Green Public Procurement – A Potential Game Changer for India?

Green Public Procurement (GPP) may be simply defined as “Public procurement for a better environment“. Those not accustomed to simplicity, define GPP as “a process whereby public authorities seek to procure goods, services and works with a reduced environmental impact throughout their life cycle when compared to goods, services and works with the same primary function that would otherwise be procured.” (Phew!)

GPP is fundamentally a voluntary instrument, but it can be legislated.

Japan already has a law on GPP. In 2000, in South Africa, Department of Environment Affairs adopted a Preferential Procurement Policy under the ‘Preferential Procurement Policy Framework Act, 2000’. In China, from January 2007, provincial and central governments have made a list of environment friendly products certified by China Certification Committee for Environmental Labelling and these products have to mandatorily meet environmental protection and energy saving standards. In Mexico, the 2007–2012 National Development Plan brought in sustainability criteria in the procurement policy followed by a procurement law. The law recognized that all wood and furniture procurement by public agencies requires a certificate highlighting its legal origin and paper procured by public agencies will need to have 50 % recycled content

Public authorities are major consumers in Europe. They spend approximately 1.8 trillion euro annually (2015 statistics), representing around 14 % of the EU’s gross domestic product. By using their purchasing power to choose goods and services with lower impacts on the environment, consumers in Europe can make an important contribution to Sustainable Consumption and Production (SCP).

European Union (EU) adopted two directives on 26 February 2014. Today many of the EU countries have transposed these directives or rules into national laws. The new rules are driven by goals that include environmental protection, social responsibility, innovation, combating climate change, employment, public health and other social and environmental considerations.

Importantly, these directives support Innovation partnerships where a contracting authority wishes to purchase goods or services, which are not currently available on the market. The authority may establish an innovation partnership with one or more partners allowing research and development (R&D), piloting and subsequent purchase of a new product, service or work. The procedure for establishing an innovation partnership is set out in Article 31 of Directive 2014/24/EU. Further, these procurement directives allow for preliminary market consultation with suppliers in order to get advice, which may be used in the preparation of the procedure.

Green purchasing is thus about influencing the market. By promoting and using GPP, public authorities can provide industry with real incentives for developing green materials, technologies and products. GPP is therefore a strong stimulus for eco-innovation. To me this is a very important game changing feature – something India badly needs while pushing the agenda of “make in India”.

GPP has  great environmental benefits too. In Brazil for instance, procurement of recycled paper notebooks in middle and higher schools has helped in saving 8 million liters of water, 1,766 tons of waste, 241 kg of organo halogen compounds from procurement of 17,97,866 high school and 19,94,149 middle school “green” kits.

To be effective, GPP requires the inclusion of clear and verifiable environmental criteria for products and services in the public procurement process. Several countries in the world have developed guidance in this area, in the form of national GPP criteria. In India, the Eco-mark label miserably failed. Recently, CII has launched a certification scheme called Green Products or GreenPro to promote products that are green. So far, more than 100 products (mainly related to construction) have been certified. The green criteria used however is not well defined, not easily verifiable and many times ambiguous. I won’t attribute much credence to GreenPro certification. It’s more of a PR initiative to me.

My company Environmental Management Centre LLP (EMC) was chosen by the Ministry of Finance in Mauritius to pilot GPP. The main objective was to develop a Framework for Sustainable or Green Public Procurement that will ensure that procurement decisions take the following key factors into account when evaluating goods and services:

• Economic: The need to achieve better value for money with the financial resources available
• Environmental: The product, service or work requirements should include environmental performances following environmentally friendly production methods, higher energy efficiency as well as maximum use of renewable energy, lower generation of waste and emissions and avoiding use of non-biodegradable and toxic substances.
• Social: reduction of poverty and inequality: promoting security and social inclusion; improving working conditions and employee welfare; promoting gender balance.

We developed a SPP Action Plan for Government of Mauritius on this basis. This Action Plan was approved by the Cabinet of Ministers in December 2011. A Workshop was organized with a view to develop sustainability criteria for 5 products as an initial phase. These products included paper, ICT equipment, office furniture, passenger cars, detergents and cleaning materials. A second workshop was held to train procurement officers and hence facilitate implementation of SPP – the participants included both procurement officers and suppliers. Model bid documents were then prepared after training and consultation.

I was personally involved in this project that was supported by UNEP’s SPP. And it was a satisfaction to see that we could implement GPP at policy as well as operational levels – even if I couldn’t do so for my own country!

