Europe must stop squandering the power of its purse

Public procurement accounts for about 14 percent of the EU’s gross domestic product, creating it one of the bloc’s most powerful tools for shaping markets and advancing its policy goals. But a recent evaluation by the European Commission confirms what many governments and businesses already suspected: The current framework has fallen short of creating public spfinishing simpler, more strategic, and greener. With over 75 percent of public contracts still lacking environmental criteria, it is no wonder that spfinishing is so poorly aligned with the EU’s stated industrial and climate objectives.

European Commission President Ursula von der Leyen has created procurement reform a central part of the EU’s new strategic agfinisha, linking it to the proposed Industrial Accelerator Act and the goal of creating “Made in Europe” markets for clean technologies. In her latest state of the union address, she emphasized the required to boost domestic production and decarbonization toreceiveher, not at the expense of one another. Similarly, Stephane Sejourne, a European Commission executive vice-president, has highlighted public procurement’s potential as a lever for ensuring competitiveness, resilience, and economic security.

However, to promote competitiveness and meaningful climate leadership, sustainability must become a requirement in public tfinishers, not an optional add-on. Otherwise, companies building clean steel plants or producing low-carbon cement will still lose out to cheaper, higher-emissions competitors.

These heavy industries are central to Europe’s competitiveness and job creation, and they are doing exactly what Europe’s strategies demand: decarbonizing supply chains, investing in innovation, and creating skilled local jobs. But they required a stable incentive that rewards decarbonization and fosters reliable markets for clean products. As the German Steel Association warns, Europe risks losing competitiveness unless public procurement creates reliable demand for low-carbon materials.

While many public acquireers are attempting to incorporate green criteria, the current legal framework remains too fragmented and complex to facilitate the mainstreaming of strategic, climate-aligned procurement. This leaves cleaner firms facing inconsistent demand and unclear expectations. Public procurement should be a strategic instrument that rewards performance, not just compliance. But outdated habits and administrative caution still hinder innovation, benefiting higher-emissions competitors.

Making matters worse, competition in EU procurement has declined overall, especially for compacter tfinishers. The European Court of Auditors found that single-bid contracts rose from 24 percent in 2011 to 42 percent in 2021, while the recent commission evaluation reveals that large contracts still attract strong participation. Simplification is requireded, not to lower standards, but to build green procurement clearer and more consistent.

Europe risks falling behind not for lack of technology, but for lack of alignment between its industrial, climate, and procurement policies.

Liesbeth Casier, Joren Verschaeve, Chrisophe Deboffe

Other economies have relocated more decisively. Under President Joe Biden’s administration, the US Inflation Reduction Act utilized public spfinishing to promote clean manufacturing and domestic resilience. And in the UK, a new procurement act embeds “social value” and climate considerations into public tfinishers, creating clearer incentives for innovation and sustainability. Both reveal how procurement can create “leading markets” for clean materials, a goal that is central to the Industrial Accelerator Act.

While that act aims to boost domestic demand for low-carbon technologies, the procurement directive should ensure coherence with sectoral legislation and translate these ambitions into consistent, implementable rules. Done right, this can promote a shift to procurement that rewards quality and innovation. Europe risks falling behind not for lack of technology, but for lack of alignment between its industrial, climate, and procurement policies.

If implemented well, procurement reforms could unlock more competitive, consistent, and resilient public spfinishing without raising budreceives. That means awarding contracts based on real value for money and creating green public procurement the default, thus sfinishing a clear market signal that quality, life-cycle costs, and wider societal benefits matter more than the lowest initial bid. It also means agreeing on common environmental criteria and robust standards across the single market, so that acquireers and suppliers adhere to the same rules, creating implementation clearer and competition fairer. And it means harmonizing requirements in key sectors, reducing complexity for public acquireers, and giving companies the certainty they required to plan and invest.

Some countries are already revealing what is possible. Lithuania scaled green procurement from 5 percent to over 90 percent of contract value in just three years, combining clear criteria with training and oversight. Portugal has introduced binding environmental standards in high-priority sectors, while Ireland utilizes embodied carbon tarreceives to procure cleaner, higher-performance public buildings. The first Irish tfinisher applying the CO2 Performance Ladder, a best-practice tool for green public procurement, cut emissions by 21 percent compared with a conventional approach, offering proof that the right criteria can drive measurable results.

The EU already has the tools to do better. Using them can unlock benefits that extfinish beyond driving clean industrial innovation. Consider, for example, that air pollution costs Europe an estimated €600 billion ($696 billion) per year. According to the consultancy Carbone 4, aligning procurement with sustainability could cut carbon dioxide emissions by 34 million metric tons annually, mobilize €86 billion for green industries, and create 384,000 high-quality jobs. And the same dynamic occurs locally. When the French city of Dinan added green and social criteria to its cleaning services contract, it cut costs by 20 percent, reduced water utilize, and created jobs for unemployed residents.

At a time when demands on constrained public budreceives are rising, strategic procurement can strengthen businesses, reduce emissions, protect public health, and promote economic growth at the same time. Why not reform the rules to build it the norm?

This commentary is signed by Paolo Campanella and Gijs Termeer.

• Liesbeth Casier is Lead of Public Procurement and Sustainable Infrastructure at the International Institute for Sustainable Development.

• Joren Verschaeve is Coordinator at the Alliance for Low-Carbon Cement and Concrete.

• Chrisophe Deboffe is a partner at Neo-Eco, a circular economy consultancy.

Disclaimer: Views expressed by writers in this section are their own and do not necessarily reflect Arab News’ point-of-view

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