EXPLORING PUBLIC PROCUREMENT AS A MECHANISM FOR ... · Exploring Public Procurement as a Mechanism for Transitioning To Low-Carbon Buildings i Keywords Barriers, building sector,

EXPLORING PUBLIC PROCUREMENT AS AMECHANISM FOR TRANSITIONING TO

LOW-CARBON BUILDINGS

David Sparks B.Eng (Environmental) (Hons 1)

Submitted in fulfilment of the requirements for the degree of

Doctor of Philosophy

School of Earth, Environment and Biological Sciences

Science and Engineering Faculty

Queensland University of Technology

2018

Exploring Public Procurement as a Mechanism for Transitioning To Low-Carbon Buildings i

Keywords

Barriers, building sector, carbon, climate change, decoupling, greenhouse gas

emissions, low-carbon public procurement, sustainability, sustainable development.

Total estimated greenhouse gas emissions generated as a result of this dissertation have been offset.

ii Exploring Public Procurement as a Mechanism for Transitioning To Low-Carbon Buildings

Abstract

Climate change presents one of the greatest sustainability challenges for society

and it is clear that nations must rapidly reduce greenhouse gas emissions to adapt to a

low-carbon future. Public procurement – the processes by which government

authorities acquire goods, services and works – has been identified as a key mechanism

to reduce greenhouse gas emissions and stimulate action on low-carbon development.

The collective purchasing power of public authorities worldwide is substantial and if

this spending was aligned more closely to climate change mitigation objectives it

would significantly reduce the impact of government activities.

‘Low-carbon public procurement’ (LCPP) is emerging as an important agenda

internationally to bring attention to the potential for procurement to reduce emissions.

However, research and practice on low-carbon public procurement is somewhat

emergent and ad hoc, with certain regions and jurisdictions more progressed than

others. Research on the topic has been insufficient to provide clear direction for

government entities considering a transition to low-carbon practices. Within this

context, the purpose of this thesis was to contribute to this emerging research area by

exploring how public procurement can be further harnessed to transition public

buildings towards low-carbon operations.

A survey of public procurement staff was undertaken to gain insight into barriers

limiting the uptake of LCPP and to explore the current use of low-carbon and energy

efficiency criteria in government procurement. A variety of key barriers across cost,

skills/knowledge and tools/guidelines categories emerged as important barriers to

uptake. The results also showed that whilst the use of energy efficiency criteria was

relatively frequent within state government building-sector procurement, the use of

low-carbon criteria was uncommon and generally does not appear to be influencing

procurement decision-making. Significant untapped potential remains for public

procurement to play a role in driving building sector emissions reductions.

Two case studies of successful initiatives were investigated with regard to their

approaches to low-carbon public procurement. Characteristics and strategies of the two

programs were compared and a suite of factors concluded to be conducive to program

success were identified through an analysis of survey results, interviews and document

Exploring Public Procurement as a Mechanism for Transitioning To Low-Carbon Buildings iii

analysis. It is concluded from the synthesis of key findings that a suite of five enabling

factors and 24 success strategies were conducive to successful low-carbon public

procurement outcomes, with important implications for government, industry, and

academia.

A new low-carbon public procurement practices model was developed as a way

of processing key lessons learned and to highlight key success factors and their

potential interrelationships. It was concluded that these factors align with – and should

be applied within – three program mechanisms of ‘Leadership and vision’,

‘Engagement’ and ‘Design and implementation’ of programs. This provides a starting

point for considering the development of future LCPP initiatives and a context for

discussing opportunities for improvement of existing programs. This research has

important implications for governments beginning the transition towards low-carbon

practices and operations.

iv Exploring Public Procurement as a Mechanism for Transitioning To Low-Carbon Buildings

Table of Contents

Keywords .................................................................................................................................. i

Abstract .................................................................................................................................... ii

Table of Contents .................................................................................................................... iv

List of Figures ......................................................................................................................... vi

List of Tables .......................................................................................................................... vii

List of Abbreviations ............................................................................................................. viii

Statement of Original Authorship ........................................................................................... ix

Acknowledgements .................................................................................................................. x

Chapter 1: Introduction ...................................................................................... 1

1.1 Climate change and the imperative for action ................................................................ 1

1.2 Opportunities for low-carbon development ................................................................... 3

1.3 The role of public procurement in the building sector ................................................... 4

1.4 The research problem ..................................................................................................... 6

1.5 Scope .............................................................................................................................. 7

1.6 Thesis structure ............................................................................................................ 10

Chapter 2: Literature Review ........................................................................... 11

2.1 Low-carbon buildings .................................................................................................. 11

2.2 Procuring for low-carbon buildings ............................................................................. 22

2.3 Potential barriers to low-carbon public procurement ................................................... 32

2.4 Summary and Implications .......................................................................................... 45

Chapter 3: Research Design .............................................................................. 47

3.1 The Research problem and research design ................................................................. 47

3.2 Research methods ........................................................................................................ 54

3.3 Data collection procedure ............................................................................................ 59

3.4 Data analysis ................................................................................................................ 65

3.5 Ethics and Limitations ................................................................................................. 68

3.6 Chapter Summary ........................................................................................................ 69

Chapter 4: Survey Results and Analysis .......................................................... 71

4.1 Survey results ............................................................................................................... 71

4.2 Analysis of results ........................................................................................................ 83

Chapter 5: Case Study – GGB Program ........................................................ 119

5.1 Program background .................................................................................................. 119

5.2 Key program characteristics and strategies ................................................................ 123

5.3 Chapter summary ....................................................................................................... 153

Exploring Public Procurement as a Mechanism for Transitioning To Low-Carbon Buildings v

Chapter 6: Case Study – GPP 2020 ................................................................ 155

6.1 Background ................................................................................................................. 155

6.2 Key program characteristics and strategies ................................................................ 158

6.3 Chapter summary ........................................................................................................ 182

Chapter 7: Discussion ...................................................................................... 183

7.1 Factors conducive to LCPP program success ............................................................. 184

7.2 A new conceptual model of low-carbon public procurement practices ...................... 214

7.3 Chapter Summary ....................................................................................................... 226

Chapter 8: Conclusions ................................................................................... 229

8.1 Justification for the research focus ............................................................................. 231

8.2 Public procurement as a mechanism for decoupling emissions.................................. 232

8.3 State government efforts addressing the carbon performance of public buildings ..... 234

8.4 Status of low-carbon public procurement practices .................................................... 235

8.5 Learning from successful LCPP initiatives ................................................................ 237

8.6 Implications of the research for academia, government and industry ........................ 241

References ............................................................................................................... 245

Appendices .............................................................................................................. 263

Appendix A : Bibliometric analysis results .......................................................................... 263

Appendix B : Uptake of sustainable procurement in Australian state governments ............. 268

Appendix C : Desktop case study matrix .............................................................................. 282

Appendix D : Interview protocol .......................................................................................... 283

vi Exploring Public Procurement as a Mechanism for Transitioning To Low-Carbon Buildings

List of Figures

Figure 1: Research focus ............................................................................................ 11

Figure 2: Building-sector emissions reduction opportunities (ClimateWorks Australia, 2010) ............................................................................................ 14

Figure 3: Stylistic representation of decoupling concept (Smith et al., 2010) ........... 52

Figure 4: Survey respondents' work experience ......................................................... 73

Figure 5: Use of energy efficiency in state government procurement is common .. 112

Figure 6: Use of low-carbon criteria is relatively uncommon ................................. 114

Figure 7: Low-carbon criteria does not significantly impact contract award decisions ..................................................................................................... 115

Figure 8: Hypothetical EPC scenario (Government Procurement Group, 2011) ..... 124

Figure 9: Low-carbon public procurement practices (LCPPP) model ..................... 215

Figure 10: Number of published peer reviewed papers on public procurement and carbon or energy efficiency issues. ..................................................... 264

Exploring Public Procurement as a Mechanism for Transitioning To Low-Carbon Buildings vii

List of Tables

Table 1: Classification system for epistemological orientation (Hoejmose and Adrien-Kirby, 2012). ................................................................................... 60

Table 2: Survey respondent location .......................................................................... 73

Table 3: Respondents’ familiarity with the term ‘low-carbon’ .................................. 74

Table 4: Organisational familiarity with the term ‘low-carbon’ ................................ 74

Table 5: Frequency distribution of key barrier categories ......................................... 75

Table 6: Barrier Category Score and Ranking of barrier categories .......................... 76

Table 7: Summary of perceived barriers to low-carbon public procurement – Frequency and proportion of responses ....................................................... 78

Table 8: Ranking of barrier items .............................................................................. 80

Table 9: Inclusion of energy efficiency criteria in requests for tender ...................... 82

Table 10: Inclusion of carbon emission criteria in requests for tender ...................... 82

Table 11: Have carbon emission criteria ever resulted in the rejection of the offer with the lowest price? .......................................................................... 82

Table 12: Barrier Category Score and Rank .............................................................. 86

Table 13: Factors and Strategies conducive to LCPP program success................... 184

Table 14: Recommendations for transitioning towards low-carbon public procurement ............................................................................................... 231

Table 15: Summary of bibliometric analysis ........................................................... 265

viii Exploring Public Procurement as a Mechanism for Transitioning To Low-Carbon Buildings

List of Abbreviations

AEPCA Australasian Energy Performance Contracting Association ASBEC Australian Sustainable Built Environment Council BAU Business as Usual CBI Climate Bonds Initiative CO2e Carbon Dioxide Equivalent CO2PL CO2 Performance Ladder GGB Greener Government Buildings EGB Efficient Government Buildings DFS Detailed Facility Study DTF Department of Treasury and Finance EPC Energy Performance Contract ESCO Energy Service Company GPP Green Public Procurement HVAC Heating, Ventilation and Air-Conditioning IPCC Intergovernmental Panel on Climate Change IPMVP International Performance Measurement and Verification Protocol KPI Key Performance Indicator LCC Life-Cycle Cost LCPP Low-Carbon Public Procurement NABERS National Australian Built Environment Rating System NSW New South Wales NPV Net Present Value M&V Measurement and Verification MEAT Most Economically Advantageous Tender MRV Measurement, Reporting and Verification NGER National Greenhouse and Energy Reporting OECD Organisation for Economic Cooperation and Development RFP Request for Proposal SIP Strategic Implementation Plan SPP Sustainable Public Procurement UN United Nations WSD Whole System Design

Exploring Public Procurement as a Mechanism for Transitioning To Low-Carbon Buildings ix

Statement of Original Authorship

The work contained in this thesis has not been previously submitted to meet

requirements for an award at this or any other higher education institution. To the best

of my knowledge and belief, the thesis contains no material previously published or

written by another person except where due reference is made.

Signature: QUT Verified Signature

Date: _________________________22/03/2018

x Exploring Public Procurement as a Mechanism for Transitioning To Low-Carbon Buildings

Acknowledgements

I would like to express profound gratitude to my primary supervisor, colleague

and friend, A/Professor Cheryl Desha. My deepest thanks for your guidance, support,

encouragement and kindness along this journey. I look forward to conquering exciting

sustainability opportunities with you in the future.

Secondly, I would like to express heartfelt thanks and appreciation to my

associate supervisor Professor Les Dawes and external advisor Dr Karlson ‘Charlie’

Hargroves who provided invaluable feedback and insights throughout the course of

researching and writing this dissertation. Thank you also to Dr Prasanna Egodawatta

and Professor Robin Drogemuller for your review and comments.

I am so grateful to my family for the support over these past years and for all the

dinners, wines, love, and ridiculous banter that has helped immensely. Thank you in

particular to my wonderful parents and siblings for all your support. To my fellow

QUT colleagues and friends, thank you for sharing the many lunchtimes and

conversations that have made this such a special journey. In particular, thank you to

Angie Reeve, Omniya el-Baghdadi, Kim Wilson, Kristen Thompson, Savindi Caldera,

Fiona McKeague, Karen Manley, Matt Gray, and Tony Matthews. I would also like to

extend my thanks to the Queensland University of Technology Science and

Engineering Faculty, in particular Professor Stephen Kajewski, for the provision of a

scholarship that enabled me to carry out this research. Computational resources and

services used in this work were provided by the HPC and Research Support Group,

Queensland University of Technology, Brisbane, Australia.

A special thank you to the many colleagues in academia, industry and

government who have provided feedback, review, and insightful conversation at

various stages of this research. In particular, I would like to thank Luke Menzel, Mark

Thomson, Lee Wade, Adrian Bridge, Alan Pears, Jo Lewis, and Le Chen.

Finally, to all those who participated in the survey and interviews that were

conducted during this research – but who I cannot mention by name here in the

interests of maintaining anonymity – It is your insights upon which this research has

been built. Thank you.

Chapter 1: Introduction 1

Chapter 1: Introduction

1.1 CLIMATE CHANGE AND THE IMPERATIVE FOR ACTION

Society is facing a host of significant and complex challenges, including climate

change, resource shortages, and environmental degradation (Intergovernmental Panel

on Climate Change, 2013, Gardner et al., 2015). Human civilisations are becoming

increasingly urbanised with predictions that approximately two-thirds of the world’s

population will live in cities by 2050 (United Nations, 2014). This urbanisation creates

pressure points for sustainability but also provides opportunities for action. As such,

there can be no true attempts at achieving sustainability unless cities are a focal point.

Greenhouse gas emissions resulting from human activity have increased

significantly since the beginning of the industrial revolution leading to a marked

increase in atmospheric greenhouse gas concentrations (Intergovernmental Panel on

Climate Change, 2013). The rate of emissions has continued to rise, with absolute

global emissions increasing in recent decades despite the increasing adoption of

national and international mitigation policies (Intergovernmental Panel on Climate

Change, 2014). Furthermore, the most recent reports from the IPCC show that the

impacts of climate change are already being seen, resulting in impacts such as sea level

rise, more frequent and extreme natural disasters, and global warming.

Recent climate change research indicates that human activity has been the

dominant cause of observed warming in recent decades, while observational studies

show that Earth’s climate is changing in rapid and unprecedented ways

(Intergovernmental Panel on Climate Change, 2013). In the words of the IPCC it is

‘extremely likely’ that “human influence has been the dominant cause of the observed

warming since the mid-20th Century” (Intergovernmental Panel on Climate Change,

2014). It is now clear that climate change represents one of the most pressing problems

for society and is a significant impediment to achieving sustainable development.

Considering the increasingly dire predictions of the scientific community and

the forecasted negative impacts of climate change on the economy, this presents a

significant barrier currently preventing governments from achieving sustainable

development goals and climate change mitigation objectives. More than a decade ago

2 Chapter 1: Introduction

Stern (2007) stressed the imperative for additional greenhouse gas mitigation

opportunities to be identified and rapidly implemented, a conclusion reinforced in

Australia in 2011 by Garnaut’s review for the federal government (Garnaut, 2011) and

more recently in the Paris Agreement which was ratified by the Australian Government

in November 2016 (United Nations Framework Convention on Climate Change,

2015). If anthropogenic greenhouse gas emissions are not rapidly reduced, future

impacts are likely to increase, resulting in drastic financial, social and ecological

consequences.

In summary, numerous international bodies such as the United Nations, the

World Bank, and the IPCC are calling on public and private organisations to

implement further climate change mitigation initiatives in order to reduce greenhouse

gas emissions and slow the rate of climate change. Whilst many nations are taking

some degree of action on these fronts, global greenhouse gas emission trends are

continuing to rise and are predicted to continue rising rapidly unless more significant

mitigation efforts are rapidly introduced.

Within cities, the building sector is responsible for a significant proportion of

energy and resource flows, contributing significantly to anthropogenic climate change

and other environmental pressures. There is also significant potential for this sector to

improve its energy efficiency and carbon performance, with many of these

opportunities already cost-effective (Hargroves et al., 2016). Realising this

opportunity, governments around the world are prioritising the need for the buildings

sector to significantly reduce greenhouse gas emissions and associated carbon liability,

to contribute to global efforts in greenhouse gas emission reductions.

There are significant calls to action from a range of private and public-sector

entities to rapidly adapt our urban development models to low-carbon operations. This

includes rapidly reducing greenhouse gas emissions (Intergovernmental Panel on

Climate Change, 2014), building resilient low-carbon cities (McKevitt and Davis,

2016) and immediately implementing strategies to decouple carbon emissions from

economic growth (Hargroves et al., 2016). Such action is also seen as critical to

enhance the preparedness and economic resilience of the building sector globally, in a

future carbon-constrained economy.


1.2 OPPORTUNITIES FOR LOW-CARBON DEVELOPMENT

In the following paragraphs, opportunities for sustainable development are

briefly highlighted with regard to the established consensus globally amongst

researchers and practitioners in the built environment. Seminal literature is referenced

to provide a foundation for the following thesis chapters.

Sustainable development is often defined as "development that meets the needs

of the present without compromising the ability of future generations to meet their own

needs” (World Commission on Environment and Development, 1987). For

development to progress in such a way it necessitates that our social and institutional

systems operate within the ecological boundaries imposed by the natural environment

in which they operate. However, key reports such as the Millennium Ecosystem

Assessment (World Resources Institute, 2005) and the State of the World Reports

(Worldwatch Institute, 2015) suggest that development over the past several decades

has been exceeding the carrying capacity of the planet in many respects.

In 2016 the United Nations General Assembly officially adopted the ‘2030

Agenda for Sustainable Development’ which sets out a 15-year plan to improve

sustainability and prosperity worldwide. It sets out 17 sustainable development goals

(SDGs) to be addressed, including 169 indicators. Many of the priorities are directly

relevant to this thesis, including taking action on climate change, improving the

sustainability of cities, and adopting responsible consumption and production

practices. For example, Sustainable Development Goal #13: Climate Change, which

aims to “take urgent action to combat climate change and its impacts” and includes

targets such as “Integrate climate change measures into national policies, strategies

and planning”, and “Improve education, awareness-raising and human and

institutional capacity on climate change mitigation”. These and many other SDGs are

of direct relevance to this thesis, which aims to contribute to the ongoing discussion

and investigation of sustainable development in practice.

Government agencies have key roles to play in achieving these and other

sustainable development goals. This is primarily due to the functions government

undertakes in relation to national development and the role government plays in

shaping social systems such as the economy, policy, infrastructure, and education.


Over the past several decades governments worldwide have been attempting to

integrate sustainable development concepts into policy and regulation to deal with

challenges such as climate change. Many policy documents now reference

sustainability concepts and, in some instances, accompanying guidelines have been

developed to help government agencies operationalise sustainable development

objectives. It is of paramount importance that governments continue to develop

policies and practices that facilitate sustainable development goals. In order to achieve

this, governments must identify strategic opportunities for incorporating sustainable

development procedures into existing policies and mechanisms.

1.3 THE ROLE OF PUBLIC PROCUREMENT IN THE BUILDING SECTOR

Over the past several decades the total volume of greenhouse gas emissions

released directly as a result of government activities have generally continued to

increase (see for example Wiedmann and Barrett (2011). This suggests that despite

national climate change mitigation strategies in many regions, current government

purchasing patterns are actively contributing to further climate change. In order to

effectively deal with the problem of climate change, government procurement

practices need to be more closely aligned with climate change mitigation goals.

The significant purchasing power of public authorities worldwide accounts for a

large percentage of Gross Domestic Product (GDP) in most countries and collectively

amounts to trillions of dollars annually (Organisation for Economic Cooperation and

Development, 2013). In Organisation for Economic Co-operation and Development

(OECD) countries, public procurement accounts for 13 per cent of GDP and 29 per

cent of general government spending (Organisation for Economic Cooperation and

Development, 2013). It has been suggested that if this significant financial investment

could be aligned more closely with sustainability principles it could potentially help

reduce the environmental impact of government activities (Organisation for Economic

Cooperation and Development, 2013, Correia et al., 2013). It is for this reason that

public procurement is often regarded as a potential leverage point for supporting

sustainable development.

In recent years, public procurement has been highlighted as a key instrument

available to governments to reduce greenhouse gas emissions and help achieve low-

carbon development objectives (Correia et al., 2013, van Asselt et al., 2006). Due to


the scale of expenditure, procurement policies can be a powerful policy tool for

responding to evolving environmental and social expectations, particularly when used

in conjunction with regulation and other economic instruments (European

Commission, 2008). In particular, public procurement has the potential to drive

markets for energy-efficient and low-carbon technologies, products and services (U.S.

Department of Energy, 2012). If public spending could be directed towards low-carbon

outcomes it could lead to reductions in greenhouse gas emissions and help encourage

further innovation in low-carbon solutions.

Although the concept of using public procurement to help achieve emissions

reductions has been discussed for a number of years, uptake has been slow, and a

number of barriers are preventing mainstream adoption. Government spending in the

building sector is significant, yet the majority of expenditure is still not directed

towards achieving the level of emission mitigation efforts that are required to limit

climate change. The building sector in particular has a key role to play in reducing

anthropogenic greenhouse gas emissions. Fortunately, there is significant potential to

improve the energy efficiency and carbon performance of the building stock.

Public procurement represents a key mechanism through which to enhance

decoupling efforts. The influence of procurement spans government policy,

organisational behaviour, technological development and institutional innovation.

Procurement practices can help support the development and proliferation of low-

carbon innovations. It has the potential both to influence niche technological

innovations and to affect wider policy and organisational changes at the landscape and

regime levels that are currently locking-in business-as-usual trajectories.

Despite the clear need to mainstream the adoption of low-carbon buildings it is

generally agreed that the uptake of low-carbon buildings is still too slow

(ClimateWorks Australia, 2013). Recently there has been a number of initiatives in

some more progressive jurisdictions focussed on trialling and implementing low-

carbon public procurement practices, however action in has still been largely ad-hoc

and champion-led.

In order to understand how low-carbon public procurement can be mainstreamed

there is a need to explore key barriers and lessons learned that can help facilitate uptake

in other regions. This thesis will help fill the gap that exists in the academic literature


on guidance regarding key success factors and strategies for overcoming barriers to

adoption.

1.4 THE RESEARCH PROBLEM

This research will explore the use of public procurement as a mechanism to

accelerate the uptake of low-carbon buildings and help transition the building sector

to low-carbon operations, focusing on the context of Australian state governments.

This thesis will explore the following research problem:

“How can public procurement be used to transition public buildings towards low-

carbon operations?”

This research problem will be informed by the following subset of research

questions that drive the research methods and inquiry. Specifically, this dissertation

addresses four research sub-questions:

RQ1. How can low-carbon procurement practices lead to improved carbon and

sustainability performance outcomes in public buildings?

This research question aims to investigate how public procurement practices can

lead to improved carbon and sustainability performance outcomes in public buildings.

The aims of this research question are to understand firstly what low-carbon public

procurement looks like in practice; and secondly to understand the challenges and

opportunities of incorporating low-carbon considerations into public procurement

processes. This research question is addressed through the literature review.

RQ2. How do Australian state government authorities currently address the

carbon performance of public buildings?

The purpose of this question is to explore the extent of current efforts by

Australian state governments to reduce greenhouse gas emissions from public

buildings. This is important because it helps to set the context for the relevance of the

research and the potential applicability of the research outputs across various

jurisdictions. This research question is addressed firstly through the literature review

by exploring current policies and initiatives of state and territory government in

Australia; and secondly through the survey stage by exploring the extent to which

survey respondents responded whether or not their departments were incorporating

carbon emission and energy efficiency criteria into their procurement processes.


RQ3. What is the status of public procurement practices for low-carbon

outcomes, including barriers to uptake and opportunities for

implementation?

This research question is addressed firstly through the survey to understand

barriers to uptake, and secondly through the case studies, involving document analysis

and interviews with program stakeholders to determine opportunities for

implementation and key success factors of the programs. The purpose of this research

question is to explore what low-carbon public procurement practices are being

employed by LCPP initiatives in order to understand opportunities for reducing

emissions and overcoming barriers to implementation.

RQ4. What can be learned from successful examples of low-carbon public

procurement to help deliver low-carbon outcomes in public buildings?

The purpose of this research question is to explore key lessons learned from

successful low-carbon public procurement initiatives that could be transferable to the

Australian context. This question is answered by drawing on the findings of the

literature review, survey and case studies to compare and contrast the different

approaches in order to distil attributes that are conducive to program success and which

hold promise for application in an Australian context. Specific objectives are to

develop a model to assist with synthesising the results of the inquiry. Specifically, to

help identify key strategies and factors of successful initiatives to inform the design

and implementation of future LCPP programs and a context for discussing existing

program improvement opportunities.

1.5 SCOPE

The following section summarises the scope and significance of the thesis,

introducing two key concepts of ‘public procurement’ and ‘public buildings’.

1.5.1 Public procurement

This research focuses on the policy instrument of public procurement. The term

‘procurement’ refers to processes through which goods, services and works are

acquired by an entity (Hackett et al., 2007). This may include such things as acquiring

products, capital equipment, property, infrastructure, and services (Government of

New South Wales, 2005). In general, procurement entails a number of common


process steps, including the identification of a need, the development of specifications

to fulfil that need, make and buy analysis, tendering, selection, and the awarding and

management of a contract (Department of Finance, 2014). The term ‘public

procurement’ refers to the processes by which a government authority acquires goods,

services and works using public funds (Parikka-Alhola and Nissinen, 2012). Public

procurement is a central function of governments and facilitates the achievement of

government objectives. Due to the scale of government operations, public procurement

entails the purchasing of immense amounts of goods, services and works across all

sectors of the economy.

1.5.2 Public buildings

This research focuses on procurement within the context of public buildings,

including government office buildings, hospitals, schools and other facilities owned

and tenanted by governments. The motivation for focusing on this sector is the

significant impact these buildings have on demand for energy, resources and waste,

which contribute to a wide range of negative environmental and social impacts,

including anthropogenic climate change, environmental degradation, and energy and

resource pressures.

Public-sector buildings have long been identified as a priority sector for

greenhouse gas abatement, for example the Australian Greenhouse Office highlighted

their mitigation potential in 1999 (Australian Greenhouse Office, 1999). More recently

it has been estimated that facilities owned and occupied by governments in Australia

account for approximately 14 per cent of the potential efficiency improvements across

the Australian buildings sector which equates to a significant impact on energy use

and greenhouse gas emissions nationally (Department of Climate Change and Energy

Efficiency, 2012). Additionally, the recent National Strategy on Energy Efficiency

(NSEE) highlights the importance of governments taking a leadership role to

accelerate efficiency efforts, further underscoring the importance of a focus on public

buildings (Department of Climate Change and Energy Efficiency, 2012).

Unfortunately, studies suggest that emissions released as a result of occupying

and operating government buildings have not shown sufficient progress to respond to

the urgent threat posed by climate change. Many key public building categories such

as hospitals, schools and offices are predicted to show a rise in emissions over the

coming years (Department of Climate Change and Energy Efficiency, 2012). Given


the seriousness and urgency of the climate change problem more needs to be done to

reduce the impact of these buildings on emissions. This research will therefore

consider barriers and opportunities for low-carbon public procurement practices to

impact emissions from government owned and operated buildings.

This thesis takes a whole-system view of opportunities for emissions reductions

in buildings by considering not just the building and construction stage of buildings,

but also opportunities that exist throughout a building’s entire lifecycle. This includes,

for example, emissions reductions that can be delivered through changes to operation

and maintenance practices, as well as opportunities for improvements to existing stock

through retrofitting and refurbishment, and the impact that decisions about factors such

as office equipment and occupant behaviour could have on building energy use. Thus,

the term ‘buildings’ is used as a comprehensive term to allow inclusion of

opportunities throughout all phases of a building’s life, and that are broader than

simply just construction stage opportunities. In particular, the focus of the research

concerns opportunities that can be impacted through the mechanism of procurement.

