21 March 2011 | Luca Del Buono
Finance/insurance, Legislation, Europe

 

As European governments feel pressure from the European Union’s Emissions Trading Scheme (EU ETS) to reduce carbon emissions, procurers for urban regeneration projects must select suppliers according to EU criteria. Private companies and energy efficiency consultants operating in the water, energy, transport and postal services, may wish to become familiar with the EU’s changing body of procurement legislation and tailor their services for sustainability to compete for regeneration jobs.

EU laws target regeneration projects because sustainable energy and energy-efficient construction changes can be implemented simultaneously. Optimising buildings and infrastructure to save energy potentially cuts the economic risks of peak demand energy prices, as well as the potential risk of energy shortage if the main supplier fails.

Public purchasers must comply with the EU’s Green Public Procurement (GPP) laws in EU countries, which have opted into the scheme. The GPP regulates public-private supply chain contracts for building and transport construction. At its core, it requires public purchasers choosing suppliers to follow extensive environmental criteria outlined by the EU. They are also required to follow criteria for the services of regeneration consultants, for example, criteria requiring that architects have experience in environmental building design.

Suppliers in most European public building works already comply with the EU Directive on the Energy Performance of Buildings (EPBD), which requires that they complete energy performance, boiler and air conditioning inspections.

Urban regeneration companies seeking to bid for new or future works may refer to the EU GPP Green Product Sheet which sets out legal criteria specifying acceptable products for sectors including construction, transport, and electricity. For example, these criteria specify that 50 per cent of supplied electricity for a given energy efficient house or development must come from sustainable energy sources and/or high efficiency cogeneration and must be accompanied by a Guarantee of Origin. Criteria for construction not only addressing energy consumption, but also materials, waste and water management.

Among many other EU countries, the UK requires its councils to work with companies that meet GPP procurement standards. The Department for Environment, Food and Rural Affairs (Defra) sets targets for public purchasers buying works such as construction and transport, and awards contracts by means of a ‘points’ system where environmental criteria account for at least 10 to 15 per cent of the total points available.

The EU has mandated transparency in the tendering process. A lead tenderer in a public-private project is subject to EU rules governing invitations to tender if the project is more than 50 per cent publicly funded and the cost is greater or equal to a threshold amount, which is published in the official Journal of the European Union (OJEU).

When tendered, the contract notice must be publicly published in the OJEU advertising the urban renewal project, to allow environmentally efficient suppliers the opportunity to compete for the tender. The project details may also be included on the tenderer’s website. When third-party contractors are involved, they will also publish information about which suppliers they may contact. To allow smaller green electricity suppliers to participate in the bidding process, tenderers, for example the Austrian Life Ministry, sometimes divide the tender into smaller parts, or ‘lots’.

As more focus is being placed on European urban renewal projects in the Netherlands and in the UK with the ‘Green Deal’, procurers will be required to source more energy-efficient materials – insulation, solar energy, and combined heat and power – increasing competition and driving down prices for these products.

On 27 January 2011, the European Commission launched a public consultation on the modernisation of EU public procurement policy. The results of the consultation will provide input to the Commission for the preparation of the future legislative proposal on the reform of the EU public procurement rules. Upon completion of the consultation, Climate Action will publish key developments online as they happen.

 

Updated and edited by Ben Kolb (April 2011).

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