Today, thirty per cent of the GDP of India is spent on public procurement. Given the massive size of public spending, public sector in India can be a prime driver towards sustainable production and consumption and can create environmental and economic benefits. Unfortunately, In India, GPP is still in infancy.

Some public sector entities and government departments have started internalizing environmental and energy efficiency criteria in their procurement decisions. For instance, Indian Railways, Bharat Heavy Electricals Limited (BHEL), National Thermal Power Corporation (NTPC), and Indian Oil Corporation are promoting sustainable public procurement in a decentralized way in project specific sites with a major focus on procurement of energy conserving equipment in the procurement process of small items. However, such efforts have been undertaken in isolation and have not been replicated or scaled up across organizations, sectors, and levels of governments. Green Procurement related policies may be now seen at Tata Consulting Services (TCS)  and Mahindra .  These examples are like “islands” in “isolation”

The challenge of making GPP as a common practice still remains. See TERI’s Policy Brief that provides a good analyses of the situation.

In 2012, the Confederation of Indian Industry (CII) carried out a study and came up with GPP Guidelines. The Thirteenth Finance Commission of India emphasized the need for incentivizing growth of India with lower environmental and resource footprint. In April 2012, the Union Cabinet approved the Public Procurement Bill, which is currently pending in the Lok Sabha. The Bill aims at ensuring ‘transparency, accountability and probity in the procurement process, promoting competition, enhancing efficiency and economy, maintaining integrity and public confidence in the public procurement process.’  There is hardly any green in this bill, except in Clause 21 where one of the criteria mentioned is “environmental characteristics” of the product.

I think we need a better bill from the green perspective and perhaps at the same time a good pilot. GPP at Indian Railways (IR) could be the pilot given that we have visionary Railway Ministers like Suresh Prabhu.

IR has introduced several green measures and preferences already. IR now produces modern green three-phase drive locomotives with regenerative capability of producing electric power during breaking of trains along with conventional locomotives. This has been done by forming collaboration with General Electric (GE) and BHEL.

Mineral insulating oil is another case for greening of transformers. The latest green intervention is to use organic ester-based insulating fluid in transformers. These fluids are biodegradable. The BIS Draft standard was under discussion on operation of such transformers – DOC ETD 3 (6354) 2012 – and was finalized in April, 2016

Key goods of focus for greening could include ceiling fans, refrigerators, Air conditioners, motors where emphasis could be on energy efficiency and hence reduction in GHG emissions and life cycle costs. IR has already taken steps in this direction by specifying minimum 3 star energy rating during procurement. These requirements could be heightened gradually as market matures.

Although the volume of procurement is negligible as compared to total procurement of IR, the human resources engaged for employment are large. IR could consider supplies of all uniforms for instance made out of Khadi that meet the green requirements and in the process generate revenues and employment for KVIC with reduced environmental footprint.

Introduction of biodegradable bottles for RailNeer, biodegradable paper cups, use of leaf plates etc. could be examples of greening. IR has already installed Bio-toilets for efficient waste disposal and resource recovery. Paperless e-ticketing has been successfully introduced leading to significant reduction in the environmental footprints. Water is now recycled after washing the wagons and solar energy producing plants & self-sustaining hydro-electric and bio-diesel plants at vacant railway lands are getting commissioned.

IR has already started using Compressed Natural Gas (CNG) in its fleet of multiple diesel units and introduced bio diesel in the sector. Trials have also been completed and one power car of DMU has been converted to run on dual fuel mode using CNG and further proliferation is in progress. Laboratory tests have been carried out by using 10% blend of bio-diesel on Trains that have shown successful results.

The only problem is that all these interventions have not been well documented, or third party assessed with metrics to make a strong case for GPP that makes an economic, environmental and social case. We need the numbers to communicate the entire story. Imagine the massive impact of GPP as a pilot at the Indian Railways! There will simply be a surge of green product makers and service providers (e.g. on reverse logistics) and India will move a few inches at least towards Green Manufacturing & Green Market. And more importantly, ride on the innovation and become even globally competitive

Union Railway Minister Suresh Prabhu has been a good friend of mine. I have decided to see him in his office to address my above concerns. Or may be I should ask him to travel with me between Mumbai to Delhi on Rajdhani Express – we could then spend the 17 hours of the Journey together to come up with a pilot and plan to change the game by the time the locomotive of the Rajdhani Express whistles into the New Delhi Railway Station!

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