1.5.3 Significance and contribution

The preceding sections highlight the imperative to rapidly reduce emissions from

the building sector and the potential for public procurement to be used as a mechanism

for achieving significant decoupling of emissions from building sector development.

It also highlighted that guidance on how to transition public procurement practices

towards low-carbon outcomes is still quite emergent in both academic and industry

realms, with limited research on best practices and a lack of understanding about

important barriers to uptake and key success factors that can help overcome these

challenges.

To understand how low-carbon public procurement can be mainstreamed there is a

need to explore key barriers and lessons learned from early adopters that can help

facilitate uptake in other regions. This thesis will help fill the gap that exists in the

academic literature on guidance regarding key barriers, success factors and strategies

for low-carbon public procurement. This thesis contributes to important dialogue

between academic, government and industry stakeholders by exploring low-carbon

public procurement as a carbon emission mitigation strategy. The research study

investigates the role of public procurement as a potential mechanism to accelerate the

uptake of low-carbon buildings and help transition the Australian public building


sector to low-carbon operations. Specifically, this research will identify and detail key

barriers and drivers to the increased adoption of low-carbon public procurement

(LCPP) practices, particularly as relevant to state government agencies in Australia. It

will also identify strategic opportunities to learn from current practice to enhance the

capacity of public procurement to deliver low-carbon outcomes.

The following research is significant and unique since there is limited research

generally on low-carbon public procurement and a lack of research relating

specifically to opportunities throughout the building sector. Additionally, there is

limited existing research on barriers contributing to the limited uptake of low-carbon

public procurement and on opportunities for implementation that may assist the

transition to more widespread application of LCPP.

Given the significance of public procurement and its impacts on sustainability

objectives, this research will be of value to both the government and private sectors in

identifying opportunities for enhanced use of public procurement to reduce greenhouse

gas emissions arising from Government building sector purchases. This will assist both

government and industry with efforts to decouple development from greenhouse gas

emissions.

1.6 THESIS STRUCTURE

This introductory chapter introduces the research area and core research

problem. Chapter 2 presents a review of literature on low-carbon public procurement

including a focus on barriers to uptake. Chapter 3 outlines the methodology, including

the research methods used to collect and analyse the data. Following this, Chapter 4

presents the results of a nationwide survey of public procurement staff involved in

building-sector procurement. Two case studies are presented in Chapter 5 and Chapter

6, focusing on existing successful initiatives that can inform strategies to overcome

key barriers to low-carbon public procurement practices. Chapter 7 presents a

discussion drawing on the findings of the literature review, survey, document analysis

and case studies to compare and contrast the different approaches in order to distil

strategies and factors that appear conducive to program success. Finally, Chapter 8

concludes and discusses implications for government, industry and academia.

Chapter 2: Literature Review 11

Chapter 2: Literature Review

This literature review chapter begins with an exploration of the role of public

procurement as a potential mechanism to support the uptake of low-carbon buildings

and reduce the sector’s impact on climate change. Figure 1 (below) depicts the

progressive narrowing of the research scope resulting in a focus on low-carbon public

procurement (LCPP), where the first two contextual issues of ‘climate change’ and

‘public buildings’ have been outlined in Chapter 1.

Section 2.1 summarises the literature on low-carbon buildings, and strategies and

tools to achieve low-carbon outcomes. Section 2.2 focuses on the specific opportunity

in low-carbon public procurement, and Section 2.3 discusses the existing literature

exploring barriers to more sustainable public procurement, with a focus on literature

concerning energy efficient and low-carbon procurement. This discourse is then used

to discuss implications and emergent knowledge gaps that have informed the resulting

conceptual framework and research methods for this thesis.

Figure 1: Research focus

2.1 LOW-CARBON BUILDINGS

This section defines low-carbon buildings and outlines common terminology

and metrics used to report emissions from buildings. It then discusses potential

strategies for reducing energy use and greenhouse gas emissions in existing and new

Climate change (Ch. 1)

Public buildings (Ch. 1)

Low-carbon buildings (Ch. 2.1)

LCPP & barriers(Ch. 2.2 and 2.3)

12 Chapter 2: Literature Review

buildings, including opportunities for technology and process innovation, behaviour

change, and skills development for professions involved in the building sector.

Greenhouse gas emissions are caused directly and indirectly throughout a

building’s life cycle, during manufacturing of building materials, construction of the

building itself, end-of-life options, and through energy consumed during the

operational phase by systems such as heating and cooling, lighting, computers and IT

equipment, lifts, and numerous other systems. This thesis considers emissions

reductions opportunities throughout the lifecycle of buildings, including opportunities

during construction, refurbishment, maintenance, operational practices, purchase of

energy-consuming office equipment, occupant behaviour; wherever there may be

opportunities to influence emissions reductions through the mechanism of

procurement.

A report by the Council of Australian Governments predicts that greenhouse gas

emissions from a number of key public-building sector categories are likely to continue

to increase over the coming years, while other categories such as libraries and galleries

are predicted to remain relatively steady. Given the urgency and seriousness of the

climate change problem it is important to identify additional mechanisms that could

help to improve this situation and deliver significant emissions cuts across the building

sector.

Improvements to public buildings could deliver a large portion of the efficiency

improvements that are possible to achieve across the Australian buildings sector

(Department of Climate Change and Energy Efficiency, 2012). This would result in

significant reductions of energy use and greenhouse gas emissions. Unfortunately,

studies suggest that emissions released as a result of occupying and operating

government buildings have not shown sufficient progress to respond to the urgent

threat posed by climate change. Many key public building categories such as hospitals,

schools and offices are predicted to show a rise in emissions over the coming years

(Department of Climate Change and Energy Efficiency, 2012).

Numerous mitigation opportunities in all major built environment sectors are

available, with many already being cost-neutral or economically profitable (Australian

Sustainable Built Environment Council, 2016b). According to the IPCC there is

‘robust evidence’ and ‘high agreement’ that recent building-sector advances make

“very low energy construction and retrofits of buildings economically attractive,


sometimes even at net negative costs” (Intergovernmental Panel on Climate Change,

2014). Economic studies have shown that climate change mitigation opportunities in

the building sector alone could reduce global emissions by approximately six

gigatonnes carbon dioxide equivalent (CO2e) per year by 2030 (Intergovernmental

Panel on Climate Change, 2007). This estimate relies only on already-existing

technologies and new technologies that are expected to be available by 2030 and does

not even factor in additional non-technical opportunities such as behaviour change that

could deliver added reductions. Further it has been estimated that approximately thirty

per cent of projected building sector emissions could be “avoided with net economic

benefit” (Intergovernmental Panel on Climate Change, 2007). The building sector

therefore is a key sector deserving of research focus to help realise these and other

opportunities.

The potential for the building sector to drastically reduce its contribution to

global greenhouse gas emissions is now widely recognised. The IPCC 4th Assessment

Report highlights the enormous potential within the building sector to significantly

reduce greenhouse gas emissions, stating that:

“The building sector has the largest potential for reducing GHG

emissions and is relatively independent of the price of carbon reduction

(cost per tCO2e) applied. With proven and commercially available

technologies, the energy consumption in both new and existing

buildings can be cut by an estimated 30-50% without significantly

increasing investment costs.” (United Nations Environment Program,

2010)

Some research suggests that emissions could be reduced by as much as 50 to 80

per cent cost-effectively by 2020 (Department of Climate Change and Energy

Efficiency, 2010, von Weizsäcker et al., 2009). An Australian Senate report estimates

that 60 megatonnes of CO2e per annum could be mitigated in Australia at low or

negative cost by 2030 using technologies already available or expected to be available

before 2020 (Senate Economics Legislation Committee, 2010). Furthermore, many

opportunities are already cost-effective with current technologies, design practices,

equipment, management and behaviour change opportunities (Department of Climate

Change and Energy Efficiency, 2010, Department of Industry, 2015). Figure 2


highlights the cost-effectiveness of numerous building-sector efficiency measures that

can deliver significant emissions reductions.

Figure 2: Building-sector emissions reduction opportunities (ClimateWorks

Australia, 2010)

Despite the existence of many opportunities, tools, guidelines, and technologies

for improving the carbon performance across the building sector, the uptake of low-

carbon buildings is still not happening fast enough to contribute to the greenhouse gas

mitigation efforts that are necessary, and reports by organisations such as the Council

of Australian Governments are predicting that certain key public building categories

are likely to show an increase in greenhouse gas emissions over the coming years

(Department of Climate Change and Energy Efficiency, 2012).

The building sector clearly has a significant impact on greenhouse gas emissions

and climate change and is therefore a key leverage point for climate change action and

the transition to a low-carbon future. The Australian built environment sector must

rapidly transition to a low-carbon development model in order to avoid contributing to

further climate change. The following sections define low-carbon buildings and

outline key strategies for achieving emissions reductions across the building sector,

with a focus on those that are applicable to public buildings, which is a focus area of

the research.

Many building-sector efficiency measures deliver emissions reductions at negative cost


2.1.1 Defining low-carbon buildings

Many different definitions for low-carbon buildings are used in Australia and

Internationally that attempt to define buildings with reduced climate change impact.

Despite many government authorities recently pursuing ‘zero carbon building’ policies

and goals, at present there is no international agreement on building performance

measures or the exact definition of a ‘low-carbon building’ (Marszal et al., 2011).

Existing definitions of reduced-impact buildings in common usage and which are

relevant to public buildings include: ‘low carbon’, ‘zero carbon’, ‘zero emission’, ‘net

zero carbon’, ‘green buildings’, ‘carbon neutral’, ‘climate neutral’, ‘climate positive’,

‘zero energy’, ‘nearly zero-energy building’, and ‘zero net energy’ (Australian

Sustainable Built Environment Council, 2011).

Variations in existing definitions and terminology often relate to factors such as

the physical and temporal system boundary, assessment methods and metrics, and

building type (Australian Sustainable Built Environment Council, 2011). The variety

of definitions is perhaps a result of the recentness of the concepts, and the fact that

definitions and metrics are still emerging. However, the Australian Sustainable Built

Environment Council (ASBEC) defines a zero carbon building as “one that has no net

annual Scope 1 and 2 emissions from operation of building-incorporated services”

(Australian Sustainable Built Environment Council, 2011). ASBEC goes on to define

‘building-incorporated services’ as including “all energy demands or sources that are

part of the building fabric at the time of delivery, such as the thermal envelope (and

associated heating and cooling demand), water heater, built-in cooking appliances,

fixed lighting, shared infrastructure and installed renewable energy generation”.

In this thesis, various terms are used throughout to explain concepts related to

buildings with reduced emissions. The two most common terms employed are ‘low-

carbon’ and ‘energy efficient’. The term ‘low-carbon’ is defined for the purposes of

this thesis as a building with reduced greenhouse gas emissions as compared either to

business-as-usual, or compared to the same building before intervention to improve its

performance, as relevant. The term ‘energy efficient’ refers to an improvement in the

utilisation of energy per unit of productive output or service (which often has an

emission reduction benefit, but may not be the focus). When referencing previous

research about energy efficiency or emissions reductions the terms used in this thesis

will by default be the term used by the original authors of those studies to avoid


misinterpretation. The same principle applies to other similar terms such as

‘sustainable’ and ‘green’, since research in these areas often has transferrable lessons

to low-carbon procurement.

This ASBEC definition discussed above utilises the ‘Greenhouse Gas Protocol’,

developed by the World Council for Sustainable Development (WCSD) and the World

Resources Institute, is the most widely used and recognised standard for greenhouse

gas reporting (Wiedmann and Barrett, 2011). The protocol identifies three categories

to classify emissions from direct business activities (Scope 1), from the use of

electricity (Scope 2) and indirect emissions which result from supply chains (Scope

3). ASBEC recommends the use of this same greenhouse gas emissions in order to

ensure consistency with the National Greenhouse and Energy Reporting System

(NGERS) legislation, and to maintain compatibility with existing Australian

sustainability ratings tools such as the National Australian Built Environment Rating

System (NABERS) (Australian Sustainable Built Environment Council, 2011). The

NGERS and IPCC agreed metric for the measurement and communication of carbon

intensity is in units of kg CO2e/m2/yr.

Common metrics for low-carbon buildings are ‘greenhouse gas emissions’,

‘delivered energy’, ‘primary energy’, ‘energy cost’ and ‘exergy’. The most common

metrics are ‘greenhouse gas emissions’ and ‘primary energy’ (Australian Sustainable

Built Environment Council, 2011), and these are the terms most commonly referred to

in this thesis. This thesis also considers opportunities for emissions reductions in any

of Scope 1, 2 or 3 emissions categories. It is anticipated that by taking a broad view of

emissions reductions it may reveal opportunities for achieving greater reductions and

leveraging co-benefits.

The International Energy Agency has proposed an international framework with

common definitions and terminology. For instance, ‘low-carbon technology’ is

defined as “technologies that produce low – or zero – greenhouse-gas emissions while

operating” (International Energy Agency, 2016). This definition could also be

extended to low-carbon buildings, which could be defined as a building that produces

low – or zero – greenhouse gas emissions while operating. There are also definitions

specifically for zero-carbon buildings. In the IEA framework, zero carbon buildings

are defined as:


“Buildings that over a year do not use energy that entails carbon

dioxide emission. Over the year, these buildings are carbon neutral or

positive in the term that they produce enough CO2-free energy to supply

themselves with energy” (Laustsen, 2008)

Low-carbon buildings should ideally reduce emissions not only during the

operation phase, but also during construction and at end-of-life (Srinivasan et al.,

2014). Thus, a low-carbon building could be defined as a building that produces low

– or zero – greenhouse gas emissions over its entire life cycle. This is the broad

definition adopted in this research. Key strategies for achieving low-carbon buildings

are outlined below.

2.1.2 Existing strategies and tools for low-carbon public buildings

This section outlines some key strategies for reducing emissions from the

building sector and their importance in the context of public procurement. The

development and uptake of these measures is continually increasing, however the

extent of application across the building sector has not yet reached sufficient capacity

to deliver the emissions reductions that will be necessary to avoid significant climate

change. These strategies and tools can be incorporated in procurement processes to

operationalise the concept of low-carbon public procurement.

As mentioned above, greenhouse gas emissions are produced during all stages

of a building’s life-cycle; from initial raw material extraction through to construction,

operation and end-of-life. Therefore, all these life-cycle stages should be considered

when assessing building performance. The majority of emissions result from the

operation phase of the building lifecycle (United Nations Environment Program,

2010). The use of electricity accounts for a significant proportion of emissions

generated during the operation phase. Building-sector energy efficiency is therefore

also a key focus this research.

Collectively, the building sector has a significant impact on greenhouse gas

emissions. The IPCC estimates that non-residential buildings consume approximately

8.4 petawatt-hours of energy worldwide (Lucon et al., 2014). The vast majority of this

is caused by space heating and cooling (40%), lighting (16%), and water heating (12%)

(Lucon et al., 2014). However another large source of emissions falls within the

category of ‘other’, which includes the numerous small sources of energy use from IT


equipment etc., but collectively accounting for approximately 32 per cent of total

building emissions (Lucon et al., 2014).

In Australia the building sector is responsible for approximately twenty-three per

cent of total national emissions (Ma et al., 2012)., with emissions released as a result

of activities throughout the non-residential building sector predicted to increase by

approximately 154 per cent by the year 2050 (Ma et al., 2012). The biggest impact on

emissions in non-residential buildings arises from heating, ventilation and cooling

(HVAC) equipment (68%) and lighting systems (15%) (Department of Climate

Change and Energy Efficiency, 2012). Base building services are typically responsible

for 50 to 60 per cent of a building’s total emissions (Government of Australia, 2010)

with additional indirect emissions arise from the transportation of people, goods and

services to and from buildings (United Nations Environment Program, 2010).

Embodied energy from the extraction and processing of raw materials,

manufacture of building products, construction, refurbishment and demolition of

buildings also contributes significantly to greenhouse gas emissions. For example, the

Commonwealth Scientific and Industrial Research Organisation (CSIRO) estimate

that the total embodied energy embodied contained within the existing building stock

is roughly equivalent to ten years’ worth of national energy consumption (Government

of Australia, 2010).

The Low Carbon Growth Plan for Australia (ClimateWorks Australia, 2011)

identifies twelve cost-effective measures to reduce emissions by 28 MtCO2e across the

building sector, with a majority being delivered by non-residential buildings. The

measures most relevant to public buildings include energy waste reduction, retrofitting

HVAC and lighting systems, elevators and appliances, and water heating. Energy

consumption can be reduced by at least 40 per cent using currently-available

technology (Kneifel, 2010).

Larger improvements of 50 to 80 per cent or more are achievable and cost-

effective through integrated whole systems refurbishments focussing on key systems

such as lighting, HVAC, building envelope, and office equipment (Hargroves et al.,

2016). Some key strategies in these building systems are highlighted below to illustrate

the sorts of technological solutions that can be implemented through low-carbon

procurement practices to reduce emissions.


Heating, Ventilation and Air-Conditioning

The heating, ventilation and air-conditioning (HVAC) systems in a building can

dramatically affect energy consumption and lead to significant greenhouse emissions

impacts. Some studies estimate that HVAC systems account for 65 per cent of energy

consumption in an average building (Kahn et al., 2014). Features such as economy

cycles, variable speed drives, and variable air volume systems are widely-used

technologies that can drastically reduce energy consumption and greenhouse gas

emissions. Good maintenance schedules can ensure systems are operating optimally.

Energy services companies can be contracted to reduce energy consumption and

greenhouse emissions from HVAC systems while maintaining indoor environment

quality.

Lighting

Electric lighting is estimated to account for approximately twenty per cent of a

typical building’s energy use, so collectively accounts for a significant amount of

carbon emissions across the building sector (Australian Sustainable Built Environment

Council, 2016b). Energy efficient design, daylighting strategies and correct

management of lighting systems can reduce lighting energy use by almost 60 per cent

(Xu et al., 2017). Additionally, many lighting technologies emit a significant amount

of waste heat which adds to cooling load for HVAC systems.

Building fabric and façade

The building fabric refers to the outer structure of a building, including the roofs,

walls and other external elements. A building façade has a significant impact on energy

use through the interaction with lighting and heating/cooling systems. Studies have

shown that daylighting strategies can have significant impacts on building energy

consumption (Pellegrino et al., 2017). Passive design strategies can help reduce energy

consumption by controlling solar gain.

Building energy efficiency retrofits

There is significant opportunity to retrofit existing building to improve

operational efficiency by implementing the strategies outlined above and other

measures (Chidiac et al., 2011, Ardente et al., 2011). It is particularly important to

implement such retrofit strategies in public buildings since government-owned and

government-tenanted buildings make up a large percentage of the commercial building


market in most capital cities. Secondly, given that the vast majority of the building

stock that will operate over the coming decades is constituted of existing buildings

rather than new buildings, it is imperative that the carbon performance of the existing

building stock is improved. Existing building retrofit projects have thus been described

as “one of main approaches to realistically achieving reduced building energy

consumption and greenhouse gas emissions” (Ma et al., 2012).

There are significant financial benefits that could be delivered through retrofit

projects, both for individual building stakeholder and for the wider community.

Significant additional economic activity could be generated by building-sector energy

efficiency projects over the coming years (Ma et al., 2012). Despite this, the retrofitting

of the existing building stock presents numerous technical, financial, political and

behavioural challenges. Key challenges include the ‘split incentive’ problem (Kahn et

al., 2014), where misaligned costs and incentives for building owners and tenants can

result in building upgrade works being avoided. Additional challenges include factors

such as the technical complexity of retrofitting existing buildings, accessing capital for

upfront cost, challenges regarding payback periods, and many others. These and other

barriers are discussed in further detail in Section 2.3 below.

2.1.3 Section Summary

Climate change represents a real and significant threat that governments must

respond to first and foremost by mitigating further greenhouse gas emissions. Public

buildings generate significant greenhouse gas emissions could continue to increase

over the coming decades under a business-as-usual approach. Therefore, public

buildings are a valuable focal point for the development of initiatives aimed to reduce

emissions.

There is significant potential to improve the energy efficiency and carbon

performance of public buildings, with many low-carbon strategies already cost

effective and many others that would deliver significant emissions abatement at

marginal cost. Despite this, a number of potential barriers exist. The following sections

discuss sustainable development and the potential role of public procurement as a

policy mechanism through which governments can achieve emissions reductions.

Many of the strategies, technologies and tools discussed above are able to be

incorporated into procurement processes, either as general considerations, technical


specifications, or award criteria. Currently this has been done with an amount of

success. For example, some State governments have trialled the use of tools such as

Green Star in their tenders, and others have set minimum NABERS targets for leased

tenancies. However, the existence and availability of these tools and strategies is not

sufficient on its own to achieve widespread uptake of low-carbon public procurement.

Various and multifaceted barriers limit their uptake.

For example, tools such as Green Star can result in higher upfront cost for new

construction, which may be a deterrent to uptake. When considering whole-of-life

costs they can often pay back the initial premium through lower operating costs and

lower vacancies etc., but this is not necessarily factored into decision-making

adequately and so may not impact uptake. Additional resourcing may also be required

to upskill procurement staff in the effective application of such tools, or there may

simply be a lack of awareness of the potential benefits at a management or decision-

making level. These factors also influence uptake of low-carbon buildings.

Simply using tools such as those mentioned above does not necessarily guarantee

greenhouse gas emission reductions. Typically, with sustainability tools such as Green

Star, credits can be earned across a wide variety of sustainability parameters; many of

which are unrelated to greenhouse gas emissions. A certain score may be required to

achieve a given rating, but this score may be achieved in whole or in part by focussing

on criteria related to other social, economic, or environmental parameters which have

no bearing on carbon emissions. Therefore, the existence and uptake of these tools is

not sufficient to achieve low-carbon public procurement. Secondly, often the

performance is significantly poorer than expected, meaning that intended outcomes

are not achieved. Finally, the uptake of certification tools is much less than sufficient

to deal with the climate change crisis.

Whilst these tools and strategies will form an integral part of the implementation

of low-carbon public procurement, they are not sufficient to achieve it, particularly

because of the many and varied barriers preventing widespread uptake. Hence more

research is needed to explore key barriers in order to understand how low-carbon

public procurement can be mainstreamed. These and many other barriers will be

discussed in the following sections.


2.2 PROCURING FOR LOW-CARBON BUILDINGS

This section will first define and discuss the importance of procurement in the

building sector. It will explore public procurement nationally and globally, and

highlight the potential for public procurement to play a major role in driving the uptake

of low-carbon innovation in the building sector.

2.2.1 Public procurement

The term ‘procurement’ refers to processes through which goods, services and

works are acquired by an entity (Hackett et al., 2007). This may include such things as

acquiring products, capital equipment, property, infrastructure, and services

(Government of New South Wales, 2005). In general, procurement entails a number

of common process steps, including the identification of a need, the development of

specifications to fulfil that need, make and buy analysis, tendering, selection, and the

awarding and management of a contract (Department of Finance, 2014).

The term ‘public procurement’ refers to the processes by which a government

authority acquires goods, services and works using public funds (Parikka-Alhola and

Nissinen, 2012). Typically this entails acquisition from a supplier external to the

government (Department of Housing and Public Works, 2015). Public procurement is

a central function of governments and facilitates the achievement of government

objectives. Due to the scale of government operations, public procurement entails the

purchasing of large amounts of goods, services and works across every sector of the

economy.

The Chartered Institute of Procurement and Supply (CIPS) and other

professional bodies have adopted definitions for public procurement such as “the

designated legal authority to advise, plan, obtain, deliver, and evaluate a

government’s expenditures on goods and services that are used to fulfil stated

objectives, obligations, and activities in pursuit of desired policy outcomes” (Prier and

McCue, 2009). Similarly, the South Australian State Procurement Board defines

procurement as procurement “the end-to-end process (not only the tendering phase)

that begins with defining the need through to contract management and close out of

the supplier, as well as the disposal of the goods” (State Procurement Boad (SA),

2015). These definitions are common in their recognition of procurement as not simply

the purchasing of goods, but a process undertaken to define and achieve objectives


through the management of a variety of processes for the purpose of achieving a

specific organisational outcome.

2.2.2 Public procurement in Australia

Public procurement spending typically accounts for a large percentage of

national Gross Domestic Product (GDP) in most countries. In Australia, public

procurement typically accounts for approximately twenty per cent of GDP (Anthony

and Evans, 2010). Total public procurement in the European Union accounts for

approximately sixteen per cent of the European Union’s GDP annually (European

Commission, 2008) whilst in OECD member countries public procurement accounts

for thirteen per cent of GDP (Organisation for Economic Cooperation and

Development, 2013).

In Australia, the Commonwealth Procurement Rules (CPRs) form the basis of

the government’s procurement policy framework. The Rules define what government

officials can and cannot do when procuring goods and services, and are guided by the

Public Governance, Performance and Accountability Act 2013. The primary goal set

out by these rules is to fulfil government needs in a transparent way while achieving

value for money (Department of Finance, 2014). State and Territory governments have

also adopted these as primary objectives of procurement.

Each State and Territory Government in Australia creates its own procurement

guidelines based on the Commonwealth Procurement Rules. For the past thirty years

there has been an increasing shift away from in-house solutions towards outsourcing

of goods and service provision from the wider market (Anthony and Evans, 2010), so

procurement guidelines are used to help guide these procurement interactions. These

are routinely updated with the goal of improving public procurement processes. A

summary of some key sustainable procurement policies and initiatives in various

Australian state and territory governments is provided in Appendix A with a focus on

those that relate to carbon and energy efficiency.

The construction sector in particular accounts for a large percentage of public

procurement spending, potentially accounting for up to 10 per cent of GDP in some

industrialised countries (Greenhalgh and Squires, 2011). According to Staples and

Dalrymple (2011) “Infrastructure investment in roads and buildings by Australian

state and territory governments accounts for over $59 billion in their respective 2009-


2010 budgets”. They further point out that “as a result of this very considerable

investment, the procurement process has the potential to deliver very significant public

value payoffs to the community” (Staples and Dalrymple, 2011). Many other authors

discuss the public value paradigm of public procurement, for example (O'Flynn, 2007,

Moore, 1995, Murray, 2001). This important concept will be expanded upon in the

following sections, particularly in relation to sustainability and carbon outcomes.

Due to the scale of this expenditure, procurement policies can be a powerful

policy tool for responding to evolving environmental and social expectations,

particularly when used in conjunction with regulation and other economic instruments.

Arguably, reducing emissions caused as a result of government spending represents

good public value. In particular, public procurement has the potential to drive markets

for energy-efficient and low-carbon products and services, drive upstream emissions

reductions, and reduce energy costs for governments and the wider public. Following

is a discussion of sustainability and carbon considerations as a driver to deal with these

and other issues through public procurement.

2.2.3 Sustainable public procurement

A number of terminologies have emerged over the past several decades to

describe the use of public procurement to achieve various environmental and social

outcomes; in particular ‘sustainable public procurement’ (SPP) and ‘green public

procurement’ (GPP). Sustainable public procurement aims to reduce the negative

sustainability impacts of procured products and services across the entire life-cycle.

