last year September we had four governments commit to um reporting back on um what levels they can commit to by cop 28 so we expect that announcement in just about one month I won’t be able to let the cat out of the bag just yet in terms of what
They are committing to but we’re working very hard on that announcement and and I hope you all stay tuned for that oh that sounds great so thank you very much Yona um Nancy Gillis um could you tell tell us more about the first movers Coalition so what’s the idea behind it and and
Probably what’s the advantage for companies to join the FMC great thank you and thanks for this opportunity to participate so the first movers Coalition is on the demand side there’s great conversation that happened uh during the last session about how public procurement can serve as a demand signal
Um the first movers Coalition is the private sector demand signal so it’s a program that is managed between the world economic Forum which serves as the Secretariat and the United States through the Department of State it also is comprised though of additional governments as Government Partners those governments including Japan Canada
Denmark Italy Norway Singapore for UAE and the UK and the purpose of the first movers Coalition is to aggregate demand in what we call the heavy industry sectors so this is having private companies agree or commit to buying near zero versions of either steel cement and concrete or Lumin
And then also in Long Range Transportation sectors of shipping Trucking and Aviation and we have worked very closely with iddi and Fiona personally in that level four area because when our private sector members of the first movers Coalition make a commitment in the steel sector or in the cement and concrete
Sector what they’re doing is is putting their same purchasing power in support of those sectors in the way that governments are increasingly doing as well and they are buying either directly or as influencing purchases like real estate designers or so forth they’re buying these near zero versions
Of cement and concrete or steel that we’ve talked about that we want to see pulled into the market more quickly and to close out the first movers Coalition is really looking at near zero products and services that meet that definition utilizing a number of clean Technologies
Or fuel sources not all apply these are fuel sources such as hydrogen green ammonia they are Technologies um such as CC us as examples these are ones in which we understand that in creating a demand function through private sector purchasing it can serve to pull forward these Technologies faster than they’re
Currently organically expected to commercialize so these are Technologies and fuel sources that aren’t bleeding edge but they’re still Innovative in Cutting Edge and we hope that the FMC demand signal pulls them forward into commercialization by 2030 so that they’re more broadly available to meet 2050 decarbonization
Goals so with that let me hand it back to you thank you very much Nancy Gillis so um Kor um in in your project probably you could explain us um in some examples um what is your main focus to driving change in projects
Uh yeah so I work at the IPA and as part of the author microphone um we have to turn on and no right no is that working now now it’s working yes uh thank you um so yes as part of IPA we look after major government project delivery so as part of that
We’re driving best practices um and within our team specifically uh we are embedding uh our transforming infrastructure performance program uh and that is about driving uh best practice and principles around uh leveraging data digital maturity uh delivery models uh how we collaborate with uh industry for example
So that we can achieve our shared Vision um for for the sector so between um as part of the initiative of tip we have a a shed vision for the future um so so that we collectively prioritize and optimize uh benefits and outcomes for society and nature and for that to
Become the basis of how we intervene in the bill environment and carbon is one of the sort of initial Focus areas for us um so two years ago we cabin office released something called the construction Playbook which sets out how government should procure construction works and as part of that we mandated
The the requirement for whole life carbon assessment to be done for um buildings and infrastructure projects um so I’ve been working across government to standardize uh how we assess and Report whole live carbon um but because government don’t procure low carbon products we need to move towards looking how how do we drive
That emphasis on decarbonization in general so we’re looking at at how we uh embed sort of pragmatic approach to decarbonization making sure that whilst it’s important to drive the demand for low carbon products we need to emphasize on that focus on decarbonization Solutions and approaches as a whole so
That we don’t drive unintended uh sort of disadvantages or advantages in specific areas um so part of that is um you might have heard of the past 2080 Caron Management in buildings and infrastructure so we’re looking at um how we can incorporate that within our delivery bodies so department for transport for example
Have already um requir s of their delivery bodies to achieve accreditation for past 2080 so we’re looking at how can we make sure that we incorporate those carbon reduction hierarchy um and make sure that we are able to drive meaningful actions uh in the absence of um good data so
Making sure that we are actually decarbonizing and being comfortable with the state of the data that we have now um so that we don’t delay uh achieving our so that zero agenda as part of that okay so it’s um again about data that’s very important especially for you as a
Scientist um Rina Kito your research focuses on sustainable innovation and Industrial policy and geopol politics of transitions in energy and Industry so um in very general question but um what kind of innovative strategies do we need when you listen to these inputs um well I mean what I was May
Going to comment on is um one of the questions because that was the kind of the title of of the session about how do we now we’ve heard about the us we we heard now about the UK so how do we bring this all together right and and
We’ve heard a lot about the problem of carbon leakage and competition so and I and I think um I mean of course we want that to happen right we want these markets to grow and become bigger and potentially transatlantic build critical mass in terms of demand to really
Catalyze new investment I don’t really see uh a problem I I thought it was kind of interesting this this question of like isn’t this going to take away uh all the products all the clean products from from the private Market it it’s kind of like well yeah because it’s
Creating demand and and we want that demand so that that companies will invest and and so but then when we start looking about at harmonization of of these policies across Atlantic for example we see exactly we see similar questions arising to what we’ve seen um or what we’ve talked about in terms of