Sustainability impacts may be in the form of environmental, social or economic

impacts. Green public procurement has a focus more on environmental impacts rather

than the broader sustainability issues encompassing additional social and economic

realms.

The idea that procurement can be used for more than simply acquiring goods and

services - for example, that it can contribute to broader societal objective and values -

has been discussed at least at a theoretical level for many years (Staples and Dalrymple,

2011). Whilst it is only relatively recently that sustainable public procurement has

become an area of active development and pursuit (Hasselbalch et al., 2014), it is

however increasingly being seen as an important objective in government procurement

policies. For example, the Queensland Government Department of Housing and Public

Works states that government can “leverage procurement beyond commercial or


‘profit’ driven objectives, to deliver broader economic, environmental and social

policy objectives” (Department of Housing and Public Works, 2015).

Stakeholder theory is the current dominant theoretical perspective applied within

the sustainable procurement research field, followed by resource-based view (RBV)

and institutional theory (Johnsen et al., 2014). The vast majority of research within the

sustainable procurement field is a-theoretical (Johnsen et al., 2014), which is perhaps

a result of the still emergent nature of the field and a predominance within the extant

literature of practitioner-focused enquiry concentrating on practical issues, challenges

and practices. This research will consider stakeholder and institutional theory

perspectives and their relationship to low-carbon public procurement. Resource-based

view is not pertinent to this thesis as it considers the competitive advantage of

organisations in view of control over resources.

In Australia, the Commonwealth Procurement Rules (CPR) require

sustainability to be considered during procurement. Section 4.5 of the current CPRs

state that “when conducting procurement, an official must consider the relevant

financial and non-financial costs and benefits of each submission including, but not

limited to… environmental sustainability of the proposed goods and services (such as

energy efficiency and environmental impact)” (Department of Finance, 2014). This

particular rule is stated with regard to value for money, acknowledging the role that

low-energy solutions can play in achieving public value. The wording of this rule is at

the same time both strong and weak with respect to sustainability and carbon etc. It

could be considered strong due to the inclusion of the word ‘must’, which in the CPRs

is a term that specifically means a government entity is required to comply with this

rule. However, it could also be considered weak in the sense that it requires the entity

only to ‘consider’ sustainability impacts while also giving no guidance regarding

important considerations such as how significantly sustainability impacts should be

weighted. Thus, there is potential for sustainability to be ‘considered’ but to have these

considerations effectively have no impact on decision-making.

The CPRs do provide some general practical guidance on ways that

sustainability can be achieved. In particular, they suggest “including strategies that

reduce demand or unnecessary consumption and end-of-life disposal”, “considering

future sustainability issues and policies in the planning process”, “encouraging

sustainable solutions and innovation in tenders”, and “measuring and improving


sustainability throughout the life of the procurement” (Department of Sustainability,

2013). These suggestions do at least provide procurement units with examples of

strategies that could be implemented.

The majority of OECD nations have now developed green procurement

guidelines or incorporated sustainability into government purchasing practices to some

extent (Organisation for Economic Cooperation and Development, 2011). The

Australian Government Department of Environment developed a Sustainable

Procurement Guide, which explains the concept of sustainable procurement and

outlines its general principles in an Australian context. Its general principles promote

avoidance and minimisation of waste, promotion of innovation and fair sourcing

practices (Department of Sustainability, 2013).

The Australian Procurement and Construction Council’s Australian and New

Zealand Government Framework for Sustainable Procurement adopts the definition

for sustainable procurement as “a process whereby organisations meet their needs for

goods, services, works and utilities in a way that achieves value for money on a whole

life basis in terms of generating benefits not only to the organisation, but also to society

and the economy, whilst minimising damage to the environment” (Australian

Procurement and Construction Council, 2007). Important concepts expressed within

this definition include the notion of considering the whole of life impacts of procured

solutions and the focus on the triple-bottom-line of social, environmental and

economic benefits. These considerations can also extend to low-carbon public

procurement.

The Framework outlines four principles of sustainable procurement to assist

Australian governments to integrate sustainability into their procurement processes.

The four principles of sustainable procurement in the Framework are: (Australian

Procurement and Construction Council, 2007)

1. “Adopt strategies to avoid unnecessary consumption and manage demand”;

2. “In the context of whole-of-life value for money, select products and services

which have lower environmental impacts across their life cycle compared with

competing products and services”;


3. “Foster a viable Australian and New Zealand market for sustainable products

and services by supporting businesses and industry groups that demonstrate

innovation in sustainability”; and

4. “Support suppliers to government who are socially responsible and adopt

ethical practices”.

These principles can also be applied specifically to low-carbon public

procurement. Avoiding unnecessary consumption, particularly with regard to energy

and other carbon-intensive products and services, can have a significant impact on

achieving LCPP outcomes. Secondly, selecting products and services with lower life-

cycle environmental impacts can assist carbon reduction goals, particularly where the

impact in question is related to greenhouse gas emissions.

Finally, supporting suppliers and markets for energy efficient and low-carbon

products and services has flow-on benefits that can influence greenhouse gas

mitigation efforts throughout wider business and community sectors. This idea is

supported by other research from e.g. Brammer and Walker (2011), who discuss the

role of public procurement in stimulating innovation in sustainability markets, citing

the inclusion of public procurement in European innovation policy.

2.2.4 Low-carbon public procurement

In response to the continued escalation of greenhouse gas emissions, public

procurement has been highlighted as an important mechanism available to

governments to reduce carbon emissions and increase action on low-carbon

development (Intergovernmental Panel on Climate Change, 2014, Correia et al., 2013,

van Asselt et al., 2006). ‘Low-carbon public procurement’ (LCPP) is an emerging term

used to describe this area of research, which focuses on the use of procurement

processes to mitigate carbon emissions arising from government purchases. Given the

imperative for government agencies to significantly reduce their contribution to global

greenhouse gas emissions, it is pertinent to explore further the use of public

procurement to improve energy efficiency and reduce carbon emissions.

Public authorities spend billions of dollars each year procuring goods, services

and works across every major sector of the economy. Due to this significant purchasing

power it is widely acknowledged that public procurement is a powerful mechanism

through which governments can pursue economic, social and environmental goals


(Organisation for Economic Cooperation and Development, 2013, Correia et al.,

2013). Yet despite the increased attention being given to sustainability objectives it

has been shown that greenhouse gas emissions resulting from government activities

are significant and continuing to rise (Wiedmann and Barrett, 2011). These increasing

greenhouse gas emissions are contributing directly to further climate change,

suggesting that government activities may currently be counteracting efforts to reduce

emissions and limit further climate change.

If used strategically, public procurement could significantly impact the

sustainability performance of public assets and help to stimulate innovation (Lundberg

and Marklund, 2011, Killip, 2013). Public procurement also has the potential to

contribute significantly to government policy goals (Brammer and Walker, 2011) such

as national greenhouse gas emission reduction targets, since purchasing decisions

directly influence factors such as operational energy consumption and life-cycle

greenhouse gas emissions (van Asselt et al., 2006). Public procurement also has the

potential to drive innovation (Alvarez and Rubio, 2015) and stimulate markets for

energy-efficient and low-carbon technologies, products and services (Parikka-Alhola

and Nissinen, 2012). Public procurement therefore represents an ideal focus point for

exploring opportunities for low-carbon development.

There is currently no standardised definition of ‘low carbon procurement’,

however Correia et al. (2013) propose the following definition; which works equally

well for public or private sector organisations:

“The process whereby organizations seek to procure goods, services,

works and utilities with a reduced carbon footprint throughout their life

cycle and/or leading to the reduction of the overall organizational

carbon footprint when considering its direct and indirect emissions.”

Public procurement is already beginning to play a role in the climate change

policy response of many countries, particularly in Europe. An analysis of national

procurement programs by Perera et al. (2007) found that climate change and energy

efficiency were found to feature commonly in sustainable public procurement

initiatives. Additionally, a 2012 survey commissioned by the United Nations explored

drivers and barriers to sustainable and green public procurement. The research found

that ‘energy’ and ‘CO2 and methane emissions’ were amongst the top environmental

priorities for national governments (O’Rourke et al., 2013). The European


Commission has also highlighted the potential for carbon emission reduction from

procurement of energy efficient goods and services (van Asselt et al., 2006). This

suggests that the value of public procurement as a strategic tool for climate change

mitigation is increasingly being recognised.

Many government entities internationally have implemented or trialled low-

carbon public procurement practices. Research by PriceWaterhouseCoopers (2009)

surveyed the use of public procurement in the European Union and the resulting

emissions reductions. A key finding was that the implementation of green public

procurement in the EU had resulted in an average carbon emission reduction of 25 per

cent for ten product groups that were studied. Procurement in the construction sector

delivered amongst the highest CO2 reduction of all of the product groups while also

delivering a significant financial benefit. The report’s authors therefore recommended

that construction should be a key focal point for public purchasers implementing

sustainable public procurement.

Though much has been written on the topic of ‘green’ and ‘sustainable’ public

procurement over the past several decades (see for example O’Rourke et al., (2013))

much of this literature discusses broader environmental or social considerations, rather

than the utilisation of public procurement processes specifically to achieve carbon

reductions. Additionally, despite the increased focus on the use of public procurement

as a greenhouse gas emission mitigation mechanism, its potential has not yet been fully

exploited in practice (United Nations Environment Program, 2015). This research

therefore seeks to further investigate the use of public procurement specifically to

reduce greenhouse gas emissions and energy consumption.

Low-carbon public procurement in practice

An influential concept within the public-sector policy space is that of Moore’s

‘public value’ theory (Moore, 1995), which posits that public sector agencies should

increase public value through provision of services, maintenance of government

legitimacy and attainment of positive social outcomes. Arguably, using public funds

to procure high-carbon assets that contribute to further climate change is a poor use of

resources that detracts from public value. It is likely that the importance of public

procurement as a mechanism to mitigate climate change will increase in future as

governments prioritise investment in assets that do not exacerbate the climate change

problem or intensify future carbon and energy risks. Public procurement must be


adapted to climate change mitigation objectives in order to contribute to a low-carbon

future.

Like the wider GPP/SPP fields, LCPP aims to satisfy procurement objectives

such as value-for-money while simultaneously achieving sustainability goals – in this

case; the reduction of greenhouse gas emissions specifically. The significant and

urgent threat posed by climate change warrants a specific focus on low-carbon public

procurement in order to develop the practice and the academic research area. The

concept of low-carbon public procurement is put forward in an attempt to highlight the

importance of achieving carbon reductions through the mechanism of procurement,

since without a strong focus on carbon reductions it is likely that these issues may be

unintentionally overlooked or overshadowed by other competing sustainable public

procurement issues.

The focus area of this research is public procurement within the context of the

Australian public building sector. Public buildings are relevant to government

procurement in many ways as they are the facilities in which government operations

are conducted. Additionally, the cost incurred by governments in the purchasing,

operation and maintenance of these facilities represents a significant investment of

public funds. Research by PriceWaterhouseCoopers (2009) found that sustainable

public procurement in the construction sector could deliver significant emission

reductions and recommended that construction should be a focal point for public

purchasers implementing more sustainable public procurement. As such, the focus of

examples and discussion throughout the remainder of this chapter will focus

predominantly on issues and opportunities relevant to the building-sector.

In practice, low-carbon public procurement is not an isolated phenomenon but

rather a component of the broader sustainable and green public procurement field that

aims to bring focus to the issue of achieving greenhouse gas emission reductions in

public procurement of goods, services and works. In this context, the term ‘low-

carbon’ is used here as a recognised shorthand to refer to the reduction of a group of

greenhouse gasses including carbon, methane, nitrous oxide and other gases.

There are numerous ways of achieving carbon reductions through procurement

processes. Firstly, procurement can be used to influence construction materials and

works that can deliver greenhouse gas reductions. Secondly it can include simply

procuring energy efficient or low-carbon equipment and products that can influence


the carbon performance of building during the use phase. Thirdly procurement can be

used to influence supply-chain emissions through practices such as preferencing

contractors that implement carbon reduction practices and environmental management

systems and so forth, thereby encouraging emissions reductions throughout the wider

market. These will be discussed further below.

The procurement of low-carbon office and IT equipment can influence the

carbon performance of buildings. Existing energy efficiency labelling schemes and the

like can be used to preference suitable products that may help deliver the desired

energy/carbon reductions. There are many cases that have shown the substantial

economic and environmental benefits delivered by focussing on the purchase of energy

efficient electrical and ICT equipment. For example the procurement of energy

efficiency lamps in 300 public buildings in Hamburg, Germany reduced energy

consumption by 4.5 million kWh and carbon emissions by 2,700 tCO2e while

delivering cost savings (Clement et al., 2007). Such energy-efficient procurement can

have a significant impact on the greenhouse gas emissions of buildings during the use

phase.

Low-carbon public procurement can also include the procurement of

construction works with lower embodied and/or life-cycle carbon emissions. There are

opportunities to preference or specify low-carbon construction materials and process

(for example, fly-ash-based geopolymer concretes which can reduce energy use and

improve durability (Hardjito et al., 2004, Mehta, 2004). Other important factors

include transportation of materials to site and the choice of energy source for

construction equipment and activities (Liu and Cui, 2016). For example, the

procurement of a section of motorway in the Netherlands delivered carbon emissions

reductions of 8,944 tCO2e over the life-cycle of the road compared to a reference

design (van Geldermalsen, 2015). The carbon savings were achieved largely through

innovations in road surfacing materials that delivered life-cycle emissions reductions

compared to a standard approach. The procurement process utilised a tool designed to

encourage tendering parties to identify opportunities for carbon reductions by offering

a bid price advantage tied directly to carbon savings. Absent this incentive to identify

carbon reduction strategies it is likely that such opportunities may not have been

identified or actioned. There is potential to influence these and other factors through

innovative procurement models and practices.


2.3 POTENTIAL BARRIERS TO LOW-CARBON PUBLIC PROCUREMENT

It is clear from the results of a survey commissioned by the United Nations in

2013 (O’Rourke et al., 2013) that energy and climate change issues are gaining

prominence for governments. The survey, which explored drivers and barriers to

sustainable and green public procurement, found that ‘energy’ and ‘CO2 and methane

emissions’ were amongst the top environmental priorities for national governments.

The research also found that interest in sustainable public procurement grew during

the previous five years, despite poor economic conditions and the persistent perception

that sustainable products carry a cost premium.

Yet despite this recognition of the need to respond to these sustainability

priorities, a number of challenges and barriers still present significant impediments to

the adoption of low-carbon procurement practices. There appear to be many potential

barriers currently impacting the uptake of such procurement practices. The following

section summarises the academic research on these barriers to sustainable and low-

carbon public procurement.

In this literature review, a thematic analysis of peer reviewed papers on public

procurement and carbon/energy-efficiency issues was undertaken in order to identify

common themes and concepts emerging from the literature. The purpose of the

thematic analysis is to identify common and divergent themes and concepts that occur

throughout the literature (Hoejmose and Adrien-Kirby, 2012). This is of value to the

field as it helps identify and bring together some key issues that are pertinent to low-

carbon public procurement. A recurrent theme that emerged from the literature was a

discussion of barriers and drivers to transitioning to low-carbon and energy-efficient

public procurement. The lack of understanding of barriers and drivers is a pertinent

issue, since low-carbon public procurement has been discussed for a number of years

in both academic and public settings, yet uptake of low-carbon public procurement

processes has been slow in many regions.

An emergent coding process was used to group barriers and drivers observed in

the literature, into common categories, namely: skills/knowledge, tools/guidelines,

cost, time, risk, policy/regulation, managerial/organisational issues, and supply chain

issues. The following section presents a summary using these categories.


2.3.1 Cost and time

Cost is a commonly reported barrier to more sustainable procurement, as it often

is for many initiatives with an environmental focus. There are many aspects of ‘cost’

that can impact the uptake of more sustainable procurement, and some significant

recurring themes are discussed in further detail below. Cost barriers were by far the

most commonly discussed barriers in existing literature which highlights the

importance of financial issues for LCPP.

Brammer and Walker (2011) investigated the implementation of sustainable

public procurement practices across twenty countries, focussing on barriers and drivers

to sustainable public procurement (SPP) and the level of engagement in SPP by

individual governments. Their findings show that ‘financial concerns’ were the most

significant barrier to sustainable procurement, whilst management leadership and

government policy were the most significant drivers. They highlight the tendency of

government entities to often focus heavily on cost as the main criteria for awarding

procurement contracts.

A study by Lund (2007) found that strategic use of procurement could achieve

cost-effective climate change mitigation outcomes, requiring only 0.025 Euro (€) per

tonne of CO2 mitigated, compared to 2.5–250 €/tCO2 for other policy measures. By

facilitating innovation and market breakthroughs, procurement can provide support

by catalysing commercialisation of new technologies rather than simply subsidising

their development (Lund, 2007). Yet despite the apparent cost-effectiveness of public

procurement to deliver carbon reductions, there are a variety of barriers and

drivers/enablers related to cost and time considerations that are reported in the

literature. These are categorised under a number of headings below:

Upfront cost – Upfront cost of energy efficient or low-carbon technologies may

be perceived to be high (for example, Zhou et al. (2013) mention photovoltaic systems

in this category). This may be due to a higher purchase price for a low-carbon

product/service, or perhaps due to higher procurement process costs. However, Boza-

Kiss et al. (2013) discuss the cost-reducing strategy of using existing tools (such as

energy performance labels) within procurement criteria in order to reduce upfront

procurement costs.


Split incentives – Government financial arrangements mean that a department

that invests in energy efficiency may not see the financial benefit, especially if there is

no mechanism for allocating the savings back to the department who initially invested

in the energy efficiency measure (Hoejmose and Adrien-Kirby, 2012, Borg et al.,

2006). This means that individual government departments often do not have any

direct financial incentive to invest in low-carbon or energy efficient purchases.

Similarly in cases where the procuring organisation will not retain ownership of the

asset (e.g. building) this could reduce the application of criteria such as energy-

efficiency (Varnäs et al., 2009). However as awareness of the benefits of energy-

efficient and low-carbon buildings grows it will surely become easier to communicate

the value of such assets to potential buyers.

Current focus on least cost – Many studies have highlighted the tendency for

procurement processes to focus almost exclusively on capital cost as the main criteria

for awarding procurement contracts (Michelsen and de Boer, 2009). De Melo et al.

(2013) discuss an example of the impacts of such award criteria in Brazil, where low-

cost but inefficient products are often given preference over efficient options that could

provide life-cycle cost savings.

However, procurement methods that require accounting for full life-cycle costs

can therefore act as an enabler for low-carbon procurement, where energy audits can

be used to rationalise purchases that reduce operational energy use and other life-cycle

costs (Annunziata et al., 2014). Bids may be assessed on the basis of the ‘most

financially advantageous bid’, in which future maintenance and operation savings over

the entire life-cycle of a purchase may be taken into consideration (de Leonardis,

2011). The logical extension of this concept is the direct carbon cost savings of energy-

efficient and low-carbon assets in a future carbon-constrained economy.

Lack of funds – Borg et al. (2006) discuss situations where energy efficient

upgrades or purchases are not prioritised due primarily to a lack of funds. This may be

due the perception that energy efficiency is purely an ‘environmental’ issue rather than

an economic issue, or in situations where decision-makers with financial or investment

responsibilities are not in a position to allocate resources to procurement or investment

decisions (Borg et al., 2006). There may also be situations where energy efficiency is

given a lower priority due to the perception that energy savings provide only marginal

savings, compared with expenses such as staff costs (Borg et al., 2006).


The peak body for the energy efficiency industry in Australia – The Energy

Efficiency Council – recently stated that “most government programs to drive

efficiency have only delivered limited results, because they have allocated insufficient

funds and relied on uncoordinated efforts by agencies and individuals that often lack

key skills” (Energy Efficiency Council, 2016). This highlights the funding problem

discussed by Borg et al. and also serves to illustrate that barriers are multi-faceted.

Lack of time – In addition to cost barriers, several papers cite time constraints

as a key barrier to low-carbon procurement. (Carlsson-Kanyama et al., 2013) citing

Burch discuss the fact that municipalities typically have time constraints that reduce

the opportunity for including complex tasks such as exploring low-carbon options and

auditing tenders.

Cost as a driver – A unique issue for LCPP is the potential for cost to be one of

the most significant drivers of LCPP adoption, rather than a barrier. Cost is continually

discussed in the wider GPP/SPP research field as being a significant barrier to the

adoption of more sustainable procurement practices. A number of studies involving

surveys of barriers and drivers to SPP/GPP identify ‘cost’ as the most significant

barrier (Appolloni et al., 2014). This may be because sustainable procurement is

perceived to entail additional expenses that do not provide a significant financial return

for the procuring organisation. However, ‘cost’ could actually be a key driver for

LCPP for several reasons. Firstly, given the close relationship between greenhouse

emissions and energy efficiency, procurement that targets energy efficiency for

financial savings will generally achieve emissions reductions in the process. Secondly,

as the world moves towards carbon pricing mechanisms, assets that are carbon

intensive become a significant carbon liability. Therefore low-carbon procurement

becomes a cost saving measure in a future carbon-constrained economy.

The introduction of carbon pricing has the potential to completely change the

dynamic of cost issues that were previously regarded as barriers. The World Bank has

shown that States and regions around the world are increasingly adopting carbon

pricing mechanisms (Kossoy et al., 2015). Once carbon pricing is adopted, any

government assets that are carbon-intensive effectively become a liability. This is

particularly as issue with carbon-intensive assets that have long operational life cycles

– effectively locking governments into years or decades of carbon liability. Putting a


price on carbon could therefore create significant impetus for the adoption of LCPP

practices.

Absent carbon pricing mechanisms, procuring energy efficient products can still

provide life-cycle cost savings to the procuring organisation while often

simultaneously reducing its carbon footprint. By considering whole-of-life costs in the

awarding of contracts, ‘cost’ can shift from a barrier to a driver of LCPP. Research has

shown that building energy efficiency can be significantly improved by focussing on

whole-system design and key energy-intensive systems such as lighting, HVAC,

building envelope, and office equipment (von Weizsäcker et al., 2009). Properly

accounting for life-cycle energy costs in the procurement process can help to monetise

these energy efficiency gains and help inform procurement decision-making.

Curiously, sustainable or ‘green’ options are often perceived to be more

expensive (Ochoa and Erdmenger, 2003). However, this is not necessarily always the

case. Numerous examples are provided in the literature review on low-carbon

buildings which show numerous cost-effective opportunities. Furthermore, even when

more sustainable buildings do indeed have a higher upfront cost, they may often have

a lower whole-of-life cost (Varnäs et al., 2009). There are challenges to appropriately

accounting for this discrepancy in practice (Organisation for Economic Cooperation

and Development, 2011), and these need to be explored further.

2.3.2 Procurement skills and knowledge

Some key barriers discussed in the literature concern the skills and knowledge

required to ensure procurement processes do actually result in carbon reductions. It

has been suggested that there is a general lack of ‘carbon literacy’ amongst decision-

makers that may affect the translation of carbon reduction objectives into procurement

policy and strategy (Correia et al., 2013). Climate change adaptation and mitigation

are still quite new challenges for government authorities and it is understandable that

there is still some uncertainty and lack of awareness about issues such as how to

identify opportunities for carbon reduction and what methodologies to use for carbon

accounting (Correia et al., 2013). As Correia et al. point out, absent such understanding

by key procurement decision-makers, “the chances of this emerging policy being

successfully translated from strategic vision to practice will be seriously

compromised”.


In addition to these high-level barriers there are challenges around developing

appropriate specifications and effective evaluation criteria, particularly in relation to

life-cycle costing (Bolton, 2008). Some research has also found that criteria are often

poorly specified and may not appropriately reflect the importance of the sustainability

attribute they are trying to influence (Varnäs et al., 2009). For example, Melissen and

Reinders (2012) discuss cases where the misapplication of sustainability specifications

could actually result in increased greenhouse gas emissions from production and

transportation. These issues reflect the need for development of skills and knowledge

regarding the intricacies of low-carbon procurement and the importance of being able

to consider procurement choices from a whole-systems perspective.

Research undertaken by Michelsen and de Boer (2009) explored the

implementation of green public procurement in Norwegian municipalities and

counties. They found that whilst environmental specifications were often included in

calls for tender, they often do not factor into the final selection of suppliers.

Respondents also reported a general lack of environmental expertise within purchasing

teams. A similar study by Varnäs et al (2009) explored the inclusion of environmental

considerations in Swedish construction procurement. They surveyed public and

private construction project stakeholders and found that environmental specifications

often did not have any impact on the decision to award contracts. These issues are

symptoms of a lack of skills and understanding of how to effectively implement low-

carbon public procurement. They are likely to have a significant impact on the

effectiveness of public procurement as a mechanism to achieve sustainability

outcomes.

A way of ensuring that sustainability criteria actually result in better

sustainability outcomes could be to upskill staff about the strategic use of procurement

criteria and specifications. Setting strict criteria around sustainability factors can

ensure specific low-carbon products are used, for example. Although as Arvidsson

(2012) points out, overly detailed or prescriptive procurement criteria may stifle

innovation. In contrast to this van Asselt (2006) recommends including performance

specifications for criteria such as energy performance, rather than prescriptive input

design or product specifications. Performance specifications link some part of the

contract terms to achieving specified ‘output’ sustainability performance outcomes.

This can encourage sustainability innovation (Klatt, 2015) and if used carefully can


deliver energy and resource efficiencies (Turley, 2013). Successful use of this

approach requires setting measurable outcomes and incentives, and also putting in

place mechanisms to govern contracts and outputs to ensure they are effective

(Selviaridis and Wynstra, 2015).

Another important consideration is the temporal bounds of procurement criteria.

Despite the importance of operational energy consumption in the overall economic

and sustainability performance of assets such as buildings, it is often not included in

procurement criteria (Varnäs et al., 2009). The widespread preference for ‘lowest

price’ award criteria may put too much focus on the upfront price at the expense of the

(often lower) life-cycle costs of more sustainable alternatives. A number of authors

discuss the lack of understanding of whole-of-life costing procedures as a significant

barrier to achieving sustainability goals (Carlsson-Kanyama et al., 2013, Borg et al.,

2006, Bolton, 2008). Furthermore, the focus on upfront costs may altogether preclude

selection of bidders on the basis of environmental criteria (such as carbon emissions).

However Kunzlik (2013) suggests that the adoption of the ‘Most Economically

Advantageous Tender’ may be used to better account for environmental criteria.

Additionally, the ‘Most Advantageous Offer’ approach could also permit the inclusion

of non-economic criteria which could, for instance, favour low-carbon bids (van Asselt

et al., 2006).

Finally, even if effective and appropriate criteria is developed it has been shown

that simply including environmental criteria in tender documents may not necessarily

impact tender award decisions (Varnäs et al., 2009). Procurement officers may need

guidance on how to appropriately interpret energy efficient and low-carbon options so

that LCPP criteria do have an impact on contract award decisions. Several authors

discuss issues related to the skills and knowledge required to effectively evaluate

tenders, including (Borg et al., 2006, Carlsson-Kanyama et al., 2013).

In order for public procurement to play an effective role in driving low-carbon

outcomes there must be a focus on improving carbon skills and knowledge amongst

public procurement professionals, particularly in relation to carbon management and

greenhouse gas reporting concepts (Borg et al., 2006). It has been suggested that

procurement staff generally recognise the need for procurement decisions to contribute

to sustainability goals, however exactly how they could operationalise this in practice

is still a barrier (Forum for the Future, 2016).


Some aspects of sustainability are relatively more widely understood and easy

to implement. For example, it is widespread practice to procure recycled or

sustainably-sourced paper, and the regulatory environment around labelling of

recycled products is relatively mature and there are several widely-used labelling

initiatives such as the Forest Stewardship Council. Another example is volatile organic

compounds, which are now widely included in procurement specification, and which

are commonly measured and widely regulated. In contrast, carbon and climate change

issues are still relatively new areas of consideration in public policy, and this may be

particularly so for procurement policy in many regions.

There is still much uncertainty about appropriate methods for quantifying,

reporting and labelling of carbon emissions. There are also additional levels of

complexity related to what should be included in carbon emission calculations (for

example, to what extent Scope 1, 2 and 3 emissions are to be included, and what

verification methods are used in the process). There are many additional

considerations, such as uncertainty around what specifications are most appropriate or

effective; how to develop fair/achievable/effective award criteria. In order to deal with

these issues, more research needs to be undertaken, and new skills in carbon literacy

will be required throughout government agencies, particularly in procurement units.

2.3.3 Procurement tools and guidance

Given the numerous skills and knowledge barriers hampering the adoption of

low-carbon public procurement (discussed above), there may be opportunities for tools

and guidance resources to assist low-carbon procurement initiatives. Appropriate tools

and guidance may act as an enabler for more low-carbon public procurement by

helping to overcome a number of key skills and knowledge barriers. For example, Borg

et al (2006) discusses a lack of appropriate tools and guidance such as cost-benefit

analysis procedures that help procurement personnel assess the value of energy saving

purchases. Bouwer et al. (2005) surveyed the use of green procurement in European

Union countries and found that key challenges included lack of management support,

information, and practical tools.

Sterner (2002) discusses the lack of operational models to assist procurement

decision making, and highlights the significant challenges involved in assessing the

environmental impact of material use, energy consumption, and emissions from

construction products. In particular, problems of data availability and the considerable


investment of time required to assess the myriad construction products and materials

available (Zhang and Assuncao, 2004). Borg et al. (2006) suggest that a potential way

to overcome such barriers would be access to in-house ‘energy efficient procurement

information desks’ for procurement practitioners to access help regarding energy-

efficient equipment procurement.

Zhang and Assuncao (2004) discuss the benefit of eco-labels where procurement

bodies do not have the expertise or time to develop specifications. A study by Preuss

(2007) suggests that government agencies are now often using such labelling and

rating tools within procurement contracts to specify energy consumption requirements,

particularly for purchases such as IT and electrical equipment. Using instruments such

as energy efficiency labelling within the procurement process can reduce procurement

costs and time (Boza-Kiss et al., 2013). The IPCC has reiterated this point by referring

to energy efficiency labelling as a ‘useful framework’ for use in public procurement

(Intergovernmental Panel on Climate Change, 2007).

Certification tools and schemes also have great potential for driving low-carbon

public procurement. For example, Rietbergen and Blok (2013) discuss achievements

of the CO2 Performance Ladder (CO2PL) in delivering carbon reductions in

infrastructure projects in the Netherlands. The CO2PL is a staged certification tool that

has been developed to confer a competitive advantage in the tender process to

companies who commit to reducing project carbon emissions. The tool creators state

that “an optimal choice of the discount level can provide incentives to companies to

reduce GHG emissions while keeping procurement costs under control” (Liu and Cui,

2016). The availability of such tools that have potential to be included in procurement

processes can reduce the expense and complexity barriers of government procurement

staff attempting to create such frameworks anew.

Other tools such as carbon footprinting methodologies also have great potential

for integration into procurement processes. Alvarez and Rubio (2015) evaluated the

cost-effectiveness of using carbon footprinting within public procurement and suggest

that it is achievable and should be promoted for use in procurement initiatives. Other

similar tools are discussed by Anthonissen (2015) in the context of road project

procurement in Belgium. Two alternative tools were developed to evaluate emissions

during the construction process, and whilst there were some limitations as a result of

the early stages of the tool development (lack of data; scope limitations; and human


resourcing commitments) there may be potential to further develop the tools for wider

use. Some research already exists in this space, for example Liu and Cui (2016) who

develop a model to assist low-carbon procurement decision-making. The central goal

is to provide suppliers with a clear incentive and method of calculating emissions that

confer an advantage in the bidding process. Critically, the model also determines an

optimal process to achieve emissions reductions without significantly increasing

procurement costs. Such tools and decision-support methods could be integrated into

procurement policy and guidance material.

2.3.4 Policy and regulation

There are a number of barriers and enablers discussed in the literature regarding

policy, regulation, and legal issues relevant to public procurement. Procurement

regulations often require that procured goods and services should confer quantifiable

and demonstrable benefits to the procuring organisation, which may make the

inclusion of carbon-related specifications problematic in situations where it is difficult

to show the direct or immediate benefits of a low-carbon outcome for the organisation

(Correia et al., 2013), particularly in the medium and long term rather than just the

very short term. This is likely to be an even more pronounced barrier in regions that

have not yet adopted some form of carbon pricing. However, as many regions

throughout the world move progressively towards carbon pricing (Kossoy et al., 2015)

this is likely to become less of an issue.

Indeed, many governments are implementing preferential mechanisms to ensure

low-carbon opportunities are considered in procurement choices. For example, the

Japanese government’s Green Contract Law requires procuring entities to give

preference to goods and services that deliver greenhouse gas emission reductions. It

states that “preferment is undertaken through appropriate set-asides, specification

requirements and bid award criteria, applicable to four major types of contract which

have ‘overriding priority’ on the reduction of greenhouse gas emissions” (Jones,

2011). Additionally, there are preferential bidding instruments such as the CO2PL tool

(discussed above) being used by governments to provide financial advantages to bids

that identify carbon reduction opportunities for public procurement projects (Liu and

Cui, 2016).

Some years ago there was still some uncertainty regarding the legal implications

of including environmental or sustainability criteria in tender documents (Borg et al.,


2006). However, given that low-carbon procurement has the potential to result in

reduced costs (e.g. reduced operational energy use) it should be possible to justify

based on economic and technical performance (Borg et al., 2006). The Borg et al. paper

concluded that in the case of including energy efficiency specifications in procurement

documents “there are no fundamental legal obstacles that would a priori disable the

public sector from procuring energy efficient technologies or applying energy

efficiency considerations in its daily building management routines”. Additionally, the

recent EU Directive 2014/24/EU has helped to reduce the uncertainty surrounding the

legality of including environmental criteria in tendering processes (European Union,

2014).

The recent European Directive 2009/33/EC on the promotion of clean and

energy efficient road transport vehicles prescribes a method of accounting for issues

such as energy consumption, carbon emissions and other environmental issues in the

calculation of the life-cycle costs of procured assets (Parikka-Alhola and Nissinen,

2012). The directive appears to have had the intended effect, with the European

Commission recently stating that “more public authorities have been evaluating life

time costs and impacts of vehicles, rather than just focusing on purchasing costs”

(European Commission, 2013).

Supporting policy instruments such as standards and labelling programs may

help to increase the use of LCPP by making it easier or cheaper to include carbon or

energy criteria into procurement practices (Boza-Kiss et al., 2013). Yet due to the

relatively recent advent of carbon labelling and the general lack of regulations

governing calculation methods and the accuracy of labelling information, simply

preferencing a product with a low-carbon label may not necessarily guarantee

legitimate emissions reductions (McKinnon, 2010). As policy and regulation is

updated to respond to the emerging climate change arena it is likely that these issues

will be addressed, but in the meantime there will naturally be some uncertainty. In the

absence of enforceable regulations, implementing voluntary standards can drive

innovation and challenge suppliers to innovate. Additionally, revealing future

standards can signal a forthcoming market for low-carbon services and help prepare

the market for future mandatory standards (Killip, 2013).


2.3.5 Risk

Risk may present a barrier to the adoption of low-carbon procurement; however

in some circumstances risk may provide a powerful incentive to invest in low-carbon

options. Firstly, adequately responding to a request for tender which specifies low-

carbon options may have additional time and cost implications for suppliers, and thus

increase the risk to them (Grant, 2009). Olerup (2001) also points out that the absence

of formal commitments beyond the initial procurement is a risk for suppliers and

manufacturers. However, this is true on any procurement process; there will always be

uncertainty regarding future demand for any product or service, and this is therefore a

‘risk’ that could reasonably be expected. Conversely, low-carbon procurement

initiatives can reduce risk for the supply chain. For example, Lund (2007) discusses a

case of energy-efficient lighting procurement in Sweden that helped signal the

governments’ intention and create a market for the new energy efficient products,

thereby lowering the potential risk to producers/suppliers who might consider

investing capital to develop new low-energy products.

There may also be risks within procurement finance arrangements that could act

as either a driver or barrier, depending upon the intricacies of the arrangements. Zhou

et al. (2013) discusses the transfer of risk from the public sector to the private sector

under a type of procurement arrangements known as a ‘private finance initiative’ (PFI)

which could act either as a barrier or as a driver, depending upon the specific

circumstances. In cases where project risks such as life-cycle energy consumption are

transferred to the private sector this may create an incentive to invest in energy

efficiency (Zhou et al., 2013); or conversely it may slow the adoption of new

technologies, particularly where factors such as high upfront cost or uncertain product

performance may increase project risks (Zhou et al., 2013). Either way, careful

calculation and management of life-cycle costs is required to reduce risks to both

public and private entities.

Finally, the inherently risk-averse culture of public procurement may stifle

attempts to use innovative procurement partnerships, contracting processes, or tender

criteria that could facilitate carbon management objectives (Correia et al., 2013). Yet

considering that further climate change represents a significant risk to governments

everywhere, low-carbon procurement could be considered as a way to lower risk for


public bodies, since it can help achieve climate change mitigation and reduce the

carbon liability of government-owned assets in a future carbon-constrained economy

There is also some concern and uncertainty from industry and professional

bodies about the potential impacts of carbon pricing on procurement costs and risks.

For example, the Australian Association of Procurement and Construction

Management released an article outlining cost and risk implications of the carbon tax

on procurement (Australian Association of Procurement and Contract Management,

2013). They also discuss that it is still not yet determined which entities should and

will bear the potential risk of investing in low-carbon projects. Due to factors such as

complexity and regulatory pressures, the default position is often to rely on past

practices and proven technologies rather than encouraging innovation (Borg et al.,

2006). There is a lack of knowledge about low-carbon innovation, and how to create

procurement conditions that are conducive to innovation in a manner that reduces the

risk involved (Kaukewitsch, 2009).

2.3.6 Management and organisational culture

Several authors discussed issues related to management and organisational

culture. O’Brien and Hope (2010) discuss the significant influence of factors such as

political leadership and organisational priorities on sustainable procurement outcomes.

Gee and Uyarra (2013) illustrate the importance of senior management support as a

driver for more sustainable public procurement practices, highlighting the integral role

of senior staff in driving the sustainability transformation of a UK waste system

through public procurement.

A lack of senior management support can be a significant barrier to low-carbon

public procurement. Borg et al. (2006) suggest that the lack of a clear mandate from

upper management or government agencies for procurement staff to incorporate

energy efficiency criteria into procurement practices is a significant institutional

barrier to increased procurement of energy efficient products. Additionally, the lack of

‘investment culture’ within public bodies often results in a shortage of funds dedicated

to energy efficiency investments and efficient building management practices that

could secure future economic returns (Borg et al., 2006).


2.3.7 Supply chain issues

The literature reports a lack of research focussed on the strategic considerations

of supply chain carbon emissions, and restricted opportunities for developing strategic

relationships with the supply chain (Correia et al., 2013). Additionally, the majority of

literature focuses on procurement of products (Varnäs et al., 2009) rather than services

and construction works. There is significant potential to use procurement for

construction contracts (Michelsen and de Boer, 2009) or for building management

services such as low-carbon facilities management, however more research is needed

to explore how procurement processes could be further harnessed for projects within

the construction and service supply chains.

2.4 SUMMARY AND IMPLICATIONS

Public buildings already generate significant greenhouse gas emissions and

could continue increasing over the coming decades under a business-as-usual

approach. As the world moves increasingly toward carbon pricing it will become even

more important to ensure government owned assets do not become a carbon-liability

that reduces long-term value for money to the public. As the OECD point out

“investment decisions that are being made today will lock in (emissions-intensive)

infrastructure for years or decades to come” (Organisation for Economic Cooperation

and Development, 2012). Fortunately there is significant potential to improve the

energy efficiency and carbon performance of public buildings, with many low-carbon

strategies already cost effective and many others that would deliver significant

emissions abatement at marginal cost.

Public procurement is being proposed as a key instrument available to

governments wishing to drive innovation in sustainability and encourage low-carbon

development. Many authors and organisations are increasingly recognising public

procurement as a powerful and cost-effective policy instrument through which value-

for-money can be achieved while also decoupling government activities from carbon

emissions. The term ‘low-carbon public procurement’ (LCPP) is emerging to describe

the utilisation of public procurement processes to mitigate carbon emissions arising

from government purchasing.

Purchasing decisions made by governments directly influence factors such as

operational energy consumption and life-cycle greenhouse gas emissions of built


assets. If procurement decisions can be strategically aligned with climate mitigation

and energy-efficiency goals they can have a significant impact on national greenhouse

gas emissions reductions and reduce the energy consumption of government assets.

Additionally, low-carbon public procurement can help drive innovation and increase

demand for low-carbon products and services in the wider market.

Yet although the economic, social and environmental benefits appear to be

significant, the use of public procurement to achieve carbon reductions is still

somewhat ad-hoc and champion-based. Some government entities appear to be more

progressed regarding the trialling and implementation of low-carbon public

procurement processes into procurement policies and practices, while other regions

appear to be lagging or not engaging at all.

A review of the literature revealed that there are a number of barriers currently

limiting widespread uptake of low-carbon public procurement practices. The range

from financial issues to the availability of tools and guidelines to assist procurers

operationalise low-carbon procurement practices, to the lack of skills and knowledge

regarding carbon and energy-efficiency opportunities. Further research is therefore

clearly needed to identify the preeminent barriers in each regional context and to

explore strategies to assist governments attempting to align procurement strategies

with long-term goals such as climate change mitigation. Low-carbon public

procurement therefore represents an ideal focus point for further research exploring

opportunities to decouple greenhouse gas emissions from development.

The focus and extent of academic and industry research to date is insufficient to

provide clear direction for government entities considering a transition to lower-carbon

public procurement practices. With the benefits of low-carbon public procurement so

clearly evident, further rigorous investigation is required urgently to understand and

address barriers and drivers to low-carbon public procurement practices. This research

therefore seeks to contribute to this emerging field by examining the barriers to low-

carbon public procurement as faced by Australian State and Territory governments,

and examine case studies of national and international low-carbon public procurement

initiatives to identify strategic opportunities to enhance the capacity of public

procurement to deliver low-carbon outcomes.

Chapter 3: Research Design 47

Chapter 3: Research Design

This chapter describes the research design and methods adopted to achieve the

aims and objectives of this doctoral research. Section 3.1 discusses the rationale for

the selected research design. Section 3.2 discusses the research methods and data

collection instruments, and Section 3.3 discusses the data collection procedures.

Section 3.4 explains the data analysis methods used to examine and interpret the

information collected in the study. Section 3.5 discusses research ethics and limitations

of the research design and Section 3.6 summarises the key information from the

chapter, reviewing the justification for the research design.

3.1 THE RESEARCH PROBLEM AND RESEARCH DESIGN

This section describes the methodology and research paradigm guiding the

research design. It first discusses the epistemological position and its relation to the

research design. It then discusses the rationale for adopting a mixed-methods approach

and outlines how the chosen research methods were used to answer the research

questions.

This research explored barriers and enabling factors for public procurement as a

mechanism to accelerate the uptake of low-carbon buildings and help transition

Australian public buildings to low-carbon operations. Specifically, the thesis explored

the following research question:

“How can public procurement be used to transition public buildings towards

low-carbon operations”

This research question was informed by a four research sub-questions, as

outlined in Chapter 1: firstly, exploring how low-carbon procurement practices can

lead to improved carbon and sustainability performance outcomes in public buildings;

secondly, how Australian state governments currently address the carbon performance

of public buildings; Thirdly, exploring the current status of public procurement

practices for low-carbon outcomes, including barriers to uptake and opportunities for

implementation; and finally, what can be learned from successful examples of low-

48 Chapter 3: Research Design

carbon public procurement initiatives to help deliver low-carbon outcomes in public

buildings.

3.1.1 Research paradigm

The research paradigm shapes the approach both to the overall investigation and

to the choice of specific research methods. The central perspective adopted in this

research is a constructivist approach, which seeks to understand meaning as it relates

to individuals and in specific contexts Creswell and Plano-Clark (2011). It draws on

understandings from insider perspective and seeks to understand ‘why’ questions

(rather than what, when or how much). Money et al. (1998) explain the importance of

examining “details of the situation to understand the reality or perhaps a reality

working behind them”. Since this research study aims to identify perceived barriers

impacting the uptake of low-carbon procurement practices and to explore opportunities

for overcoming key barriers, which all entail understanding meaning and reality as it

relates to individuals a constructivist approach is deemed the most suitable.

3.1.2 Theoretical framework

A number of potential theoretical frameworks were considered as a lens through

which to explore the questions and findings of this dissertation. The following sections

summarise the key theories drawn upon.

3.1.2.1 Institutional theory

Institutional Theory is focussed on how and why similar practices and systems

are adopted by organisations (Meyer and Rowan, 1977). The theory hypothesises so-

called ‘isomorphic drivers’ that place pressures on organisations to change and adopt

new practices based on what other similar organisations are seen to be doing. These

are commonly labelled ‘coercive’, ‘normative’ and ‘mimetic’ drivers (Sarkis et al.,

2011).

Coercive drivers arise from stakeholders in a position of influence over an

organisation, who can pressure the organisation to adopt certain practices or

behaviours. For example, in the case where the desired outcome is for an organisation

to adopt more sustainable practices these coercive influences can be important drivers

that can encourage organisations to improve environmental performance (Kilbourne

et al., 2002). The driving stakeholders may be industry councils, influential

organisations, higher levels of government, or others.


Normative drivers create conditions that encourage organisations to conform to

accepted behaviours and practices. Glover (2014) explains this as pressure from a

“social obligation to comply, rooted in social necessity or what an organization or

individual should be doing”. In the case of more sustainable practices this could be

similar organisations or government jurisdictions who are seen to be more

environmentally aware and creating a new sort of status quo, which can exert pressure

on late adopters who don’t want to be perceived to be lagging.

Finally, mimetic drivers can occur when an organisational pattern that has

achieved success is copied by another organisation in order to replicate that initial

success (Sarkis et al., 2011). Glover (2014) explains that this can lend the mimicking

organisation an air of legitimacy, and can be a reason for the organisation wishing to

pursue such actions. Thus, through these various drivers one organisation can become

similar to another organisation in its behaviours, practices and structures (ADD REF

Meyer & Rowan, 1977; Meyer & Scott, 1983).

Following on from this work, Institutional Logic attempts to explain how

systems of belief influence the behaviour of actors (Thornton and Ocasio, 2008). In

particular, the interrelationship between individuals, organisations and wider society

are explored with regard to how these shape the motives and behaviours of actors. In

the decade following the work by Friedland and Alford the concept of institutional

logics came to be defined as “the socially constructed, historical patterns of material

practices, assumptions, values, beliefs, and rules by which individuals produce and

reproduce their material subsistence, organise time and space, and provide meaning to

their social reality (Thornton and Ocasio, 1999). At its core this highlights the

important relationship between stakeholders and the context in which they exists

(Thornton and Ocasio, 1999) and can be useful in understanding how the surrounding

social and technological landscape can affect the uptake of more sustainable actions

(Glover et al., 2014, Ball and Craig, 2010).

3.1.2.2 Diffusion of Innovation Theory

Innovation can be defined as “the management of all the activities involved in

the process of idea generation, technology development, manufacturing and marketing

of a new (or improved) product or manufacturing process or equipment” (Trott, 2012).

In the context of this thesis, innovation is of interest because transitioning to new low-


carbon processes and mainstreaming low-emissions products and services will require

some innovation in processes, behaviours, management and systems.

A leading perspective on how such innovations are adopted and spread is

referred to as Diffusion of Innovation (DOI) Theory. Diffusion of Innovation theory

was first put forward by Rogers (Rogers, 2003) and is concerned with the spread of

new ideas and practices. It considers the conditions under which innovations are more

or less likely to spread, and posits that after an innovation is first perceived by

stakeholders as new it then goes through a period of adoption over time. It is said that

stakeholders fall into various adopter categories, for example with ‘innovators’ and

‘early adopters’ paving the way for other stakeholders that may be slower to adopt an

innovation, such as the ‘late majority’ and ‘laggards’.

The adopter categories characterised by earlier adoption are typically

adventurous and risk-taking, while the later adopters are more cautious and

conservative. The stages of adoption include initial awareness, decision to adopt, initial

uptake, and finally continuation of use (Mahajan et al., 1990). Innovations can be

regarded as behavioural or managerial (for example, new practices and ways of

operating), or technological (new products and techniques).

In DOI theory there are five core factors that influence the diffusion of

innovations; innovation, individual, task, environmental, and organizational factors.

These are further subdivided into ‘traits’ such as ‘relative advantage’, ‘ease of use’,

‘trialability’ and others (Mustonen-Ollila and Lyytinen, 2003); each of which can

influence the likelihood of an entity adopting innovations.

There is increasing awareness of the importance of public procurement as a

driver of innovation (Uyarra et al., 2014). Rolfstam (2012) also highlights the

importance of public procurement as a policy instrument that can stimulate innovation,

and predicts it will continue moving toward a central role in innovation policy. In part

this is because of the influence of government to lead by example and their large

expenditure that can signal markets to innovate towards a desired goal (Rolfstam,

2012).

3.1.2.3 Decoupling

The concept of ‘decoupling’ refers to the process of separating or delinking

economic development and human well-being from negative environmental impacts


such as the release of greenhouse gas emissions (United Nations Environment

Programme, 2011, Smith et al., 2010). Decoupling has been identified as a key strategy

in the move towards a low-carbon model because it advocates a reduction in negative

environmental impacts such as climate change while encouraging an increase in

development.

Decoupling can be divided into two key aspects; ‘impact decoupling’ and

‘resource decoupling’ (United Nations Environment Programme, 2011). Impact

decoupling refers to the decoupling of environmental impact from economic activity,

while resource decoupling refers to reducing the amount of resources used for each

unit of production. Error! Reference source not found. provides a stylised

representation of decoupling, showing the intended reduction in environmental impact

with continued economic growth.

It can be seen that under ‘business-as-usual’ trends, greenhouse gas emissions

follow an upward trajectory, with each unit of economic growth causing an increase

in environmental pressure. Decoupling begins when this relationship is broken, and

environmental pressure starts to accelerate at a slower rate than economic growth.

‘Peaking’ is said to occur at the point where environmental pressure reaches its highest

point and then begins to undergo ’tailing’ as environmental pressure becomes

‘absolutely decoupled’ from economic growth.

The International Resource Panel and United Nations Environment Program

(UNEP) Green Economy Initiative have produced a number of reports outlining the

conceptual framework for decoupling theory and an analysis of a number of challenges

to achieving it (United Nations Environment Programme, 2011). Additionally, Smith

et al (2010) provide an assessment of the barriers to achieving rapid decoupling,

followed by an analysis of opportunities to inform national decoupling strategies.

These key documents show that a multifaceted approach will be necessary; one that

fosters rapid uptake of existing low-carbon technologies while supporting

technological innovation and transformation of socio-technical systems and regimes

to support low-carbon outcomes.


Figure 3: Stylistic representation of decoupling concept (Smith et al., 2010)

Achieving a significant decoupling of carbon emissions from development will

require a focus on innovation – innovation of technologies, of knowledge, of

behaviour, and of managerial and organisational systems (United Nations

Environment Programme, 2011). According to UNEP, innovations are not limited

simply to technological improvements, but also include institutional and relational

innovations. Institutional innovations refer to improvements in management and

organisational systems. Relational innovations focus on improving interactions that

can foster sustainability, such as social learning and benefit sharing. In order to

effectively decouple environmental impact from economic growth, there must also be

“significant changes in government policy, corporate behaviour and consumption

patterns” (United Nations Environment Programme, 2011).

This thesis contributes to the emerging discussion of how to operationalise

decoupling at a practical level and addresses key strategies that can be employed to

facilitate shifts in government policy, behaviour and consumption patterns referred to

by UNEP in the quote above. The barriers and strategies discussed throughout this

thesis are considered through the lens of decoupling by exploring barriers first at a

holistic level as broad categories of barriers, and then in finer detail at the level of

specific barrier items. Finally, decoupling also provides a means of situating the

current status of efforts temporally, in that the extent of progress towards decoupling


public procurement from greenhouse gas emissions can be said to be entering a period

of ‘peaking’ or ‘tailing, for example.

Research and practice have shown there are significant opportunities available

in every major sector of the economy to significantly decouple carbon emissions from

economic growth (Smith et al., 2010). Many of these opportunities are already cost-

effective, particularly when approached from a whole-systems perspective. For

example, energy consumption and emissions in buildings can be reduced by 20 to 30

per cent or more by employing simple retrofits of key systems such as lighting and air-

conditioning systems using currently-available technology (Kneifel, 2010). Even

larger improvements of 50 to 80 per cent are achievable and cost-effective for both

new and existing buildings through integrated whole systems design focussing on

integration of key systems such as lighting, heating, ventilation and air-conditioning

systems, building envelope, and office equipment (von Weizsäcker et al., 2009).

3.1.3 Research approach

Within the theoretical perspective of Decoupling this study employs a mixed

methods approach, which involves the “intentional collection of both quantitative and

qualitative data and the combination of the strengths of each to answer research

questions” (Creswell and Plano Clark, 2011). Specifically, this study relied on

literature review, survey and case study methods to explore the research questions.

The research relied primarily on qualitative techniques comprising case study

and interview. Qualitative methods are favoured for several reasons. Firstly, a

constructivist approach favours qualitative methods such as case studies and

interviews. Secondly, a qualitative approach is useful for understanding the beliefs and

perceptions of people and organisations that are of interest to the study. Since this

research is concerned with understanding the beliefs and perceptions regarding barriers

to LCPP, and exploring strategies that may prove useful for overcoming these barriers,

a qualitative focus is deemed appropriate.

Qualitative approaches can also provide insight into the qualities of a given

phenomenon – in this research this includes understanding the perceptions of

procurement professionals regarding barriers to LCPP, and gaining insight into

strategies that have proven useful for overcoming such barriers. The mixed-methods

approach also employed some quantitative methods in the survey stage of the research,


which sought to answer questions such as “Is upfront cost a barrier to government

departments procuring low-carbon products”.

The study relied on an iterative approach, which according to Grbich (2013)

depends upon on continual feedback to guide subsequent stages of the research. In this

research a preliminary literature review was used to identify potential barriers to

LCPP, which were then explored in the subsequent survey stage, the results of which

guided selection and analysis of the case studies and interviews. Results and findings

are analysed with respect to opportunities for Decoupling and drawing upon key

insights from the theoretical perspectives of Institutional Theory and Diffusion of

Innovation.