Like sectors competing against each others we also have the countries competing against each other and then we have this problem of you know do we do sort of more like an average approach or and that or do we do we try to really create these kind of Niche
Markets and in both cases we we kind of have a competitive problem because in one one case what can happen we can have ring fencing and we can have certain facilities being really really green in another country but the rest of the economy is really dirty and then those
Small Islands become maybe very successful exporters into an ambitious second Country Market right or we go for more the average but then we might have the problem that you know those that for example just happen to have a slightly cleaner sector in the first place do much better in international competition
And there’s no incentive really to go beyond that and and I mean this I’m just kind of throwing out some some problems or some challenges and I think the question is you know how do we bring these things together because nobody’s going to want to sort of forfeit their own local Manufacturing
And the competitive advantage of their local manufacturing base yeah and that’s kind of the the the challenge we’re looking at also and maybe we’ll talk about that in a second in these uh negoti negotiations that we’re seeing in the steel and aluminum sector to bring the US and and Europe into the same
Boat um so what kind of uh collaborations uh do we need uh to solve this problem or this challenge um I think we need to Leverage The differences in maturity across uh different countries but also within countries in terms of different sectors um because that I think allow us to one
Be able to accelerate different policies but also being able to learn from uh people that have actually been in the implementation phase because we risk I think in trying to be ambitious in driving some of these low carbon policy forwards if we don’t think about the consequences of
Um what this drives we could I’m in a space where we actually Venture into an area where our sort of good intents become um regressive in what we’re trying to achieve so we need to look at where’s everyone in terms of that maturity journey and how can we best um learn
From each other as part of that I guess Global road mapap for the decarbonization agenda um yeah so I think that’s okay um that leads me to a question to Fiona Skinner um um I saw that Canada Germany and the UK will report on green public procurement commitments at the cop 28 in
November um so what do you think about that and where do you see the power in general of green public procurement well I think it’s great obviously um but but I do wish there were or more um and so I think uh really the the power that we have with green
Public procurement is that um public procurement represents such a a vast um portion of the market for particularly uh Industrial Products steel cement and concrete um and so if we have that demand signal coming from governments um that is aggregated that’s really a huge huge signal to the private sector to
Come in and invest in those um low emissions but also near zero emissions technologies that we need in order to facilitate the transition um I think one when we talk about collaboration and and and strategies for um for accelerating this one of the key um challenges and
One of the things to overcome that we have seen is that um within government it is quite a challenge to have this intragovernmental coordination uh in order to to accelerate these commitments so when we think about procurement of course um there are some obvious uh departments that are responsible but
Really this is a a conversation that spans ministries of energy ministries of Industry minister of climate um and then and then specific Departments of Commerce or um competition trade you name it all of them are involved so this is a huge organizational and collaborative lift and so on the one
Hand um there needs to be a champion that that’s driving this forward but but the sort of vast amount of of um of sort of behind the scenes coordination that is required to get to these commitments is something that I really want to highlight so these these countries that
Are reporting by cop 28 they’re really the first movers um and and and they’re demonstrating tremendous leadership in in pushing this forward okay to the question goes also to you um so your UK is one of the first movers in um that way so uh what do we
Need to implement um this um yeah this good action um so so for us I guess we’re using uh government project delivery so our major project procurement uh as a way of translating some of those policies so we’re taking that leadership and that leap I guess through um our
Very own projects to make sure to make sure that we are implementing um what we said we are going to um so the construction Playbook is an example we have uh a big sort of nzero agenda as part of that um we are working through uh incorporating those updated sort of
Standardization around whole life carbon assessment for example but also working closely with industry how can we leverage um what industry clients are able to move forward so that we can accelerate uh policy uh policy development because they are sort of a a vehicle for being able to provide that
Evidence base of what works what doesn’t so that we can um sort of close that loop around policy development implementation but also evidence to support Improvement um so that we can make more progress um Nancy Gillis um to go um into details again so um in the for movers Coalition you promise your
Company um that you’re building the clean sub um Supply chains for the future or of the future so but but how do you um yeah what’s the main step to decarbonize supply chains Supply chains that’s a good question so the first movers Coalition is comprised now
Of almost 90 companies uh we are seeking to to raise that number to 100 by cop 28 and and obviously when they’re making a commitment in a sector that they buy from so when you think about some of the companies that are members um many of them such as Volvo
Group as an example you think about what they actually are as a supplier but here they are a company that’s signing up and joining the program as a buyer and so the way that they’re forcing through their purchasing power a shift in their not only supply chain but value chain is
By they don’t only make the commitment to buy the products and services and it tends to be 10% of the total volume of what they’re buying so this would be near zero steel by our definition um or the same kind of comparable volume amount in cement and concrete but they’re actually moving
Forward to make advanced purchase agreements and I I think this is what keeps coming up in some of these conversations is it’s necessary if we want to actually decarbonize certain sectors and we want to go ahead and make uh those manufacturers be less carbon intensive in their practices then we need to show