3.2 RESEARCH METHODS

Primary aims of the study were to identify key barriers impacting uptake of low-

carbon public procurement practices by Australian State governments, and to explore

strategies for enhancing the capacity of public procurement to deliver low-carbon

outcomes. To achieve the research objectives, survey and case study methods were

selected, as described below.

3.2.1 Literature review

A literature review is a key stage of the research process. A thorough literature

review enables a full exploration of the research area and development of a

foundational knowledge from which to build the thesis and helps ensure the resulting

research can build upon existing knowledge in the field (Wisker, 2007). The literature

review in this study considered peer reviewed academic papers, government and

industry publications, online resources, and books.

The literature review was used to establish how Australian state governments are

addressing the carbon performance of public buildings through procurement in order

to help answer RQ2. The review focused on developing an understanding of the

research area and exploring the feasibility of opportunities to reduce the greenhouse

gas emission impact of the building sector through low-carbon public procurement.

Secondly, the literature review was used to distil a shortlist of potential barriers to

LCPP for inclusion in the survey stage of the research. Thirdly the literature review

helped identify potential case studies that were explored in the subsequent case study

stage of the research.


3.2.2 Survey

A survey is a “systematic method for gathering information from (a sample of)

entities for the purposes of constructing quantitative descriptors of the attributes of

the larger population of which the entities are members” (Groves, 2009). Survey

methods are widely used in social research due to many factors, such as low cost and

ease of reaching a wide audience (Groves, 2009). In this research a survey instrument

was developed and distributed nationally to access multiple procurement professionals

in order to explore the range of potential barriers to low-carbon procurement.

The survey had three objectives: Firstly, to validate the emergent potential

barriers uncovered through the literature review and to check these with the Australian

context (since much of the literature was international in focus). Secondly, it was used

to draw on the experience of public procurement professionals to help identify the most

important barriers impacting the uptake LCPP by Australian State governments.

Thirdly, the findings from the survey were used to inform the selection of case studies.

Development of the survey instrument involved conducting a pilot survey to test

and refine the questionnaire. A draft questionnaire was developed based on a review

of peer reviewed literature focussing on barriers and drivers to more sustainable public

procurement. In addition to the literature review, this questionnaire was informed by a

number of existing surveys on green and sustainable procurement that have been used

by other authors to explore barriers to sustainable public procurement (for example,

(Ochoa and Erdmenger, 2003, Michelsen and de Boer, 2009). Much of this previous

research focussed on barriers to green public procurement and sustainable public

procurement more broadly, rather than low-carbon procurement specifically. Thus, in

order to help ensure the questionnaire focussed on carbon-related issues careful

wording of barrier items was developed and adapted where necessary to focus

specifically on carbon and energy issues.

Following development of the draft questionnaire, a pilot test was conducted

with nine participants from industry and academia who provided responses and

additional feedback to help refine and improve the questionnaire. A number of changes

were made to the questionnaire following this process, including rephrasing items for

clarity and rewording items to avoid leading language and jargon.


The survey instrument was divided into a number of sections. The questionnaire

first requested general and demographic information. This included questions about

their job description and level of experience in the procurement industry, the

geographical region their workplace was located in, their opinion on their

organisation’s familiarity with the term ‘low-carbon’, and their own familiarity with

the term ‘low-carbon’. The purpose of this was to check that there was a breadth of

experience and perspectives within the sample.

Part 1 of the questionnaire then asked respondents to rate the extent to which

they thought a range of factors affected their department or organisation procuring

building-sector goods/services/works with reduced carbon emissions. Eight

‘categories’ of barrier were developed, consisting of; 1) skills/knowledge; 2)

tools/guidelines; 3) time; 4) cost; 5) risk; 6) management/organisational issues; 7)

policy/regulation; and 8) supply chain issues. These categories were developed based

on a literature review and analysis of similar survey tools. Survey respondents were

asked to indicate the extent to which they thought each of these categories affected

their department/organisation procuring building-sector goods/services/works with

reduced carbon emissions.

Part 2 of the questionnaire then explored each of the eight barrier categories in

more detail. Within each of these eight ‘categories’ there were a number of specific

barrier items that participants were asked to rate on a uni-polar barrier scale (described

in further detail below). For example, in the category of ‘skills/knowledge’,

respondents were presented with options such as ‘Lack of skills within my

department/organisation to develop effective low-carbon tender criteria’, and ‘Lack

of knowledge within my department/organisation about low-carbon

goods/services/works’, and so on.

Part 3 of the questionnaire then explored the current use of carbon emission and

energy efficiency criteria in government procurement. The aim was to determine how

frequently low-carbon criteria are being included in project tendering documents.

Respondents could answer on a five-point uni-polar scale (0 = never; 1 = rarely; 2 =

about half the time; 3 = often; 4 = always.

The survey used a barrier scale in Parts 1 and 2 for the purposes of exploring the

degree to which each survey item presented a barrier to LCPP. The barrier scale used

for the questionnaire was a four-point uni-polar scale with the options ‘Not a barrier’,


‘Minor barrier’, ‘Moderate barrier’, and ‘Major barrier’. Similar barrier scales have

been used in previous research studies exploring perceived barriers in a range of

settings (see for example (McGuire et al., 2014). Respondents were given a ‘Not sure’

option for all questions, and were also given the opportunity to add and rate their own

additional barriers within each category if they desired.

3.2.3 Case Studies and Interviews

Following the survey stage case studies were used to explore and analyse

existing low-carbon public procurement initiatives. The case study method is an

effective means of addressing research questions concerned with the application of

initiatives or innovations to improve practice (Case and Light, 2011) and are

particularly useful for investigating “complex social phenomena” within their “real-

life contexts” (Sarantakos, 2013).

In this research the case studies and associated interviews were used to distil key

lessons and knowledge from existing successful LCPP initiatives. Since the focus of

this stage of the research was to explore critical insights from procurement

professionals regarding strategies to overcome key barriers to low-carbon public

procurement practices (i.e. distil key lessons regarding the application of innovative

strategies to improve practice), the case study method was deemed to be appropriate

to the research. Specifically, the case studies and supporting interviews were used to

inform two key research questions which sought to identify existing procurement

practices that have led to improved carbon outcomes, and to explore opportunities to

learn from current practices to enhance the capacity of public procurement to deliver

low-carbon outcomes.

Interviews are widely regarded as “one of the most important sources of

evidence” in case studies and are frequently used in qualitative research (Yin, 2014).

For example, Hamza and Greenwood (2009) used semi-structured interviews to

explore the implications of new building regulations on procurement practices in the

UK by interviewing energy performance consultants, large construction contractors

and architectural design offices that were identified as having experience of working

with the new regulations. A similar approach was adopted for this PhD thesis; a semi-

structured interview process was used to interview key individuals who were identified

as having experience with the low-carbon public procurement initiatives that were

selected for case study analysis.


The interviews focused on understanding key barriers to LCPP prior to the

introduction of the initiative and exploring how the initiative helped to overcome these

barriers. The interview protocol followed a semi-structured process, including up to

twelve questions that explored the role of the interviewee in relation to the initiative,

the carbon outcomes achieved by the initiative, the initial barriers to LCPP, the factors

and characteristics of the initiative that helped overcome key barriers, and aspects of

the initiative that could be improved.

Potential case studies were identified from the literature review and subsequent

desktop research. The selection method for the case study initiatives was as follows:

An initial pool of 10-15 case studies was identified (see Appendix B) through a desk-

top search and each was assessed for suitability to conduct in-depth analysis. A

procurement initiative was considered relevant for inclusion if it included an explicit

focus on low-carbon or energy-efficient procurement, and if the primary target for the

initiative was a government entity. The potential suitability of each case study was

then assessed based on several characteristics including its potential to inform the

primary objective of exploring strategies for overcoming key barriers to LCPP; the

relevance to building-sector projects; the availability of information; and contact

information for key stakeholders. Two low-carbon procurement programs were then

selected from the initial case study pool to be explored in depth in this research. This

was deemed to be an appropriate number to allow in-depth exploration while also

being sufficient to make some comparisons and identify common themes, including

barriers, enablers, practices and strategies for success.

Participants included a variety of relevant stakeholders, including; procurement

professionals from Australian and international government agencies; individuals

from organisations involved in the delivery of low-carbon building sector projects; and

key stakeholders involved in the building and energy efficiency industry. Interviewees

were identified by desktop searches and contacting government departments and

organisations involved in the case study projects.

In an effort to maintain the anonymity of the interviewees no summary of

position descriptions or organisations is provided here due to the potential for

participants to be re-identifiable through a reasonable deduction of their identity by

association with the case study projects. However, it should be noted that all


interviewees had direct involvement in the case study initiatives in some capacity and

held relevant and typically senior positions in their respective organisations.

3.3 DATA COLLECTION PROCEDURE

The following section describes the data collection procedures undertaken.

3.3.1 Literature review

3.3.1.1 Bibliometric analysis

A key aim of the literature review was to determine the extent of literature that

discusses carbon and energy issues in the context of public procurement. Energy

efficiency was included due to the significant relationship between energy use and

carbon emissions.

An initial literature review was conducted in order to identify a shortlist of

keywords related to public procurement and carbon issues. These keywords formed a

Boolean search string (see Box 1) and were used to search title, abstract and keywords

within academic databases such as ScienceDirect, ABI/INFORM, EBSCO, ProQuest

and ISI Web of Knowledge. A total of 348 papers were returned from this initial

search. These papers were reviewed to determine their relevance to the topics of public

procurement and carbon or energy efficiency.

A paper was deemed relevant if it 1) discussed issues related to procurement and

purchasing processes within a government setting, and; 2) discussed issues related to

carbon emissions reductions or energy efficiency. In total, 60 papers were deemed to

be relevant and subsequently included in the analysis. The reference lists of these

papers and ISI Web of Knowledge citation maps were also used to identify relevant

papers that were not uncovered in the database search. This relatively small sample

represents the emergent nature of the low-carbon public procurement research field.

Procur* OR tender* OR purchas* AND

Public OR government AND

Carbon OR climate OR greenhouse OR emission OR energy

Box 1: Boolean search string


Following identification of the relevant literature, a bibliometric analysis was

performed to identify factors such as epistemological orientation, geographical

emphasis, year of publication, and sector of focus. The bibliometric analysis process

used was adapted from Hoejmose and Adrien-Kirby (2012) who focus on

environmental and social issues in the procurement processes of profit-driven

organisations. The current study expands upon this conversation and focuses on public

organisations and low-carbon procurement. Table 1 presents the classification

structure developed by Hoejmose and Adrien-Kirby (2012) and which is used in the

current study. A summary of the bibliometric analysis is provided in Appendix A.

Table 1: Classification system for epistemological orientation (Hoejmose and Adrien-Kirby, 2012).

Theoretical Focus Main features Conceptual • Development of propositions or

hypotheses. • The result is based on literature

not on new empirical material. Exploratory • Development of propositions or

hypotheses. • Result is based on new empirical

material not on literature. Predictive • Testing of propositions or

hypotheses. • Result is based on new empirical

material not on literature. Prescriptive Instrumental • Prescribing to practitioners an

idea or course of action. • To aid practitioners achieve a

desired goal. Normative • Prescribing to practitioners an

idea or course of action. • To communicate an ethically,

morally or religiously valuable opinion or message.

Descriptive Descriptive • Reporting fact or opinion. • No intention of contributing to

theory or prescription.

3.3.1.2 Thematic analysis

Following the initial bibliometric analysis, a thematic analysis was performed

based on the method used by Hoejmose and Adrien-Kirby, which was based in turn on

Ryan and Bernard (2003). The purpose of the thematic analysis was to identify

common and divergent themes and concepts that occurred throughout the literature

(Hoejmose and Adrien-Kirby, 2012). This is of value to the field as it helps identify

and bring together some key issues that may be pertinent to low-carbon public

procurement.

A theme of focus that emerged from the literature was a discussion of barriers

and drivers to transitioning to low-carbon and energy-efficient public procurement.


The lack of understanding of barriers and drivers is a pertinent issue, since low-carbon

public procurement has been discussed for a number of years in both academic and

public settings, yet uptake of low-carbon public procurement processes has been slow

in many regions. It is therefore useful to collate research discussing these barriers and

drivers in order to inform the development of appropriate operational strategies. An

emergent coding process was used to group barriers and drivers into common

overarching categories of skills/knowledge, tools/guidelines, cost, time, risk,

policy/regulation, management/organisational issues, and supply chain issues.

3.3.2 Survey

A key research objective was determining key barriers impacting the uptake of

low-carbon public procurement. In order to accomplish this objective a survey of

Australian State and Territory government procurement staff was undertaken. The

study population was Australian State and Territory government employees involved

in public procurement of building-sector projects. There is no available directory that

lists Australian State/Territory government employees involved in building-sector

procurement, so to develop a sampling frame a list of government procurement units

was developed by searching government websites and databases. These procurement

units were contacted to determine whether procurement staff in each particular unit

were involved in the procurement of building-sector projects.

An approach email with a survey link was then emailed to relevant units with a

request to forward to other public procurement professionals within their network. The

discretion of procurement unit managers was relied upon to determine which of their

staff members were involved in building-sector goods/services/works procurement. In

total the questionnaire was distributed to 121 Australian State and Territory

government public procurement staff involved in building-sector procurement. It is

believed on the basis of discussions with procurement managers in these agencies that

this adequately represents the population of public procurement staff involved in

building-sector procurement.

The primary aims of this study were to identify key barriers limiting the uptake

of low-carbon public procurement practices for building-sector projects in Australia,

and to explore opportunities for further harnessing public procurement as a mechanism

to transition Australian public buildings towards low-carbon operations. The

questionnaire was available to complete online between December 2014 and February


2015. The questionnaire was developed using the web-based survey tool ‘Key Survey’

and a link was distributed to government employees involved in the procurement of

building-sector goods, services or works. Web-based questionnaires have a number of

advantages over other methods of data collection, including low cost, ease of

implementation, and improved data collection and measurement opportunities

(Groves, 2009). A web-survey was therefore identified as the most appropriate and

cost-effective means of distributing the survey and collecting responses.

A number of steps were taken in order to reduce the potential for error in survey

responses. Measurement error occurs when participants misunderstand what is being

asked. In this study, measurement error was reduced by undertaking a peer review

prior to release to ensure the questionnaire items were written as clearly as possible.

To minimise coverage error (which occurs when a sampling frame does not accurately

represent the target population), a respondent-driven snowball sampling approach was

used to reach a wide variety of respondents (Smyth et al., 2014). Approach emails

requested that participants forward the survey to other procurement professionals in

their network who were involved in building-sector procurement. Follow-up calls were

then used to determine the people that the survey was forwarded to in order to keep

track of the study population.

Non-response errors can occur when an insufficient number of responses are

received. In this study, contact was made on multiple occasions to raise awareness of

the survey and encourage participation. Several short emails were sent explaining the

benefit of survey and highlighting the value of participants’ knowledge and insights in

contributing to continued development of Australian procurement practice. In

addition, assistance was sought from procurement unit managers in raising awareness

of the survey amongst their staff.

Since there is no list of ‘procurement staff involved in building-sector

procurement’, a respondent-driven approach (Smyth et al., 2014) was used to access

the survey population. Recipients were encouraged to forward the questionnaire to

other State government procurement staff in their agency or network in order to reach

a wider survey population. At the conclusion of the survey period the researcher

contacted all individuals who had received a survey invitation to determine if they had

forwarded the survey to any other secondary contacts. When a recipient responded that

they had forwarded the survey invitation, details for that person were requested so that


any secondary recipients could be contacted to determine if they received an invitation

and to ask if they had forwarded it to any other individuals.

3.3.3 Case Studies and interviews

Case studies included an Australian and an international public procurement

program that had both developed and used low-carbon public procurement practices.

Within each of these large-scale programs there were multiple individual tenders that

were studied for further insights. In Australia, the ‘Greener Government Buildings’

program of the Victorian State Government was chosen for in-depth analysis. The

international case study program was the ‘GPP 2020’ program of the European Union.

Case study methodologies typically combine several research methods, such as

the review of archival information in conjunction with interviews and observation

(Eisenhardt, 1989). This ensures cases are able to be fully explored to extract useful

findings. Similar ‘combined methods’ using case studies supported by interviews have

been used by other researchers. Matthews (2013) uses case studies supported by semi-

structured interviews to examine institutional transformation responses of the south-

east Queensland metro-regional planning regime in light of climate change and

sustainability stressors. Reeve (2014) uses case studies supported by semi-structured

interviews to explore the policy implications of the application of biophilic urbanism

to climate change mitigation and adaptation efforts.

The case studies in this research employ a combined research method relying on

a review of program reports and other publicly-accessible information, supported by

interviews with key individuals involved in the procurement or delivery of the case

study projects. The interviews were used to expand on key areas of interest and collect

information not otherwise available in the public domain. This use of multiple sources

of information and multiple interviewees helps increase the validity of findings and

allow for an in-depth assessment of each case study program.

The sample of interview participants was guided by the selection of the case

studies. Participants were identified by desktop searches and contacting government

departments and organisations involved in the low-carbon procurement case study

projects. Participants included procurement professionals from Australian and

international government agencies, individuals from organisations involved in the

delivery of low-carbon building sector projects, and key stakeholders involved in


building sector supply chains. Interview candidates were initially contacted by phone

or email to outline the research being conducted and request an interview. Interviewees

who expressed an interest in participating were contacted to organise a suitable time

to conduct the interview. Participants were also provided with ethics information and

consent forms, and an overview of the interview questioning prior to conducting the

interview.

Key interview questions were predetermined and were intentionally open-ended

to allow the interviewee to provide a detailed response. A semi-structured interview

approach was selected as it allows for the exploration of a predetermined core set of

questions, whilst also allowing time and space for emerging relevant topics to be

discussed. This allowed for two-way communication and flexibility to inquire deeply

into issues raised during the interview. Interview participants were provided with a

copy of the interview questions approximately one week in advance of the interview

to allow participants time to consider the questions and collect any relevant

information. The interview protocol is presented in the Appendix C.

Data collection focussed on procurement practices that contributed to

overcoming important barriers or contributing to emissions reductions and energy

efficiency improvements. Information collected included specific tender information,

key tools and strategies used in the delivery of the project, key barriers and enabling

factors to low carbon procurement practices, specific policy instruments employed to

encourage or support low-carbon tendering processes, and other key lessons learned.

Interviews were transcribed from an audio recording immediately after the

conclusion of the interview. Interviewees were provided with a copy of the transcript

for review to ensure the accurate collection and interpretation of information. This

‘member checking’ helps provide validity to the interpretation of data obtained

through interviews (Lincoln and Guba, 1985). Interviews were recorded and

transcribed in full immediately following the conclusion of each interview.

Additionally, research notes were taken throughout the process to ensure a ‘chain of

evidence’ (Yin, 2014). This helps to increase the reliability and transparency of the

research process (Silverman, 2013) as it helps both observers and reviewers track and

follow the research process.


3.4 DATA ANALYSIS

This section discusses the procedures employed to analyse and interpret the

research data.

3.4.1 Survey

Raw survey data was imported into SPSS then cleaned and checked for

omissions. To analyse responses from Part 1 of the questionnaire, basic statistics were

summarised for each of the eight barrier categories. Next, in order to determine an

initial ranking for the eight barrier categories, responses were linearly transformed and

allocated scores as follows; ‘not a barrier’ = 0; ‘minor barrier’ = 1; ‘moderate barrier’

= 2; and ‘major barrier’ = 3. When respondents selected ‘not sure’ and when no

response was provided these responses were allocated a score of zero. Results were

then summed to determine an initial ‘Barrier Category Score’ (BCS). The scoring and

ranking procedure was adopted from existing research exploring barriers and drivers,

for example McGuire et al. (2014). It provides a simple method of aggregating

responses on the barrier scale into a single score which can then be ranked.

In Part 2, the eight barrier categories were explored in greater detail. Within each

barrier category respondents were asked to consider a number of individual barrier

items and rate these on the same 4-point scale described above. In total, Part 2

comprised 33 individual barrier items. Data analysis followed the same procedure as

outlined for Part 1; responses were linearly transformed and allocated scores. These

scores were used to determine an individual ‘Barrier Item Score’ (BIS) for each of the

33 barrier items.

The final section of the questionnaire explored the current use of carbon

emission and energy efficiency criteria in project tendering processes. The aim was to

determine how frequently low-carbon criteria are being included in project tendering

documents. Respondents could answer on a five-point uni-polar scale (0 = never; 1 =

rarely; 2 = about half the time; 3 = often; 4 = always). Responses were collated and

basic statistics were calculated.

3.4.2 Case Studies and Interviews

Case studies consisted primarily of qualitative information from publicly

available documents/reports and interviews with key personnel involved in the case

study initiatives. Case studies relied firstly on document analysis in order to understand


factors such as contract characteristics, tendering specifications, procurement

processes, and the wider societal and regulatory context within which the procurement

initiative takes place. Key information was obtained from publicly-available reports

and documents such as existing academic papers, government and organisation

reports, tendering notices, and documents from relevant stakeholders such as staff

from organisations overseeing the procurement initiatives.

These documents were examined for information relevant to the research

questions. In particular this included: information about key barriers and enablers of

LCPP; data about key carbon outcomes from the projects and initiatives; information

about strategies designed to overcome barriers to LCPP; insights into key success

factors; contact details of key individuals and organisations involved in the projects;

and other pertinent information.

Data analysis first involved coding transcripts to identify key information, data

and themes. Qualitative data analysis typically requires activities such as coding

information from a variety of sources and analysing to explore patterns and themes in

this information. Thematic analysis was used to help order and compare responses

from the interviews and key documents. An ‘emergent’ coding process (see (Marshall

and Rossman, 2014) was employed to develop codes and categories for analysis.

Thematic analysis using the constant comparison process (see (Glaser, 1967) was used

to distil key themes such as the theme of ‘barriers’ included categories pertaining to

different types of barriers, such as ‘cost barriers’, ‘risk barriers’, ‘supply chain

barriers’, and so on.

3.4.3 Synthesis of findings

In order to synthesise results of the survey and case studies, data triangulation

and comparative analysis were employed. Leedy and Omrod (2015) and Vohra (2014)

suggest five key steps as a good foundation for the analysis of qualitative research,

based on research by Creswell (1998) and Stake (1994). The five steps include

Organisation; Categorisation; Interpretation; Identification of patterns; and Synthesis.

The following provides a brief summary of how these stages were incorporated into

the current study.

− Organization – Case study data were organised with a clear and logical

structure aligning with the key barrier categories used for the previous


survey stage of the research, and organised chronologically, such as when

program characteristics changed over time.

− Categorization – Categories of strategies and success factors used by the

case study projects we identified and were clustered into groups. Clustering

data into meaningful groups helps the researcher organise and classify

information and aids in identifying larger patterns.

− Interpretation – Refers to interpretation of single instances in relation to the

higher-level meaning they could contribute to the case. The current study

examined project documents and interview data to identify instances where

various strategies and program characteristics were employed that resulted

in program success or otherwise helped to overcome barriers that had

previously limited the uptake of LCPP.

− Identification of patterns – Overarching patterns of key factors that appear

conducive to program success were compared and contrasted between the

case studies. According to Leedy and Ormrod (2015) this involves

searching for “underlying themes and other patterns that characterize the

case more broadly than a single piece of information can”. This research

used thematic analysis to aid in the search for themes that emerged as being

important to the description of the phenomenon.

− Synthesis – Synthesis involved the development of a model for successful

LCPP programs that was used to respond to an objective of the research; to

help synthesise the results and find a way of processing the key lessons

learned. This model was developed through an iterative approach building

on the previously mentioned steps and was used to synthesise program

mechanisms and strategies into a logical and operationalisable structure.

Comparative analysis of the case studies undertaken to explore their key

characteristics and to highlight areas of alignment and divergence, both within

and across the different contexts. The abovementioned steps were followed to

organise, categorise and interpret pertinent information. Patterns were

identified within and across the two cases and helped to guide synthesis of the

results, leading to the distillation of emergent strategies and factors seen to be

conducive to program success.


3.5 ETHICS AND LIMITATIONS

3.5.1 Ethics

Ethics approval was required for the survey and interview stages of the research.

The Queensland University of Technology Research Ethics Unit conducted a review

of the research study and all data collection instruments prior to any data collection.

The Research Ethics approval number for the study is 1400000382.

3.5.2 Limitations, validity and reliability

A limitation of the literature review is that the vast majority of the existing

research on low-carbon public procurement is focussed on international contexts,

particularly Europe and America. The literature review uncovered a wide range of

potential barriers discussed within the literature that could be important obstacles to

the increased uptake of low-carbon procurement practices. In order to determine the

relevance of these barriers in an Australian context a Survey was designed to collect

the opinions of procurement staff involved in purchasing within State government

entities in Australia.

One limitation of the current study is the relatively small sample size of the

survey. The research focused on barriers to low-carbon procurement of building-sector

projects, using Australian State and Territory government procurement professionals

as the sample population. The survey population was small and somewhat difficult to

access, resulting in a relatively small sample size. The research could be improved

upon by undertaking a similar study across multiple levels of government, which

would increase the survey population and also allow cross-jurisdictional analysis that

could prove useful. Secondly, this research involved developing and implementing the

survey tool for the first time. The questionnaire could be improved by incorporating

additional barrier items added by survey participants.

Secondly, this research involved developing and implementing a survey

instrument for the first time. The questionnaire could be improved in any subsequent

research by incorporating additional barriers that were added by survey participants.

For example, one respondents added a barrier related to decentralisation of

procurement. Barriers such as decentralisation could be added to a future iteration of

the survey. It was an intentional decision to allow participants to input additional

barriers and to rank these. This was to ensure that all relevant barriers had been


included. If a large number of respondents had added a similar novel barrier item it

would highlight an item that should have been included. There were no novel items

added by more than one or two respondents, which suggests that the included survey

items represent a thorough selection of the most significant barriers.

The interview method has some potential weaknesses such as response biases

due to the potential for poorly articulated or leading questions, or inaccurate

information due to poor recall (Yin, 2014). These limitations are reduced and avoided

by following established interview protocols, careful design of the interview questions,

and careful selection of case studies and interviewees. For example, current case

studies were chosen, rather than cases from years ago, to reduce the impact of poor

recall on the interview participants. Additionally, interviewees were provided with a

transcript of the interview to allow participants the chance to review their responses

and provide clarifications and corrections where appropriate. This helps to improve

the quality of the information captured.

Another potential limitation is uncertainty as to the degree of transferability of

key lessons learned elsewhere to the Australian procurement context. The case studies

explore a low-carbon public procurement initiative implemented in a European

context. It is possible there may be some unique factors which could make certain

program characteristics unable to be implemented in an Australian context.

3.6 CHAPTER SUMMARY

In order to explore the research questions, this study relies on literature review,

survey and case study methods. The literature review showed that low-carbon public

procurement has the potential to reduce the impact of public-sector projects on national

carbon emissions, and highlighted that a number of potential barriers could be

preventing the widespread adoption of LCPP practices. A survey method was then

used to explore barriers affecting the adoption of low-carbon public procurement

practices for building-sector projects in Australia. Additionally, it surveyed procurer’s

awareness of the concept of ‘low-carbon’ and explored the current use of energy

efficient and low-carbon criteria in procurement processes.

A key objective of the study was to identify important barriers impacting the

uptake of low-carbon public procurement practices by Australian State governments.

To meet this research objective, a questionnaire was developed and distributed to


public procurement staff involved in the procurement of building-sector projects. The

questionnaire sought insights from procurement staff and managers regarding factors

affecting the uptake of low-carbon public procurement practices within their

department. This stage of the research determined key barriers preventing the

procurement of projects with reduced emissions, and surveyed the use of carbon-

related criteria in public procurements. Key barriers identified through the survey were

then used to inform selection of the case studies.

The second key objective identify strategic opportunities to learn from existing

successful low-carbon procurement initiatives to enhance the capacity of public

procurement to deliver low-carbon outcomes. To achieve these objectives two existing

low-carbon public procurement initiatives were selected as case studies. The selection

of case studies was based on their potential to inform strategies for overcoming

important barriers identified through the survey stage of the research. The case studies

employed a combined research method relying on a review of archival and publicly-

accessible information supported by semi-structured interviews with key individuals

involved in the procurement or delivery of case study projects.

A central aim of the research is to develop a conceptual ‘low-carbon public

procurement’ model to guide successful low-carbon procurement outcomes. The

model builds upon important earlier work by authors such as Brammer and Walker

(Brammer and Walker, 2011), who present a model of the influences on sustainable

procurement. Their model focuses more generally on sustainable procurement (rather

than LCPP specifically), exploring how SPP translates into practice and argues that it

arises “primarily because of pressures on the organisation to undertake it”. This PhD

expands upon that discussion by exploring firstly what stops organisations from

undertaking LCPP, despite these pressures, and secondly what strategies have been

successful in overcoming these barriers.

Chapter 4: Survey Results and Analysis 71

Chapter 4: Survey Results and Analysis

This chapter presents the results and analysis of a nation-wide survey of

Australian State and Territory government public procurement staff involved in

building-sector procurement. The survey aimed to identify the key barriers affecting

the adoption of low-carbon public procurement practices for building-sector projects

in Australia. Additionally it surveyed procurer’s awareness of the concept of ‘low-

carbon’ and explored the current use of energy efficient and low-carbon criteria in

procurement.

The literature review showed that low-carbon public procurement (LCPP) has

the potential to reduce the impact of public-sector projects on national carbon

emissions, and highlighted that a number of potential barriers could be preventing the

widespread adoption of LCPP practices. More information is therefore needed about

key barriers impacting low-carbon public procurement so that these can be targeted.

4.1 SURVEY RESULTS

This stage of the research entailed a survey of Australian State and Territory

government procurement professionals involved in the procurement or delivery of

building-sector projects. The purpose of this research was to gain an understanding of

key barriers affecting low-carbon public procurement in Australia, focusing

particularly on public procurement of building-sector projects (goods, services or

works), and to determine the current use of carbon-related criteria in public

procurement processes. The questionnaire was developed based on potential barriers

uncovered by the literature review and an analysis of similar survey instruments that

had been used to explore sustainable procurement in other contexts. A summary of key

survey design and methods information is provided below. A detailed method is

provided in Chapter 3.

The study population targeted for this research was Australian State and

Territory government employees involved in public procurement of building-sector

projects. There is no available directory that lists Australian State/Territory

government employees involved in building-sector procurement, so in order to

72 Chapter 4: Survey Results and Analysis

develop a sampling frame a list of government procurement units and staff was

developed by searching government websites and databases. These procurement units

were contacted to determine whether procurement staff in that particular unit were

involved in the procurement of building-sector projects. An approach email with a

survey link was then emailed to relevant units with a request to forward to public

procurement staff within their department/agency. The questionnaire was available to

complete online between December 2014 and February 2015.

A respondent-driven approach (Heckathorn, 1997) was also used to access the

survey population. Recipients were encouraged to forward the questionnaire to other

State government procurement staff in their agency or network in order to reach a

wider survey population. At the conclusion of the survey period the researcher

contacted all individuals who had received a survey invitation to determine if they had

forwarded the survey to any other secondary contacts. This was done to determine the

total survey population that had been sent an invitation. When a recipient responded

that they had forwarded the survey invitation, details for that person were requested so

that any secondary recipients could be contacted. In total the questionnaire was

distributed to 121 Australian State and Territory government public procurement

professionals.

This survey sample is estimated to be approximately representative of the

population of public procurement professionals involved in building-sector

procurement across Australian State government departments. There are typically

several procurement staff within each State’s central procurement unit who are

regularly involved in procurement of building-sector projects across all government

operations. These procurement units typically handle large-scale projects. Certain

other Departments/agencies that frequently engage in building sector procurement

(Departments such as Health, Education, etc.) may have several in-house procurement

staff in addition to being able to access the central government procurement unit –

these staff are often involved in smaller procurements of goods and services. Therefore

the survey population of 121 procurement staff is estimated to be a fair representation

of the population.

In total, responses were received from 54 participants - giving an overall

response rate of 44.6%. Subsequent data cleaning involved removing incomplete

responses (16) and respondents who indicated they were not actually involved in the


procurement or delivery of building-sector projects for an Australian State or Territory

government entity (3). These incomplete and invalid responses were removed, leaving

a final sample of 35 complete and valid responses, resulting in a final response rate of

28.9%. This is comparable with other similar surveys on sustainable procurement, for

example Michelsen and de Boer (2009) who had a response rate of 24.8%; and Walker

and Brammer (2009) who had a response rate of 10%.

4.1.1 Respondent data

Respondents had a variety of different experience levels, distributed relatively

evenly across junior staff, mid-level and senior-level respondents (Figure 4).

Figure 4: Survey respondents' work experience

Responses were received from a geographically diverse range of respondents

comprising all mainland States and Territories except Tasmania (Table 2).

Table 2: Survey respondent location

State/Territory Frequency Percent

Australian Capital Territory 5 14.3 New South Wales 1 2.9 Northern Territory 1 2.9 Queensland 2 5.7 South Australia 11 31.4 Victoria 6 17.1 Western Australia 9 25.7 Total 35 100

6%

20%

34%9%

31%

Survey respondents' work experience

Less than 1 year

1 - 4 years

5 - 9 years

10 - 20 years

More than 20 years


Respondents were asked to report their own and their department/organisation’s

familiarity with the term ‘low-carbon’. All respondents reported themselves as having

at least some familiarity with the term ‘low-carbon’, with the majority classifying

themselves as being ‘moderately familiar’ with the term (Table 3).

Table 3: Respondents’ familiarity with the term ‘low-carbon’

Personal familiarity with ‘low-carbon’ Frequency Percent

Not at all familiar 0 0 Slightly familiar 5 14.3 Somewhat familiar 10 28.6 Moderately familiar 11 31.4 Extremely familiar 9 25.7 Total 35 100

Respondents gauged their organisations’ familiarity with the concept of ‘low-

carbon’. All respondents believed that their organisations had at least some familiarity

with the term ‘low-carbon’, with the majority estimating their organisations were

‘somewhat familiar’ with the term (Table 4).

Table 4: Organisational familiarity with the term ‘low-carbon’

Familiarity of department with ‘low-carbon’ Frequency Percent

Not at all familiar 0 0 Slightly familiar 3 8.6 Somewhat familiar 18 51.4 Moderately familiar 10 28.6 Extremely familiar 4 11.4 Total 35 100

4.1.2 Key barriers affecting uptake

The primary objective of the survey was to explore key barriers affecting the

uptake of low-carbon public procurement practices by Australian state and territory

government departments. To do this, the survey was administered in three parts, as

described below.

Part 1: Barrier categories

In Part 1 of the questionnaire respondents were asked to consider eight barrier

categories and to indicate the extent to which they thought each of these barrier

categories affected their department/organisation procuring building-sector goods,


services or works with reduced carbon emissions. The barrier categories were ‘skills

and knowledge’, ‘procurement tools and guidelines’, ‘time’, ‘cost’, ‘risk’,

‘management and organisational issues’, ‘policy and regulation’, and ‘supply chain

issues’.

Respondents could answer using a four-point uni-polar scale with the following

options; ‘Not a barrier’, ‘Minor barrier’, ‘Moderate barrier’, and ‘Major barrier’.

Respondents were also given a ‘Not sure’ option for all questions. Marginal

distribution data is summarised for each of the eight barrier categories in Part 1 and

presented in Table 5. Next, in order to determine a ranking for the eight barrier

categories, responses were linearly transformed and allocated scores as follows; ‘not a

barrier’ = 0; ‘minor barrier’ = 1; ‘moderate barrier’ = 2; and ‘major barrier’ = 3. When

respondents selected ‘not sure’ and when no response was provided these responses

were allocated a score of zero. Bold text indicates response categories that received

the highest frequency of responses.

Table 5: Frequency distribution of key barrier categories

Barrier Categories

Note sure No. (%)

Not a barrier No. (%)

Minor barrier

(No. (%)

Moderate barrier No. (%)

Major barrier No. (%)

Skills/knowledge 1 (3%) 4 (11%) 6 (17%) 16 (46%) 8 (23%) Tools/guidelines 2 (6%) 6 (17%) 9 (26%) 14 (40%) 4 (11%) Time 1 (3%) 3 (9%) 9 (26%) 11 (31%) 11 (31%) Cost 1 (3%) 1 (3%) 7 (20%) 9 (26%) 17 (49%) Risk 1 (3%) 6 (17%) 9 (26%) 12 (34%) 7 (20%) Management/Org. 1 (3%) 3 (9%) 14 (40%) 10 (29%) 7 (20%) Policy/regulation 2 (6%) 3 (9%) 13 (37%) 14 (40%) 3 (9%) Supply chain 3 (9%) 3 (9%) 16 (46%) 10 (29%) 3 (9%)

NB: Bold text denotes response with highest frequency

Total scores for each barrier category were then summed to determine a ‘Barrier

Category Score’ (BCS) and subsequently a rank. Results are presented in Table 6.

The scoring and ranking procedure has been adopted from previous research exploring

barriers and drivers, for example McGuire et al (2014). The procedure provides a clear

and logical way of translating response data into a useful ranking.

The highest ranked barrier category according to survey respondents was ‘Cost’,

with a BCS of 76, indicating that respondents generally thought that cost was a

significant barrier to their organisation procuring low-carbon goods, services or works.


This was followed by ‘Time’ and ‘Skills/Knowledge’. The least significant barrier was

‘Supply chain issues’.

As mentioned above, respondents had the opportunity to respond ‘Not sure’ for

each barrier category if they felt they did not know enough about the issue to accurately

respond. For ‘Skills/knowledge’, ‘Time’, ‘Cost’, ‘Risk’, and

‘Management/Organisational issues’ only one respondent selected ‘Not sure’.

‘Policy/regulation’ and ‘Tools/guidelines’ both received two ‘not sure’ responses

whilst three respondents selected the ‘Not sure’ option ‘Supply chain issues’. This

suggest that overall a high proportion of respondents felt confident enough about the

subject matter to answer the questions, but that there is a slightly higher incidence of

uncertainty regarding supply chain issues.

Table 6: Barrier Category Score and Ranking of barrier categories

Barrier Barrier Category Score Rank

Cost 76 1 Time 64 2 Skills/knowledge 62 3 Management/Org. issues 55 4 Risk 54 5 Policy/regulation 50 6 Tools/guidelines 49 7 Supply chain issues 45 8

Part 2: Key barrier items

Part 2 of the questionnaire aimed to explore specific aspects of the eight barrier

categories in greater detail. This consisted of 33 individual barrier items arranged

under the eight categories described above. For example, in order to explore the ‘cost’

barrier category in greater detail, Part 2 of the questionnaire required respondents to

consider seven specific ‘cost’ barrier items and rate each on the 4-point barrier scale.

The 33 barrier items were developed from a review of peer-reviewed public

procurement literature and an analysis of similar survey instruments used to explore

barriers to green or sustainable public procurement. Survey respondents also had the

option to add their own barriers and rate them on the same barrier scale to ensure that

all possible barriers were able to be included.


Respondents were asked to answer the question “To what extent do you think the

following factors affect your department/organisation procuring building-sector

goods/services/works with reduced carbon emissions?”. The 33 barrier items they

were asked to consider are presented in Table 7, which shows the frequency and

proportion of responses along the barrier scale. Bold text denotes the response option

with the highest proportion of responses.

In order to determine an overall ranking of the individual barrier items, responses

were allocated scores as per the procedure outlined for Part 1 (‘not a barrier’ = 0;

‘minor barrier’ = 1; ‘moderate barrier’ = 2; and ‘major barrier’ = 3). When respondents

selected ‘not sure’ and when no response was provided these responses were again

allocated a score of zero. Scores for each individual barrier item were then summed to

determine the Barrier Item Score (BIS).

The highest ranked individual barrier item was “Availability of monitoring

mechanisms (e.g. carbon reporting or audit mechanisms)”, followed jointly by “Lack

of skills within my department/organisation to monitor carbon performance of projects

during operation”, “Availability of inventories/databases with information about

carbon emissions from goods/services/works” and “Availability of information about

whole-life-costs of low-carbon goods/services”. Table 8 presents the ranked barriers.

A number of three-way ties has resulted in an atypical ranking for second and seventh

place; where for example the three items that tied for second place resulted in these

barrier items all receiving a rank of 3 ((2+3+4)/3=3). The three least significant (lowest

ranked) barriers were “Cost to evaluate low-carbon tender submissions” (BIS 51);

“Availability of suppliers that can provide goods with reduced carbon emissions” (BIS

48); and finally the lowest ranked barrier “Concerns about legality of low-carbon

public procurement” (BIS 30).


Table 7: Summary of perceived barriers to low-carbon public procurement – Frequency and proportion of responses

Questionnaire item Not sure No. (%)


Minor barrier No. (%)



Skills and Knowledge

Lack of skills to monitor carbon performance of projects during operation 2 (6%) 4 (11%) 0 (0%) 13 (37%) 16 (46%) Lack of knowledge within org. about low-carbon goods/services/works 1 (3%) 3 (9%) 7 (20%) 17 (49%) 7 (20%) Lack of skills within my org. to develop effective low-carbon tender criteria 1 (3%) 5 (14%) 6 (17%) 17 (49%) 6 (17%) Lack of skills within my org. to evaluate carbon considerations in tender proposals/bids 1 (3%) 6 (17%) 8 (23%) 12 (34%) 8 (23%) Tools and Guidelines Availability of monitoring (e.g. carbon reporting or audit) mechanisms 1 (3%) 1 (3%) 4 (11%) 15 (43%) 14 (40%) Availability of inventories/databases with info. about emissions from goods/services/works 1 (3%) 2 (6%) 4 (11%) 14 (40%) 14 (40%) Availability of information about whole-life-costs of low-carbon goods/services. 1 (3%) 2 (6%) 2 (6%) 18 (51%) 12 (34%) Availability of procurement tools to assist low-carbon procurement decision-making. 1 (3%) 5 (14%) 3 (9%) 15 (43%) 11 (31%) Opportunity within Procurement Guidelines/ Frameworks to pursue low-carbon options. 2 (6%) 3 (9%) 11 (31%) 13 (37%) 6 (17%) Time Time to monitor/report the carbon outcomes of projects during operation. 1 (3%) 3 (9%) 4 (11%) 18 (51%) 9 (26%) Time required to provide low-carbon procurement training for staff. 1 (3%) 3 (9%) 7 (20%) 14 (40%) 10 (29%) Time to develop low-carbon tender criteria. 1 (3%) 4 (11%) 8 (23%) 13 (37%) 9 (26%) Time to evaluate low-carbon tender submissions. 1 (3%) 3 (9%) 8 (23%) 17 (49%) 6 (17%) Cost

Upfront cost of low-carbon goods/services/works. 2 (6%) 3 (9%) 3 (9%) 16 (46%) 11 (31%) Cost to monitor/report the carbon outcomes of projects during operation. 2 (6%) 2 (6%) 3 (9%) 21 (60%) 7 (20%) Level of opportunity within ‘Value for money’ process to account for carbon emissions. 2 (6%) 3 (9%) 8 (23%) 10 (29%) 12 (34%) Life-cycle cost of low-carbon goods/services/ works. 2 (6%) 2 (6%) 9 (26%) 13 (37%) 9 (26%) Cost of providing low-carbon procurement training for staff. 1 (3%) 4 (11%) 13 (37%) 9 (26%) 8 (23%) Cost to develop low-carbon tender criteria. 1 (3%) 5 (14%) 11 (31%) 13 (37%) 5 (14%) Cost to evaluate low-carbon tender submissions. 1 (3%) 5 (14%) 12 (34%) 12 (34%) 5 (14%)


Questionnaire item Not sure No. (%)


Minor barrier No. (%)



Risk

Risk/uncertainty regarding the performance of low-carbon goods/services/works. 1 (3%) 7 (20%) 3 (9%) 15 (43%) 9 (26%) Risk/uncertainty over which entity owns risk if procured item do not result in CO2 reductions. 1 (3%) 8 (23%) 5 (14%) 10 (29%) 11 (31%) Management and Organisational Issues

Short-term focus in public procurement decision-making. 1 (3%) 5 (14%) 7 (20%) 7 (20%) 15 (43%) Level of interest in low-carbon procurement from my organisation’s procurement staff. 2 (6%) 4 (11%) 8 (23%) 7 (20%) 14 (40%) Level of management support for low-carbon public procurement within my organisation. 2 (6%) 3 (9%) 8 (23%) 11 (31%) 11 (31%) Policy and Regulation

Level of government incentives that could facilitate low-carbon procurement. 2 (6%) 6 (17%) 5 (14%) 12 (34%) 10 (29%) Level of political support for carbon/ greenhouse gas reductions. 2 (6%) 9 (26%) 5 (14%) 9 (26%) 10 (29%) Government procurement policies don’t require carbon emissions to be taken into account. 3 (9%) 6 (17%) 8 (23%) 9 (26%) 9 (26%) Concerns about legality of low-carbon public procurement. 3 (9%) 14 (40%) 8 (23%) 8 (23%) 2 (6%) Supply Chain Issues

Availability of suppliers that can deliver works with reduced carbon emissions. 3 (9%) 3 (9%) 8 (23%) 14 (40%) 7 (20%) Availability of suppliers that can deliver services with reduced carbon emissions. 4 (11%) 3 (9%) 7 (20%) 15 (43%) 6 (17%) Lack of supplier interest in tenders with low-carbon criteria. 3 (9%) 3 (9%) 9 (26%) 14 (40%) 6 (17%) Availability of suppliers that can provide goods with reduced carbon emissions. 4 (11%) 3 (9%) 11 (31%) 14 (40%) 3 (9%) Note: Bold text denotes response with highest frequency


Table 8: Ranking of barrier items

Individual Barrier Items Barrier Item Score Rank Category

Availability of monitoring mechanisms (e.g. carbon reporting or audit mechanisms).

76 1 Tools

Availability of inventories/databases with info about carbon emissions of goods/services/works.

74 3 Tools

Lack of skills within my organisation to monitor carbon performance of projects during operation.

74 3 Skills

Availability of information about whole-life-costs of low-carbon goods/services.

74 3 Tools

Upfront cost of low-carbon goods/services/works. 68 5 Cost Time to monitor/report the carbon outcomes of projects

during operation. 67 6 Time

Availability of procurement tools to assist low-carbon procurement decision-making.

66 8 Tools

Cost to monitor/report the carbon outcomes of projects during operation.

66 8 Cost

Short-term focus in public procurement decision-making. 66 8 Mgmt Time required to provide low-carbon procurement training

for staff. 65 10 Time

Level of opportunity within ‘Value for money’ determination process to account for carbon emissions.

64 11.5 Cost

Level of interest in low-carbon procurement from my department/organisation’s procurement staff.

64 11.5 Mgmt

Level of management support for low-carbon public procurement within my department/organisation.

63 13 Mgmt

Lack of knowledge within my department/organisation about low-carbon goods/services/works.

62 14.5 Skills

Life-cycle cost of low-carbon goods/services/works. 62 14.5 Cost Time to develop low-carbon tender criteria. 61 16 Time Time to evaluate low-carbon tender submissions. 60 17.5 Time Risk/uncertainty regarding the performance of low-carbon

goods/services/works. 60 17.5 Risk

Level of government incentives that could facilitate low-carbon procurement.

59 19 Policy

Lack of skills within my department/organisation to develop effective low-carbon tender criteria.

58 20.5 Skills

Risk/uncertainty over which entity owns the risk if procured goods/services/works do not result in carbon reductions.

58 20.5 Risk

Availability of suppliers that can deliver works with reduced carbon emissions.

57 22 Supply

Lack of skills within my department/organisation to evaluate carbon considerations in tender proposals/bids

56 23 Skills


Individual Barrier Items Barrier Item Score Rank Category

Opportunity within current Procurement Guidelines/Frameworks to pursue low-carbon options.

55 25.5 Tools

Cost of providing low-carbon procurement training for staff.

55 25.5 Cost

Availability of suppliers that can deliver services with reduced carbon emissions.

55 25.5 Supply

Lack of supplier interest in tenders with low-carbon criteria.

55 25.5 Supply

Level of political support for carbon/greenhouse gas reductions.

53 28.5 Policy

Government procurement policies do not require carbon emissions to be taken into account.

53 28.5 Policy

Cost to develop low-carbon tender criteria. 52 30 Cost Cost to evaluate low-carbon tender submissions. 51 31 Cost Availability of suppliers that can provide goods with

reduced carbon emissions. 48 32 Supply

Concerns about legality of low-carbon public procurement.

30 33 Policy

Part 3: Current extent of LCPP practices


emission and energy efficiency criteria in project tendering processes. The aim was to

determine how frequently low-carbon criteria are being included in project tendering

documents. Respondents could answer on a five-point uni-polar scale (0 = never; 1 =

rarely; 2 = about half the time; 3 = often; 4 = always).

Approximately 63% of respondents indicated energy efficiency criteria was used

regularly (always, often, or about half the time), whilst 34% said their organisation

‘rarely’ or ‘never’ included such criteria (Table 9). In contrast, 26% of respondents

indicated that carbon emission criteria were regularly included in requests for tender

by their organisation or department, whilst 67% said that their organisation either

‘never’ or ‘rarely’ included carbon emission criteria in requests for tender (Table 10).

Approximately 66% of respondents indicated that carbon emission criteria never or

rarely resulted in rejection of the offer with the lowest price, whilst the majority of the

remaining respondents indicated they were not sure (Table 11).


Table 9: Inclusion of energy efficiency criteria in requests for tender

Percent Frequency

Never 11 % 4 Rarely 23 % 8 About half the time 11 % 4 Often 40 % 14 Always 11 % 4 Not sure 3 % 1 Total 35

Table 10: Inclusion of carbon emission criteria in requests for tender

Percent Frequency


Table 11: Have carbon emission criteria ever resulted in the rejection of the offer with the lowest price?

Percent Frequency



4.2 ANALYSIS OF RESULTS

The following sections summarise the key findings from the survey, highlighting

key barriers to low-carbon public procurement as reported by survey participants. The

data has been analysed from the perspective of seeking insight into Decoupling

strategies, which seeks to break the current link between development and greenhouse

gas emissions, as discussed in Section 3.1 of the Research Design chapter. In

particular, this section has been structured with regard to:

− Key barrier categories impacting upon the transition to decoupling

procurement from greenhouse gas emissions (Section 4.2.1)

− Key barrier items (within the overarching categories) that further

distinguish points of intervention to peak and then tail emissions through

the mechanism of procurement (Section 4.2.2)

− Current status of the move towards decoupling procurement from

greenhouse gas emissions (Section 4.2.3).

− Implications of key findings for subsequent research enquiry with a focus

on exploring how decoupling efforts could be enhanced (Section 4.2.4)

Survey responses were received from public procurement staff with a variety of

different experience levels, distributed evenly across senior-level, mid-level and junior

staff, and also across a wide geographical area, thereby benefiting from a broad range

of procurement experience and resulting in considerable insights being gained from

the respondents. The final sample size of thirty-five respondents is relatively small but

is considered adequate due to the experience profile of the respondents - including a

large proportion with more than ten years’ experience in public procurement.

Additionally, the depth at which the survey explored the barrier categories allowed for

a deeper level of exploration of the topic, further contributing to the adequacy of the

findings. The final response rate of 28.9% is also comparable with other similar

surveys on sustainable procurement, for example Michelsen and de Boer (2009) who

had a response rate of 24.8%; and Walker and Brammer (2009) who had a response

rate of 10%.


4.2.1 Part 1: Key barrier categories

In Part 1 of the questionnaire the majority of respondents ranked ‘cost’ as the

most significant barrier category affecting the procurement of goods, services or works

with reduced carbon emissions. Results show that almost half of respondents (49%)

thought ‘cost’ was a ‘major barrier’ to procuring goods, services or works with reduced

carbon emissions (see Table 7). An additional 26% of respondents responded that they

thought it was a ‘moderate barrier’. This outcome is consistent with similar research

on barriers to sustainable and green procurement. For example, Brammer and Walker

(2011) who explored the implementation of sustainable procurement by public bodies,

reported that 48% of public procurement practitioners thought ‘financial constraints’

were a barrier to sustainable procurement. Another study by Varnäs, (2009) involving

interviews with procurement professionals also found that cost was a significant

perceived barrier that was limiting the inclusion of environmental criteria in contract

procurement.

When considering Rogers’ Diffusion of Innovation (DOI) theory (Rogers,

2003), the most relevant DOI attributes are ‘Price’ and ‘Funding’, which posit that the

cost of adopting an innovation and the availability of resources will influence the

likelihood of its adoption. This hypothesis is consistent with the findings of the survey,

which show that cost is a commonly reported barrier.

The second highest-rated barrier category in Part 1 was ‘Time’, with 31% of

respondents responding that they thought it was a ‘major barrier’ and an additional

31% responding that they thought it was a ‘moderate barrier’. This appears to be

roughly in line with other research. For example, a study by Bouwer reported that 35

per cent of survey respondents indicated that a “lack of organisational resources

including time” presented a barrier to the uptake of green public procurement (Bouwer

et al., 2006). Reflecting on DOI theory, ‘Time’ can be captured within the attributes

of ‘ease of use’ and ‘funding’, since both the degree to which an innovation is easy to

adopt and the extent of available resources to invest in adopting the innovation have

an impact on Time barriers.

The third highest-ranked barrier category in Part 1 was ‘Skills/knowledge’, with

23% of respondents responding that they thought it was a ‘major barrier’ and an

additional 46% responding that they thought it was a ‘moderate barrier’. Other similar

surveys have also shown that skills and knowledge are important barriers to sustainable


procurement. A study by Ochoa and Erdmenger, which explored the extent of green

public procurement in the EU, found that public authorities that were not well-engaged

in green public procurement said that a “lack of environmental knowledge and how to

develop environmental criteria” presented the largest barrier to its uptake (Ochoa and

Erdmenger, 2003). Interestingly, in the Ochoa study it was a less-significant barrier

for authorities who were more engaged in green procurement. Within the perspective

of DOI theory, skills and knowledge most relates to the Environmental attribute

‘technological experience’, since the level of LCPP-relevant experience within an

organisation can have a large bearing on the likelihood of innovation adoption.