Them that there’s an actual customer there and that customer promise isn’t satisfied purely with a memorandum of standing there actually needs to be a contract because that’s what they need to take to get the financing and as we all know the financing necessary to transition companies existing companies
Or to actually bring new companies into the market for these sectors is not a small amount so that’s what FMC members are promising they are promising to actually contract with existing and new suppliers to meet their commitments and that’s really what’s necessary to facilitate increased availability of these near zero products
And services now one thing I want to add a value that we’ve seen for first movers that honestly we weren’t able to forecast is the value of the value chain so what we’re seeing is that members within the first mover are actually coming together with their suppliers but also their customers and
Sometimes even their competitors because again to create that much of demand and meet the demand it can’t just be one player like it used to be before you really need to have every chain member in the value chain understand their role and agree to support it or else what you have is
Unnecessary competition confusion inefficiencies and we just don’t have the sector starting to decarbonized so yes Supply chains are important but increasingly what we’re having to focus on is the actual value chain I hope I understood your question so thank you very much um for that um Rina Kito um probably also this
Questions for you from a geopolitical point of view what do you think are the biggest challenges for decarbonizing the supply chains I I mean I think we’ve been like I said before I mean one of the things that everyone’s talking now about is is this idea of carbon leakage so um so how
Do we sort of apply these standards or or the CO2 prices to bring down CO2 emissions in a local market or a domestic market and what does that do to International comp competition but then also the reverse and this also I guess I touched upon that before sort of like um
Is there now there’s also the fear that if we push too hard on uh decarbonization for example in Europe that other players outside of Europe will actually be the ones that have the the renewable resources to to produce those low carbon or or near zero carbon
I didn’t know that term yet those near zero carbon um um products and services so there’s the there’s the fear that you know those Industries will might also move out because there’s better conditions for producing um low carbon elsewhere and and and now it’s kind of like it’s it’s it’s very difficult I
Think for governments to to sort of gauge whether you know they’re subsidizing locally a losing sort of low carbon industry in in the long term because the local conditions aren’t there to actually sustain it over over the long term for example steel green steel making in Europe or whether they’re investing in
You know long-term employment and and value Creation in their domestic economy going forward and this is kind of where we’re at right now and that’s why I think um well we need to discuss I think it’s ex exactly right to to sort of talk about value chains in in a in a broader
Sense because um I think it’s it’s the wrong approach to to Hope or or expect that you know we will M value Creation in the specific areas that we have been competitive in the past in the dirty economy let’s say and that we may be actually more competitive in other
Segments of of the value chain going forward and others other countries other regions might be more competitive in in the segments we were competitive in the past yeah and and it’s a difficult situation and I and I think it’s also a risk if we we Expect this to be purely driven by economics right because policy and politics Will play a role also in sort of reshaping the landscape in the end and so it has to be a mix between economics and politics in the end a mix but um how would you define a
Mix like what kind of collaboration stands behind this mix you’re talking about what I mean by mix is that um I think there’s always a case for a certain sort of uh core of of green value Creation in basic materials like steel and chemicals even if you know for
Example Germany doesn’t have very good uh renewable resources to to sort of Supply those Industries into the future um but nonetheless there needs to be a core right a core sort of uh level of value creation and and industrial production regardless and and we need to
Invest into that and and I think there’s um we can do that also politically with procurement rules for example um but we need to also discuss working with partners and and finding ways to to build International value chains where we’ll we’re comfortable with the the supply relationships that we’re going to build
Up um so one there’s a question in the audience therefore I look there but one question to um ncy Gillis also um concerning that do you think um the CBM carbon bord adjustment mechanism is a good instrument for that or is we were going to be friendly during this conversation weren’t we yes
Positive that’s a that’s so let me step back for a moment and instead of focusing purly on that but that’s a very important one I think think it goes to the answer that was just given which is I think there needs to be a Synergy and there uh without it it won’t work
Between government policy and private sector demand and that Synergy is first and foremost creating a harmonization of especially if you’re using public procurement when you’re saying like iddi uh defines what is near zero zero steel like like responsible steel was mentioned as as well what how do you
Actually Define what it is that you’re purchasing and create as much consistency in that definition so that you’re aggregating both public and private sector demand but then when you start making components of that definition sometimes it is out of the scope of private sector industry to meet access to renewable
Energy it’s not only the access it is the infrastructure necessary to ensure that access and that’s something where government really plays a role and then of course it’s the approach that government takes so whether or not it is something like the IRA in the United States which is considered by many much
More of a car or if you start thinking about a stick approach and the challenge I think is for industry having to respond to both when they are seen as disperate or different um versus many of these players are Global players trying to find some commonality between them so I would say
Building off of the last speaker his comments being very very relevant there needs to be the Synergy between government and private sector and there are very specific policies and roles or specific policies and a specific role that government can play that the private sector requires as an enabling
Environment to do what they’re supposed to do on the demand side