The lowest-ranked barrier category in Part 1 was ‘Supply chain issues’ with a

BCS rank of 8th. Only 9% of respondents responding that they thought it was a ‘major

barrier’ and 29% responding that they thought it was a ‘moderate barrier’. The majority

of respondents (46%) thought it presented only a minor barrier. This is interesting since

it suggests that many survey respondents are at least aware of suppliers who can offer

low-carbon goods and services. There is no direct analogue to ‘Supply chain’ in

Roger’s DOI theory (Rogers, 2003), however it could be said to be related to

Organisational attributes, such as ‘Interpersonal networks’ and even ‘Technological

experience’, since the purpose of procuring from an external entity is to draw on their

technical experience to provide a solution to an identified need.

Survey results were analysed as follows. First, marginal distribution data was

calculated for each barrier category. Responses were linearly transformed and

allocated scores to determine a Barrier Category Score for each item. Survey items

were then ranked to determine the key barriers. Table 12 presents the results of this

process and ranks the eight barrier categories in order from the most significant barrier

(Cost) to the least significant (Supply chain issues). Further detail on the survey

analysis methods is presented in Chapter 3: Research Design. The following sections

discuss these eight barrier categories, and key barrier items within each, in detail.


Table 12: Barrier Category Score and Rank

Barrier Category Score Rank

Cost 76 1 Time 64 2 Skills/knowledge 62 3 Management/Org. issues 55 4 Risk 54 5 Policy/regulation 50 6 Tools/guidelines 49 7 Supply chain issues 45 8

4.2.2 Part 2: Key barrier items

Part 2 of the questionnaire required respondents to consider 33 individual barrier

items arranged under the eight categories discussed above. The purpose of this was to

explore each of the eight categories in greater detail.

Cost barriers

In Part 1 of the questionnaire the majority of respondents initially ranked ‘cost’

as the most significant barrier to procuring goods, services or works with reduced

carbon emissions. However, when respondents were asked to consider the ‘cost’

category in greater detail in Part 2 of the questionnaire, most ‘cost’ barrier items ranked

significantly lower than expected. For example, the highest ranked ‘cost’ barrier item

was ‘Upfront cost of low-carbon goods/services/works’, which ranked only 5th out of

the 33 barrier items, and the next highest ranked was ‘Cost to monitor/report the

carbon outcomes of projects during operation’ which tied for 8th most significant.

These rankings were somewhat lower than expected given the proportion of

respondents who rated the ‘cost’ category as a major barrier in Part 1 of the survey.

Whilst cost is undoubtedly still a significant barrier, this perhaps suggests that

respondents may be conditioned to think of cost as the preeminent barrier, and so have

a tendency to initially rate it somewhat higher than it may actually be; perhaps out of

habit or entrenched assumptions. The results seem to suggest that when respondents

are asked to delve more deeply into specific barrier items and consider the individual

factors that comprise the ‘cost’ category in more detail they rate these as somewhat

less significant than they rated the overall category initially. Following is a discussion

of the cost barriers that ranked highly in Part 2 of the survey.


Upfront cost:

The highest ranked cost barrier was ‘Upfront cost of low-carbon

goods/services/works’ and the majority of survey respondents thought upfront cost

was either a major barrier (31%) or a moderate barrier (46%) to undertaking low-

carbon procurement. With the traditional focus on lowest cost as a key criteria for

awarding contracts in many situations (Michelsen and de Boer, 2009) it is perhaps

unsurprising that upfront cost ranked highly as a barrier to low-carbon public

procurement.

Upfront cost can often be a barrier to the purchase of more sustainable products,

since there can be a perception that sustainable products have a higher cost (Schwerin

and Prier, 2013). For example, a 2012 survey of National governments by UNEP

reported that the most common barrier to green and sustainable public procurement as

reported by survey participants was “perception that sustainable products are more

expensive” (O’Rourke et al., 2013). ‘Price’ is also a key attribute of Rogers’ Diffusion

of Innovation theory (Rogers, 2003) that influences the adoption of innovations.

Whilst it is sometimes the case that sustainable options can carry an upfront cost

premium, research has shown that sustainable and energy-efficient goods commonly

deliver long-term savings, often conferring better value for money over the course of

their life-cycle. However in order for this to affect procurement decision-making it

requires greater awareness and upskilling of procurement officials (Bolton, 2008),

particularly in relation to concepts such as whole-of-life costing. Additionally, it can

be argued that public authorities have a responsibility to consider external or ‘societal

costs’, beyond simple economic payback, and that this is a better way to consider the

real value of development decisions.

Cost to monitor/report carbon outcomes of projects during operation:

The second highest ranked cost barrier was ‘Cost to monitor/report the carbon

outcomes of projects during operation’, with 20 per cent of respondents saying it was

a major barrier and 60 per cent saying it was a moderate barrier. Interestingly, barrier

items related to monitoring and reporting of carbon outcomes consistently ranked

highly in Part 2 of the survey. In fact, four of the top ten most significant barrier items

are monitoring/reporting issues.


This suggests that developing strategies to overcome or reduce such

monitoring/reporting barriers is likely to facilitate greater uptake of LCPP. The

monitoring/reporting issues were related to cost, time, skills and tools. Interestingly,

these are all interrelated barriers. For example, developing monitoring/reporting tools

that can be used easily by procurement staff could potentially help reduce both the cost

and time of undertaking such activities.

With the increasing shift towards carbon pricing, many nations are beginning to

focus on preparatory measures and infrastructure such as monitoring, reporting and

verification mechanisms (World Bank, 2014). Such tools are likely to become more

available in the coming years, since well-developed MRV mechanisms will be

essential for ensuring rigorous carbon pricing instruments (Kossoy et al., 2015). There

are a variety of carbon and energy monitoring/reporting tools that are beginning to be

developed. Within the building sector space there are several options.

− NABERS: The NABERS rating system can be used to rate the performance of

existing buildings with regard to energy, water, and waste performance. For

energy and waste categories it can be used to rate either tenancies, base

building, or whole buildings. It includes tools to allow simple calculation of

greenhouse gas emissions and energy consumption, and allows for simple

comparisons to be undertaken with similar buildings. All ratings must be

conducted by an Accredited Assessor in order to ensure compliance with

reporting rules.

− ISO 14064 – The ISO 14064-1:2006 Standard sets out principles and

requirements for the measurement and reporting of emissions at an

organisational level (International Organization for Standardization, 2006).

This standard provides a rigorous and internationally recognised methodology

that can be used to guide the development, management, reporting and

verification of an emissions inventory. The ISO Standard also includes a

method to continually track and review progress. Ellis and Moarif (2009) state

that “there is already a large body of material relating to how to monitor or

measure emissions from different sources and sectors – at the project,

organisation or national level (e.g. IPCC 2006, WRI/WBCSD 2001, ISO

standard 14064). Any future sectoral approach could build on such material,


which has already gone through an extensive international review process.”

(Ellis and Moarif, 2009)

− Energy Performance Contracts – Energy Performance Contracts (EPCs) are a

procurement method used quite extensively for building sector refurbishment

projects. They involve outsourcing the design and implementation of a building

or tenancy upgrade project to an expert third part, who then conducts the

monitoring and verification to ensure contracted efficiency improvements are

delivered. EPCs can therefore be used to assist monitoring and reporting of

carbon emissions reductions and energy efficiency improvements. They can

help overcome cost barriers to the monitoring and reporting of emissions and

energy improvements since they typically deliver cost savings over the course

of the contract period, usually within a couple of years, and require verification

to prove that contracted improvements have been achieved.

− Building management systems – Building management systems (BMS) are

computerised systems for monitoring and operating buildings. Many modern

BMS systems allow real-time monitoring of building system performance and

energy consumption, and can generate reports of performance data such as

energy consumption over time. BMS can therefore be used in some

circumstances for monitoring and reporting of low-carbon interventions. There

is also evidence to suggest that buildings with a BMS reduce energy

consumption in the order of 20 - 40 per cent (Intergovernmental Panel on

Climate Change, 2007) conferring an additional advantage to retrofitting

buildings with BMS systems

Level of opportunity within value for money determination process to account

for carbon emissions:

The majority of respondents felt that the level of opportunity to account for

carbon emissions during the value for money determination process presented a major

barrier (34%) or a moderate barrier (29%) to LCPP. Of the seven cost barrier items,

this item received the highest proportion of votes as a major barrier.

Value for Money (VfM) is typically the core goal of public procurement, which

aims to make the best use of public funds to meet the government’s needs. Determining


optimum VfM entails taking a whole-of-life approach in order to determine the option

that would provide the best value for money, and whilst it may be true that more

sustainable buildings sometimes have higher upfront costs, it is well-documented that

they often have lower life cycle costs (Varnäs et al., 2009). In order for this to influence

procurement decisions however there will need to be better awareness of this

throughout procurement departments.

Additionally, as the world gradually moves toward carbon pricing, low-carbon

buildings are likely to deliver even greater value for money due to their reduced

embodied and operational carbon emissions. As such, this is likely to become less of

a barrier with the progressive introduction of carbon pricing mechanisms. Indeed,

given the appropriate price incentives, ‘value for money’ objectives could become a

significant enabler of low-carbon procurement, since carbon-intensive assets will carry

a significant carbon risk.

An alternative procurement award procedure called the ‘Most Economically

Advantageous Tender’ (MEAT) allows a contracting authority to apply a weighting to

criteria such as sustainability and quality characteristics of a tender, in addition to

price. This helps to signal to potential suppliers that certain criteria, for example carbon

emissions, will be considered and calculated into the award decision. Again, this may

require some cultural change and awareness-raising. Within the lens of Rogers’ DOI

theory, this would equate to an understanding of the ‘relative advantage’ of LCPP to

deliver better value as compared to standard procurement.

Procurement process costs:

The items that were ranked lowest were ‘Cost to develop low-carbon tender

criteria’ and ‘Cost to evaluate low-carbon tender submissions’. This suggests that the

procurement staff surveyed generally feel these factors aren’t a serious impediment to

procuring low-carbon projects. Just as determining key barriers is an important

undertaking, determining the least significant factors is equally important so that

resources and initiatives can focus on factors that are most needed. The survey results

suggest that whilst knowledge of low-carbon goods/services/works is somewhat of a

barrier to LCPP, once procurers have access to such information there should be no

significant increase in cost to incorporate low-carbon criteria into tenders or to evaluate

proposals.


Additional novel cost barriers added by respondents:

Respondents had the opportunity to add additional barriers under each category

and rank these on the same scale. One respondent added a novel cost barrier; “Budget

established very early in process without carbon usage really considered, then have

to work within budget” which was rated as a ‘major barrier’. This item is related to the

existing survey item ‘Short-term focus in public procurement decision-making’, or it

may be related to a lack of knowledge about low-carbon public procurement –

specifically the trade-off between higher upfront costs but lower life-cycle costs of

some low-carbon products. In either case, it seems to be a common occurrence that

sustainability is added as an afterthought rather than front-loaded into design decisions

and procurement processes from an early planning stage.

Some respondents added barrier items that more resembled comments, and these

were typically not given ratings on the barrier scale. They nonetheless provide some

useful insight into cost-related considerations. One respondent commented that “It’s a

lot to do with 'perceived costs' of not business as usual”, suggesting that procurers may

be hesitant to depart from typical practice because they believe procuring for low-

carbon outcomes will necessarily require additional expense.

Another respondent commented that “with the removal of the carbon tax, there

is no great incentive to control our carbon emissions”. This comment highlights the

significant potential for policy to influence the uptake of low-carbon practices.

Introducing a carbon pricing mechanism would make low-carbon procurement more

cost effective, since procuring carbon-intensive products would result in higher life-

cycle costs under such a system.

Two respondents made comments about the need for lifecycle cost analysis to

help justify low-carbon initiatives (in contrast to the common focus predominantly on

upfront costs). One commented that “Life cycle analysis is required to justify low

carbon initiatives - lower cost/low carbon reduced operating costs is the driver, rather

than 'green' imperatives”. Another commented that low-carbon procurement required

the “will and commitment of senior decision makers to make longer term/lifecycle

financial decisions rather than simply upfront costs”. Although State government

procurement guidelines typically recommend that life-cycle costs should be taken into

account when making procurement decisions, in daily practice there is often no life-


cycle cost analysis completed. Comments such as these suggest that upfront cost may

often still be a common focus in procurement decision making.

Tools and Guidelines barriers

A surprising outcome was that although ‘Tools/guidelines’ initially ranked lowly

(second-lowest) in Part 1 of the survey, four of the top 10 highest-ranked individual

barrier items in Part 2 were ‘Tools/Guidelines’ issues. This suggests that although

respondents did not initially think of tools and guidelines as a prominent barrier, when

prompted to explore the issue in more detail it becomes much more significant.

Within the category of ‘Tools/guidelines’ the most significant barriers were

‘Availability of monitoring mechanisms (e.g. carbon reporting or audit mechanisms’,

followed by ‘Availability of inventories/databases with information about carbon

emissions from goods/services/works’, and ‘Availability of information about whole-

life-costs of low-carbon goods/services’. All three ranked in the top 5 barrier items

suggesting that the procurement staff surveyed feel there is a perceived lack of tools

that could facilitate low-carbon procurement, and that this is a significant impediment

to undertaking LCPP. Governments wishing to develop LCPP initiatives should

therefore consider providing funding and support to develop such resources.

Availability of monitoring (e.g. carbon reporting or audit) mechanisms:

The barrier item ‘Availability of monitoring (e.g. carbon reporting or audit

mechanisms’ was both the highest ranked ‘Tools/guidelines’ barrier item and the

highest ranked individual barrier item in the entire survey (BIS 76). Collectively, 83

per cent of survey respondents thought this was either a major or moderate barrier to

their department/organisation procuring building-sector goods, services or works with

reduced carbon emissions.

Interestingly, respondents consistently ranked barriers related to monitoring and

reporting issues highly. Four of the top ten barrier items were related to

monitoring/reporting issues, indicating this is a recurring and significant concern

amongst the procurement professionals surveyed. This finding is consistent with

similar research on barriers to sustainable and green procurement. For example, a 2010

OECD Survey reported that 45 per cent of respondents thought ‘Lack of monitoring

(e.g. reporting or audit) mechanisms’ was a limitation to green procurement. It ranked


second highest out of eight potential barriers, surpassed only by ‘concern over possibly

higher price’ (Organisation for Economic Cooperation and Development, 2011).

However, it is also possible that in reality this may not be a significant barrier,

at least at the present time. Participant-A2 noted that departments would not typically

be required to monitor and report carbon emissions, and that in any case there are a

variety of available tools and guidelines to simplify the process. While in other cases

a simple estimation of the likely carbon outcomes would be sufficient at this early

stage of LCPP uptake. Finally, there is also a role for industry to perform these sorts

of tasks, as is the case with certain procurement methods such as energy performance

contracting.

Diffusion of Innovation theory posits that ‘ease of use’ is a determiner of

innovation adoption - in particular the degree to which a particular innovation is

regarded as difficult to use (Rogers, 2003). As such, a key point to highlight is that a

perceived barrier can still be a powerful barrier if the perception of it causes

departments to avoid LCPP on the assumption it would be onerous to undertake. In

such a case it matters little whether the barrier is real or imagined if the end result is

still that it prevents action. This is an interesting area of potential divergence between

perceived and actual barriers. It is likely that further development of skills and

knowledge regarding LCPP would overcome the perceived barrier, and various

existing tools and procurement methods can be utilised to overcome the remaining

barriers that do exist.

One respondent commented that “different types of evaluation are relevant to

different types of contracts. For example a ‘design and construct’ contract vs. a

‘construct only’ contract”. This suggests a possible need for tailored monitoring and

evaluation tools and mechanisms to specific procurement approaches. Building rating

tools often develop separate tools to cover major project stages. In these cases a

specialised tool is used for the design phase, then a separate specialised tool is used

for the construction phase, and so on.


Availability of inventories/databases with information about carbon emissions

from goods/services/works:

Collectively, 80 per cent of respondents thought that the availability of

inventories or databases with information about carbon emissions from

goods/services/works was either a major barrier (40%) or moderate barrier (40%) to

low-carbon procurement. This item was the second-highest-rated Tools/guidelines

barrier and also tied for second highest of all 33 barrier items.

As above, in DOI theory this relates back to ‘ease of use’, since tools such as

inventories and databases can make the task of researching and analysing emissions

easier. Various authors have highlighted the importance of access to information by

decision-makers. Bouwer et al. (2005) surveyed the status of GPP in 25 EU member

states and found that key challenges included lack of information and practical tools.

Borg et al. (2006) suggest that a potential way to overcome such barriers would be

access to in-house ‘energy efficient procurement information desks’ for procurement

practitioners to access help regarding energy-efficient equipment procurement.

Additionally, the IPCC echoes this sentiment, as cited in (Carlsson-Kanyama et al.,

2013), stating that “barriers to adaptation at that level consisted of (lack of) relevant

climate information for development-related decisions…”. Currently there do not

appear to be any accessible databases in Australia that provide information on

emissions from low-carbon goods, services and works. However it is important to note

that there is scope to use available international inventories with an associated

adjustment factor to account for the local fuel mix.

The Australian Equipment Energy Efficiency (E3) program oversees the Energy

Rating Label system, which can be used to obtain energy consumption information on

products relevant to building-sector procurement. For example, the program focuses

on products in the following categories; air-conditioners, chillers, gas space heaters,

water heaters, heat pumps, fans, lighting ballasts and lamps, domestic and commercial

refrigeration, electric motors, power supplies, televisions, data centres, computers and

monitors, and various other goods. If energy consumption information from the E3

program is computed with electricity emission factors from the National Greenhouse

and Energy Reporting (NGER) Scheme it can give an estimate of the expected

greenhouse gas emissions (Scope 2) caused by the use of that product in a particular

region. The program does not consider embodied emissions or emissions cause by end-


of-life recycling/disposal, so emissions from these lifecycle phases cannot be

estimated using the system.

However, many building-sector products are not covered by the E3 program.

Additionally many construction materials have no carbon or energy labelling or

information available. In many circumstances it would be quite time consuming, or

impossible, to find such information. In the future, as the world increasingly adopts

carbon pricing mechanisms, such information is likely to become more available.

Availability of information about whole-life-costs of low-carbon

goods/services:

Another factor that is as important to procurers as information on emissions data

is information on the whole-of-life costs of low-carbon goods and services.

Collectively, 85.7 per cent of survey respondents thought this was a major barrier

(34%) or a moderate barrier (51%) to LCPP. Since one of the primary goals of

procurement is to deliver value-for-money, it is unsurprising that a lack of whole-of-

life cost information is considered a significant barrier to procuring low-carbon goods

and services. Given that low-carbon goods, services and works may often confer life-

cycle savings, it is important that this sort of information be accessible to procurement

decision-makers and other stakeholders.

The E3 Program data, mentioned above, can be used to estimate energy

consumption costs of common products by simply multiplying the estimated energy

consumption figure on the Energy Rating Label by the price per kilowatt hour paid by

the procuring organisation. Whole-of-life costs can reasonable be estimated in this

manner. However, the majority of building-sector products and construction materials

have no such data available. Likewise, information on embodied emissions and

emissions caused by the recycling/disposal of products is also lacking.

Impact of tools and guidelines on other barrier categories:

It is important to explore the impact of tools and guidelines in more detail since

well-developed tools and guidelines may impact other barrier categories. For example,

a tool that facilitates easy estimation of the life-cycle costs of goods/services may

influence the cost of performing such a calculation. In such instances, well-developed

tools could cause the cost barriers to become less significant.


A variety of rating tools already exist that can be easily and cost-effectively

incorporated into procurement criteria (Boza-Kiss et al., 2013). For example, Energy

Rating Labels can be (and are often) used to identify energy efficient equipment and

estimate operational costs. Similarly, NABERS Ratings can be used to identify more

energy-efficient and lower-carbon buildings and tenancies. Such labelling programs

help inform purchasers of the relative carbon, energy and cost impacts of competing

options and can be incorporated into procurement processes.

Additional novel tools/guidelines barrier items added by respondents:

No additional novel tools/guidelines barriers were added by survey respondents.

However, one comment added by a survey respondent helps shed some light on

strategies that could impact the uptake of low-carbon procurement strategies. The

respondent commented that the “likelihood of a successful implementation is currently

hampered because draft Sustainable Procurement Guideline has yet to be released. It

is also critical that such an initiative will require evidence of a business case & case

studies to persuade people of the benefits”. This highlights the importance of

generating confidence in low-carbon procurement practices by making available case

studies and information to facilitate the development of a business case.

Time barriers

The second most significant barrier category in Part 1 was ‘Time’, with an initial

Barrier Category Score of 64, and 31% of survey participants identifying it as a major

barrier. The category ‘Time’ maintained its high ranking in Part 2, where participants

were asked to consider four individual barrier items relevant to the time barrier

category. The highest ranked ‘Time’ barrier item was ‘Time to monitor/report the

carbon outcomes of projects during operation’, followed by ‘Time required to provide

low-carbon procurement training for staff’.

Other authors have highlighted the importance of time barriers, for example

Borg et al. (2006) suggest that procurers may find it difficult to justify the resources

and time required to procure energy efficient products due to the perception that the

resulting savings will be marginal. Additionally, Zhang and Assuncau (2004) and

Sterner (2002) who discuss the significant time required to assess the multitude of

sustainable products and materials. However Zhang and Assuncau point out that

environmental labelling can be used for specifications, reducing the time involved.


Time to monitor/report the carbon outcomes of projects during operation:

The highest rated ‘Time’ barrier was ‘Time to monitor/report the carbon

outcomes of projects during operation’, which was identified as a major barrier by 26

per cent of respondents and as a moderate barrier by 51 per cent of respondents. As

mentioned above, barriers related to monitoring/reporting were consistently rated

highly by survey respondents. This indicates that issues relating to monitoring and

reporting are a significant impediment to LCPP for the procurement departments

surveyed.

There are a variety of tools to assist carbon management which may reduce the

time required to develop new systems. Some of these are discussed in the section

covering Cost barriers. This includes the ISO Standard 14064-1:2006 Specification

with guidance at the organization level for quantification and reporting of greenhouse

gas emissions and removals, which sets out a method for monitoring and reporting

emissions. The value of using tools such as these are that they have been developed

and refined by experts and are internationally recognised.

Certain procurement strategies can also avoid this barrier by externalising the

monitoring/reporting activities to a third-party. For example, Energy Performance

Contracts require the provider to monitor and verify contracted savings. Energy

Performance Contracts typically deliver cost savings to the procuring organisation, so

additional costs to calculate carbon savings could potentially be added to the contract

at minimal real cost to the procuring organisation.

Time required to provide low-carbon procurement training for staff:

The next most significant barrier item was ‘Time required to provide low-carbon

procurement training for staff’, which was identified as a major barrier by 29 per cent

of respondents and as a moderate barrier by 40 per cent of respondents. It is likely that

low-carbon procurement will indeed require additional training for staff to understand

key carbon concepts and to understand how to identify and evaluate low-carbon

opportunities.


Additional novel time barriers added by respondents:

Additional barriers added by survey respondents included “Time to implement

such an initiative in a large organisation can be problematic because time is required

to build momentum to roll-out the initiative against a background of resistance to

change”, which was rated as a ‘major barrier’ by the respondent. There are several

components to this added barrier; specifically, 1) the time required to implement new

LCPP practices; 2) the (large) size of the organisation; and 3) and the background

resistance to change. It is hard to know which elements are at the root of the problem,

and in what proportion.

However, the background resistance to change is related to items ‘Level of

management support for low-carbon public procurement within my

department/organisation’ and ‘Level of interest in low-carbon procurement from my

department/organisation’s procurement staff’, which both rated quite high in Part 2 of

the Survey. It is therefore reasonable to assume this may play a significant role. It is

possible that organisation size could have a positive or negative impact on the time

required to implement such initiatives. Large organisations may have additional

resources that could be put towards developing the skills and systems to implement

LCPP; however large organisations have more staff who may require upskilling,

requiring more time and resources to implement.

Another respondent added the barrier “Being a decentralised model staff tend to

be time poor in contract management and monitoring and reporting on the efficiencies

gained from solar power”, which was rated by the respondent as a ‘moderate barrier’.

Again, there are several components to this item; the degree of centralisation, the time

availability, the monitoring/reporting requirements, and the specific technology. It is

unclear of the respondent was simply using solar power systems as a general example

or if there are unique considerations specifically regarding the technology that add to

the management and monitoring/reporting requirements. It is also unclear how the

technology relates to the decentralisation of the procurement structure in the

organisation.

However, it is possible that the degree of centralisation could impact the time

required to implement initiatives. Centralisation could potentially also influence other

factors such as skills and cost. For example, if all building-sector procurement is

concentrated in a centralised unit it may somewhat reduce the need to upskill


procurement staff in client agencies that would rarely undertake building-sector

procurement.

Skills and Knowledge barriers

In Part 1 of the questionnaire, ‘Skills and knowledge’ was rated relatively highly

by survey participants, with 23 per cent indicating they thought it was a major barrier

to procuring projects with reduced carbon emissions. After responses were linearly

transformed and allocated scores, ‘Skills and knowledge’ received a Barrier Category

Score of 62, resulting in a rank of third most-significant. In Part 2, the highest rated

skills/knowledge barrier item was ‘Lack of skills within my department/organisation

to monitor carbon performance of projects during operation’, followed by ‘Lack of

knowledge within my department/organisation about low-carbon

goods/services/works’, then ‘Lack of skills within my department/organisation to

develop effective low-carbon tender criteria’.

Within Diffusion of Innovation theory (Rogers, 2003), skills and knowledge

barriers are most related to attributes such as ‘user need recognition’, ‘visibility’ and

‘technological experience’. Other authors have conducted surveys of barriers to green

and sustainable procurement, and survey items related to skills and knowledge often

rank highly. For example, a 2012 survey by UNEP reported that ‘Lack of information

and knowledge about SPP/GPP’ was the second highest-ranked barrier out of 15

barrier items (O’Rourke et al., 2013).

Lack of knowledge within my department/organisation about low-carbon

goods/services/works:

The barrier item ‘Lack of knowledge within my department/organisation about

low-carbon goods/services/works’ ranked in the top 50 per cent of barrier items in Part

2 of the survey, with 20 per cent and 49 per cent of respondents rating it as a major

and moderate barrier, respectively. This suggests that many respondents still feel

somewhat uncertain about tasks such as identifying and understanding appropriate

low-carbon products. “Many procurement officers now understand the need for their

decisions to support public sector sustainability goals. But knowing how to do this still

remains a stumbling block” (Forum for the Future, 2016).


In order for public procurement to play an effective role in driving low-carbon

outcomes there must be a focus on improving carbon skills and knowledge amongst

public procurement professionals, particularly in relation to carbon management and

greenhouse gas reporting concepts (Borg et al., 2006). Additionally, the development

of carbon labelling schemes and tools/databases for low-carbon construction materials

would likely assist overcoming such a barrier. This would have the added advantage

of reducing additional costs of implementing low-carbon procurement. This has been

an effective strategy in the energy efficiency arena, as identified by Boza-Kiss et al.

(2013), who discuss the cost-reducing strategy of using existing tools such as energy

performance labels within procurement criteria in order to reduce upfront procurement

costs.

Lack of skills within department/organisation to monitor carbon performance

of projects during operation/to develop effective low-carbon tender

criteria

These barriers have been grouped here for discussion as they both relate to

perceived skills deficiencies within departments. The barrier item ‘Lack of skills within

my department/organisation to monitor carbon performance of projects during

operation’ was rated as a major barrier by 46 per cent of respondents, and as a

moderate barrier by a further 37 per cent of respondents, making it the highest ranked

‘Skills and knowledge’ barrier item. As mentioned previously, barrier items related to

monitoring and reporting consistently ranked highly amongst survey respondents.

Whereas the barrier item ‘Lack of skills within my department/organisation to develop

effective low-carbon tender criteria’ was rated as a major barrier by 17 per cent of

respondents and as a moderate barrier by 49 per cent of respondents. This suggests that

some form of guidance regarding how to develop effective and appropriate criteria

could be useful for overcoming this barrier.

Previous research has suggested that environmental criteria are often poorly

specified and may not appropriately reflect the importance of the sustainability

attribute they are trying to influence (Varnäs et al., 2009). For example, Melissen and

Reinders (2012) discuss cases where the mis-application of sustainability

specifications could actually result in increased greenhouse gas emissions from

production and transportation. These issues reflect the need for development of skills

and knowledge regarding the intricacies of low-carbon procurement and the


importance of being able to consider procurement choices from a whole-systems

perspective.

There is additional complexity around what specifications are appropriate and

effective, and about how to develop fair and achievable award criteria. For example,

Michelsen and de Boer (2009) explored the implementation of green public

procurement in Norwegian municipalities and found that whilst environmental

specifications were often included in calls for tender, they often do not factor into the

final selection of suppliers. Similarly Varnäs et al (2009) found that environmental

specifications often did not have any impact on the decision to award contracts.

These issues are symptoms of a lack of skills and understanding of how to

effectively implement low-carbon public procurement. They are likely to have a

significant impact on the effectiveness of public procurement as a mechanism to

achieve low-carbon outcomes. DOI theory states that ‘technological experience’ can

influence the adoption of innovations (Rogers, 2003). In order to deal with these issues,

new skills in carbon literacy will be required. The development of guidance about how

to evaluate the effectiveness of low-carbon criteria would greatly assist in this regard.

Additional novel skills/knowledge barriers added by respondents:

One participant added the barrier “Putting low-carbon criteria into a major

infrastructure project management context” (ranked ‘major barrier’). This suggests

there may be additional complexity or considerations regarding the operationalisation

of low-carbon public procurement within a project management context, particularly

for large projects. This may be related to the perceived or actual lack of tools/guidance

for low-carbon procurement that could assist project managers to identify and

implement low-carbon opportunities. Alternatively, it may be simply a lack of

knowledge or awareness regarding low-carbon options for large infrastructure

projects. There are a multitude of low-carbon technologies and processes that can

significantly reduce carbon emissions in infrastructure projects, such as using warn-

mix asphalt instead of hot mix asphalt, or using concretes with fly ash content to reduce

the quantity of carbon-intensive Portland cement.

One respondent added an additional barrier related to organisational structure

barrier, stating “Because we deliver building infrastructure for other government client


agencies, there is a need to upskill and inform the client agencies” (rated ‘moderate

barrier’). It is possible that the primary barrier in this case is the decentralised

organisational structure of the procurement units, where ‘client agencies’ may not have

the sufficient skills or experience to implement effective low-carbon procurement.

However if centralised procurement staff have sufficient skills, and if there are

appropriate tools to evaluating and communicating the business case for low-carbon

procurement, this may help address this barrier to the uptake of LCPP practices.

Management and Organisational Issues

The most significant ‘Management/organisational’ barrier was ‘Short-term focus

in public procurement decision-making’, with a BIS score of 66. The second highest-

ranked Management/Organisation barrier item was ‘Level of interest in low-carbon

procurement from my department/organisation’s procurement staff’ with a BIS of 64,

followed closely by ‘Level of management support for low-carbon public procurement

within my department/organisation’ with a BIS of 63.

Short-term focus in public procurement decision-making:

The barrier item ‘Short-term focus in public procurement decision-making’

ranked highly, with 43 per cent of respondents rating it as a major barrier, and an

additional 20 per cent indicating it was a moderate barrier to LCPP in their

departments. Other authors have discussed the ‘lack of investment culture’ within

public bodies that often results in a shortage of funds dedicated to energy efficiency

investments and efficient building management practices that could secure future

economic returns (Borg et al., 2006). Department budgets are often constrained, and

energy/carbon issues must compete with a variety of other routine concerns that often

take precedence.

Within the lens of Diffusion of Innovation theory (Rogers, 2003) this could fall

within the organisational attribute categories of ‘opinion leaders and change agents’

and ‘management hierarchy’. Change agents are needed to help shift thinking about

societal issues to a longer-term horizon, then strong leadership is needed to set

management priorities. Climate change is an inherently long-term issue, as the impacts

are caused and experienced over decadal time spans. Absent a price on carbon it is

often easy to focus on immediate day-to-day concerns and de-prioritise issues such as

greenhouse gas emissions. As the world moves increasingly toward carbon pricing it


will become even more important to ensure government owned assets do not become

a carbon-liability that reduces long-term value for money to the public. As the OECD

point out “investment decisions that are being made today will lock in (emissions-

intensive) infrastructure for years or decades to come” (Organisation for Economic

Cooperation and Development, 2012).

Procurement regulations often require that procured goods and services should

confer quantifiable and demonstrable benefits to the procuring organisation, which

may make the inclusion of carbon-related specifications problematic in situations

where it is difficult to show the immediate or direct benefits of a low-carbon outcome

specifically for the procuring organisation (Correia et al., 2013). This is particularly

difficult in the medium and long term rather than just the very short term. However, as

many regions throughout the world move progressively towards carbon pricing

(Kossoy et al., 2015) this is likely to become less of an issue.

Level of interest in low-carbon procurement from my department’s

procurement staff:

The barrier item ‘Level of interest in low-carbon procurement from my

department/organisation’s procurement staff’ was rated as a major barrier by 40 per

cent of respondents, and as a moderate barrier by an additional 20 per cent of

respondents. Procurement staff are often time-poor and have numerous regulatory and

environmental requirements to consider and incorporate into tenders. Several papers

cite time constraints as a key barrier to low-carbon procurement. For example,

(Carlsson-Kanyama et al., 2013) citing Burch (2009) discuss the fact that

municipalities typically have time constraints that reduce the opportunity for including

complex tasks such as exploring low-carbon options and auditing tenders. Given this,

it is possible that adding more requirements could be met with some resistance, since

it would require additional training and adds another level of complexity to the process.

Level of management support for low-carbon public procurement within my

department:

The barrier item ‘Level of management support for low-carbon public

procurement within my department/organisation’ rated marginally lower than ‘interest

from staff’. It was rated as a major barrier by 31 per cent of respondents, and as a


moderate barrier by an additional 31 per cent. Similar studies on green and sustainable

public procurement cite lack of management support as a barrier to more sustainable

procurement. For example, Bouwer et al. (Bouwer et al., 2005) Lack of senior

management support can be a significant barrier to sustainability initiatives, and low-

carbon public procurement is no different. Borg et al. (2006) suggest that the lack of a

clear mandate from upper management or government agencies for procurement staff

to incorporate energy efficiency criteria into procurement practices is a significant

institutional barrier to increased procurement of energy efficient products.

Management support can be a key driver of sustainability initiatives. One survey

respondent added a comment that speaks to the need to management support to

champion the cause: saying it “needs committed leadership i.e., champions for the

cause. Currently there is a long way to go in terms of awareness amongst the

organisation and leadership is no exception”

Gee and Uyarra (2013) illustrate the importance of senior management support

as a driver for more sustainable public procurement practices, highlighting the integral

role of senior staff in driving the sustainability transformation of a UK waste system

through public procurement. If procurement unit managers see a clear business case

for low-carbon procurement and are given support to develop such initiatives this

could be a key facilitator of LCPP. Databases such as the European Union’s GPP2020

Tender Models database can help to demonstrate the business case, by presenting real-

world examples of low-carbon tenders and their outcomes.

Additional novel Management/Organisational Issues barriers added by

respondents:

Two respondents mentioned barriers related to the size of procuring

organisations. One respondent added the barrier “Large organisation with multiple

sections procuring goods/services work” (rated ‘moderate barrier’). It may be that it is

more difficult to implement new procurement practices in large organisations, given

that there are likely to be more procurement staff to train. Although it could be equally

argued that large organisations often have the available resources to pursue innovative

practices such as sustainability objectives, and that this might be easier in a large

organisation than in a small one.


One respondent added the barrier item “Trying to communicate this as an issue

amongst a myriad of other issues, tends to result in it being drowned out” (rated ‘major

barrier’). This may be related to issues such as management support or the existence

of enabling procurement policies, since if low-carbon procurement is not given priority

at a management or policy level it is unlikely to be implemented by staff.

Risk

Two options were provided under the category of ‘Risk’. The highest rated risk

barrier was ‘Risk/uncertainty regarding the performance of low-carbon

goods/services/works’ with a BIS score of 60, followed closely by the item

‘Risk/uncertainty over which entity owns the risk if procured goods/services/works do

not result in carbon reductions’, with a BIS score of 58. Both these items ranked

around the middle, suggesting they are not overly significant, but also not entirely

unimportant. They are discussed in further detail below.

Risk/uncertainty regarding the performance of low-carbon goods, services, or

works:

The item ‘Risk/uncertainty regarding the performance of low-carbon

goods/services/works’ was rated as a major barrier by 26 per cent of respondents, and

as a moderate barrier by an additional 43 per cent. Interestingly, 20 per cent of survey

respondents indicated they thought it was not a barrier to their departments procuring

projects with reduced carbon emission, which was somewhat higher than most other

items in the survey.

Using verified instruments such as the Australian ‘Energy Rating Label’ system

could help overcome this barrier. The labelling scheme = displays energy consumption

information on many products relevant to the building-sector, such as air-conditioners,

chillers, water heaters, heat pumps, fans, lighting ballasts and lamps, etc. Since the

labelling scheme is controlled under legislation, procurers can be certain that a

reasonable level of analysis and verification has been undertaken to assess labelled

products. If products are being used under typical conditions, this should reduce the

uncertainty about their expected performance. Given the strong link between energy

efficiency and greenhouse gas emissions, products with a high energy star rating could

be expected to reduce greenhouse gas emissions when compared with products with a


lower star rating. It may be that procurement staff and decision-makers lack

information about such labelling schemes. The development of similar emissions

labelling schemes would assist in overcoming this barrier further.

For procurement of services and works, there is generally always more

uncertainty, since each procurement is unique. However, there are many examples of

low-carbon construction projects that show it is possible to deliver emissions

reductions. For example, the procurement of a section of motorway in the Netherlands

delivered carbon emissions reductions of 8,944 tCO2-e over the life-cycle of the road

compared to a reference design (van Geldermalsen, 2015). The carbon savings were

achieved largely through innovations in road surfacing materials that delivered life-

cycle emissions reductions compared to a standard approach. The emissions figures

were verified through an independent tool called ‘DuboCalc’, which draws on a

database of environmental data analysed using the ISO Standard for Life-cycle

analysis ISO 14.040 series and the National Environment Database, NEN8006 of the

Netherlands. Using tools such as this, which follow accepted standards and protocols

to determine environmental data, would help to overcome such barriers.

Such tools and databases will be crucial for the development of LCPP practices.

Problems of data availability and the considerable investment of time required to

assess the myriad construction products and materials that are available can clearly be

a barrier to uptake (Sterner, 2002, Zhang and Assuncao, 2004). In the Australian

context, a database of case studies that provide a transparent evaluation of the

reliability of products and the carbon outcomes would help to instil confidence and

demonstrate the business case. Relying on accepted tools and rating schemes wherever

possible is also likely to reduce uncertainty. Borg et al. (2006) also suggest that a

potential way to overcome such barriers would be to provide access to in-house

‘energy efficient procurement information desks’ for procurement practitioners to

access help regarding energy-efficient equipment procurement.

Risk/uncertainty over which entity owns the risk if procured

goods/services/works do not result in carbon reductions:

The barrier item ‘Risk/uncertainty over which entity owns the risk if procured

goods/services/works do not result in carbon reductions’ was rated as a major barrier

by 31 per cent of respondents. It should be noted that this was higher than the


abovementioned barrier item ‘Risk/uncertainty regarding the performance of low-

carbon goods/services/works’, but due to the lower proportion of respondents who

rated it as a moderate barrier (29%) it rated lower overall on the basis of the Barrier

Item Score.

It is clear that uncertainty about product performance may increase project risks

(Zhou et al., 2013). Where LCPP is undertaken altruistically, i.e. where there is no

financial or other penalty for underperformance, then this is not likely to be a

significant barrier. However in cases where underperformance could result in

penalties, such as under carbon pricing schemes, then the risk of procurements

underperforming becomes more significant. Some procurement models, such as

Energy Performance Contracting (EPC), make it clear which entity owns the risk if

projects do not perform as expected. In the case of EPCs, performance improvements

are guaranteed by the Energy Services Company (ESCO) and then become contractual

requirements. If the ESCO does not achieve the contracted savings there is typically

some financial penalty. ESCOs must price each contract in accordance with the

inherent risk to make undertaking the projects worthwhile. This helps motivate high

performance and reduces uncertainty about which entity owns the risk. Typically,

EPCs deliver significant energy savings which benefits both the procuring

organisation and the ESCO.

Policy and regulation

Policy and regulation barrier items generally rated relatively lowly as barriers to

low-carbon public procurement, with all four options rating in the bottom fifty per cent

of barrier items. Policy/regulation also ranked relatively lowly in Part 1 of the

questionnaire; ranking sixth out of the eight barrier categories. The highest rated

Policy/regulation item was ‘Level of government incentives that could facilitate low-

carbon procurement’, while the least significant item was ‘Concerns about legality of

low-carbon public procurement’. These are discussed in further detail below.

Level of government incentives that could facilitate low-carbon procurement:

The barrier item ‘Level of government incentives that could facilitate low-carbon

procurement’ was rated as a major barrier by 29 per cent of respondents, and a further

34 per cent rated it as a moderate barrier. So whilst this item rates relatively lower than


many other barrier items, the majority of respondents still view it as either a moderate

or major barrier. It would be interesting to survey stakeholders that are

suppliers/providers for government tenders and compare responses. This could be a

valuable avenue to explore in future similar studies.

Concerns about legality of low-carbon public procurement:

The barrier item ‘Concerns about legality of low-carbon public procurement’

was the lowest rated Policy/regulation barrier, and the lowest rated barrier of the entire

questionnaire. Only six per cent of respondents indicated that this was a barrier to their

departments procuring low-carbon goods/services/works. Additionally 40 per cent of

respondents said it was ‘not a barrier’.

Several authors, such as Kunzlik (2013) and van Asselt et al. (2006), discuss

uncertainties and concerns about sustainable procurement in relation to EU and WTO

law. The concerns often centre on whether or not the inclusion of environmental

objectives impacts fairness, discrimination and transparency in the procurement

process. Interestingly, there is apparently little concern in Australia regarding this

matter. Based on the responses in the present study, it is clear there is not a similar

level of uncertainty in the Australian context. This is an area of divergence between

the international and Australian contexts.

Additional novel Policy/regulation barriers added by respondents:

Six respondents added additional barriers related to political commitment to low-

carbon procurement, however these haven’t been included in this section because all

these six were rephrasing existing barrier item ‘Level of political support for

carbon/greenhouse gas reductions’. However, it is worth noting that such a large

number of respondents felt the need to add this as a barrier.

However, one respondent added a barrier item that illuminates a slightly

different consideration within the issue of policy commitment. This added barrier,

which was rated by the respondent as a ‘moderate barrier’ stated that the uptake of

low-carbon procurement “requires consistent government policy”. This issue (of the

consistency of policy) is a new dimension to the policy commitment barrier. Recent

policy inconsistency in the renewable energy space has led to a cautious market

response to many new renewable energy generation projects, so it is possible that


similar inconsistency in procurement policy would result in a lack of engagement in

low-carbon tenders by the private sector. A second respondent added a similar barrier:

“Government policy is more inconsistent and confusing” – which was rated as a ‘minor

barrier’.

One respondent added an additional barrier related to costs and policy issues,

however it could be taken more as a comment on the justification of pursuing low-

carbon public procurement. They added the following; “Current state and federal

governments not providing sufficient policy incentives, but low carbon = lower costs

at the operational phase is sufficient to drive low carbon facility procurement with the

requirement for life cycle cost analysis to justify any increased capital costs incurred

as a result of the low carbon/lower cost drivers”. This was rated as a ‘minor barrier’.

This is essentially a comment that, in the view of the respondent, the operational cost

savings that are achieved by procuring low-carbon projects would justify the higher

upfront cost. A requirement to fully consider life-cycle costs during procurement

would assist

Supply Chain Issues

Survey questions explored whether supply chain issues presented a barrier to procuring

projects with reduced carbon emissions. In Part 1 of the questionnaire the majority of

respondents (46%) thought that ‘supply chain issues’ presented only a minor barrier to

their organisation or department procuring goods/services/works with reduced carbon

emissions, while 29 per cent thought it was a moderate barrier, and only nine per cent

thought it was a major barrier. In Part 2 of the questionnaire supply chain issues

consistently ranked amongst the least significant barrier categories, indicating that

respondents generally believe this does not present a significant barrier to low-carbon

procurement.

Interestingly, the options for supply chain barriers received a slightly higher

proportion of ‘not sure’ responses than typical for other survey barriers items. This

suggests that there might be somewhat more uncertainty about supply chain issues than

other considerations. A possible reason for this could be that the procurers do not have

a high level of interaction with suppliers. Previous research by Uyarra et al. (2014)

suggests that lack of interaction between procurers and suppliers is a significant barrier

to innovation.


Availability of suppliers that can deliver goods/services/works with reduced

carbon emissions:

The barrier item ‘Availability of suppliers that can deliver works with reduced

carbon emissions’ was the highest ranked supply chain barrier out of the four options.

Twenty per cent of respondents indicated they thought this presented a major barrier

to their departments procuring projects with reduce carbon emissions. The BIS score

for this item was 57, which ranked it 22nd out of 33 barrier items. This ranked slightly

higher than the barrier item ‘Availability of suppliers that can deliver services with

reduce carbon emissions’ with a BIS score of 55, and significantly higher than the

item ‘Availability of suppliers that could deliver goods with reduce carbon emissions’

with a BIS score of 48.

This suggests that respondents generally feel that there is a sufficient market

availability of low-carbon goods, but that the availability of low-carbon services and

works is more of a barrier. This is unsurprising, since works procurement is already

inherently more complex and each project is unique. There is significant potential to

use procurement for construction contracts (Michelsen and de Boer, 2009) and for

building management services such as low-carbon facilities management and energy

performance contracts. These sorts of industries are beginning to emerge; however

many markets are undeveloped. For example, Zhang et al. (2015) suggest that the

energy performance contract market in Australia is relatively immature.

Interestingly, the majority of academic literature also focuses on procurement of

products (Varnäs et al., 2009) rather than services or construction works. This may

simply be because low-carbon services and works are somewhat less common that

than the procurement of low-carbon goods, or it may be related to the complexity of

analysing and reporting on services and works procurement, which often entail more

complex and unique projects.

Lack of supplier interest in tenders with low-carbon criteria:

The item ‘Lack of supplier interest in tenders with low-carbon criteria’ received

a BIS score of 55, with 17 per cent of respondents indicating they thought it was a

major barrier to LCPP. Whilst this is relatively low, the majority of respondents still

thought it was either a moderate or major barrier. It may be that suppliers already


perceive government procurements to be relatively complex or time-consuming, with

a variety of stipulations and regulations to adhere to.

Additional novel Supply Chain barriers added by respondents:

One respondent added the barrier “Need to determine effective compliance tools.

How do we know what a supplier is saying?” which was rated as a ‘moderate barrier’.

This one respondent was the only one to raise such an issue, so it may not be a

widespread concern. The availability of tools to aid low-carbon procurement decision-

making may assist in this area. For example, the use of a tool such as the NABERS

rating tool for buildings provides a reasonable level of assurance that correct protocols

have been followed for the estimation of energy and emissions. Whilst these tools are

still developing they are getting progressively more accurate as they develop.

Another participant added the additional barrier “There are so many legislative

and policy considerations to include in procurement tenders that it is difficult to be

expert in all areas (i.e. social, environmental, safety, local preference, etc.) It also

becomes very cumbersome for respondents, who often determine it is too difficult to

submit responses to government tenders” which was rated as a ‘moderate barrier’ by

the respondent. This is similar to the existing survey item ‘Lack of supplier interest in

tenders with low-carbon criteria’, since suppliers may show a lack of interest for a

variety of reasons, including that it may be ‘cumbersome’ or complex to respond to

government tenders.

4.2.3 Part 3: Current extent of Low Carbon Public Procurement


emission and energy efficiency criteria in project tendering processes. For the purposes

of this survey, the current extent of low-carbon public procurement uptake was

investigated by asking survey respondents how often the government department they

worked within included carbon or energy efficiency criteria in tenders, and secondly

how often such criteria had any impact on contract award decisions. The aim was to

determine how frequently low-carbon criteria are being included in State government

procurements and if this influences contract award decisions. Respondents could

answer on a five-point uni-polar scale (0 = never; 1 = rarely; 2 = about half the time;

3 = often; 4 = always).


Use of energy efficiency criteria in public procurements

According to survey respondents, energy efficiency criteria is frequently used in

building sector procurements by Australian State and Territory governments.

Approximately 63 per cent of respondents indicated energy efficiency criteria was

used regularly in requests for tender. For the purposes of this research, ‘used regularly’

is defined as ‘about half the time’, ‘often’ or ‘always’. The remaining 34 per cent of

respondents said their organisation ‘never’ or ‘rarely’ included such criteria. The

remainder of survey respondents were unsure. See Figure 5 below.

Figure 5: Use of energy efficiency in state government procurement is common

These results suggest that there is relatively widespread use of energy efficiency

criteria in State government procurements. This result is to be expected, since energy

efficiency has an immediate and tangible impact on value for money and can be used

to determine the advantage of choosing one product over another. This does, however,

require agencies to be aware of the potential for energy efficiency to deliver economic

benefits.

Many State government procurement frameworks and guidelines mention

energy efficiency directly as an example of a sustainable procurement issue that could

be considered during procurement. Some procurement frameworks also directly

identify energy efficiency as a strategy to achieve value for money, for example see

the NSW Procurement Policy Framework (NSW Procurement Board, 2015). In the

NSW Energy Efficiency Action Plan the NSW Government states that it will “take a

leadership role in adopting energy efficient technology” and commits to the following

specific actions (Office of Environment and Heritage (NSW), 2013):

0 10 20 30 40 50

Not sure

Never

Rarely

About half the time

Often

Always

%


− “Drive savings by key government agencies through Government Resource

Efficiency Policy”

− “Support agencies with a specialist team to help identify and implement

projects”

− “Establish a pre-qualified tender panel to streamline procurement”

− “Improve the accessibility of finance for government energy efficiency

projects”

− “Increase energy efficient office leases taken up by government”; and

− “Make government energy usage and energy efficiency data accessible.”

These actions show significant potential for NSW to take a leading position

amongst Australian state governments, and should be commended. Many of these

actions are likely to overcome existing barriers faced by agencies. For example, having

a specific policy (GREP) with energy efficiency targets is likely to increase adoption

of energy efficiency projects and is likely to increase adoption of energy efficiency

criteria in procurement. Making funding available for energy efficiency is likely to

increase number of projects. Setting up a prequalified tender panel is likely to make

energy efficiency projects clearer and simpler for agencies to undertake and for

suppliers to deliver. Making data accessible will assist with better management and

improvement over time (‘what gets measured gets managed’). These commitments

show leadership and will help to drive energy-efficient and low-carbon outcomes.

Use of low-carbon criteria in public procurements

Carbon emission criteria is used much less frequently than energy efficiency

criteria in Australian State and Territory government procurements. The

overwhelming majority of respondents (66%) indicated that their organisation either

‘never’ or ‘rarely’ included carbon emission criteria in requests for tender.

Approximately 26% of survey respondents indicated that carbon emission criteria were

regularly included in requests for tender by their department or organisation (i.e.

selected ‘about half the time’, ‘often’ or ‘always’). This result somewhat higher than

expected, given the general lack of reference to ‘carbon’ and ‘greenhouse gas


emissions’ in State and Territory government procurement guidance material. The

remaining nine per cent of respondents were unsure or did not answer (see Figure 6).

Figure 6: Use of low-carbon criteria is relatively uncommon

It is perhaps unsurprising that low-carbon criteria are used less frequently than

energy efficiency criteria. Energy-efficiency has been more prominent in procurement

guidance in the past, and the direct benefits to the procuring organisation are often

much easier to show: energy efficient products reduce energy consumption which in

turn reduces energy expenditure. The business case is quite clear. With carbon

emission criteria on the other hand, it may often be more difficult to show the direct

and immediate benefits to the procuring entity. Absent a carbon price there may be no

immediate benefit to the agency. When other priorities exist that have more tangible

and immediate impacts, and where it is difficult to show how reducing carbon

emissions achieves value for money over the timeframes typically considered during

procurement, it is likely that carbon emission criteria will often not be used.

Rejection of offer with lowest price

In order to explore the influence of carbon emission criteria on final award

decisions respondents were asked to estimate how frequently carbon emission criteria

resulted in the rejection of the offer with the lowest price. Of the 26% of respondents

who indicated that their organisation regularly included carbon emission criteria in

requests for tender, only one respondent reported that such criteria regularly resulted

in the rejection of the offer with the lowest price.

0 10 20 30 40 50

Not sure

Never

Rarely

About half the time

Often

Always

%


Figure 7: Low-carbon criteria does not significantly impact contract award decisions

This suggests that although carbon emission criteria are occasionally being

incorporated in State and Territory government procurements, it typically does not

significantly influence award decisions.

4.2.4 Implications for subsequent research

Survey results provide a useful insight into the barriers that procurement staff

say are more significant when considering the impact on the ability of their

departments to undertake low-carbon procurement. The most significant barrier

categories impacting the uptake of low-carbon public procurement practices by

Australian state government departments were Cost, Skills/Knowledge, and

Tools/guidelines. The Cost and Skills/Knowledge barrier categories received high

Barrier Category Scores in Part 1 of the questionnaire. Tools/Guidelines was initially

rated low in Part 1 but became more significant in Part 2. These three barrier categories

dominated the top 50 per cent of barrier items in Part 2 of the questionnaire.

The majority of survey respondents initially rank ‘cost’ as the most significant

barrier category affecting the uptake of low-carbon public procurement (Part 1). This

is consistent with other similar research into green and sustainable public procurement.

However when asked to delve more deeply into specific barrier items (Part 2), the cost

barriers appeared to decline somewhat in relative importance. Interestingly, only two

of the top ten barriers were cost issues, with these ranking fifth and eighth.

0 10 20 30 40 50

Not sure

Never

Rarely

About half the time

Often

Always

%


Whilst cost is still undoubtedly a very significant perceived barrier to low-carbon

public procurement, it is possible that it is somewhat less significant than initially

thought. It is possible that survey respondents may be conditioned/inclined to think of

cost as the preeminent barrier to more low-carbon procurement, yet when considered

in greater detail many factors are less significant than would be assumed based on the

initial response.

This suggests that although survey respondents initially identified cost as the

most significant barrier to low-carbon procurement, other barriers may actually be

more significant than cost. This is important to note, because many existing surveys

only ask survey participants to respond to barriers at a Category level (e.g. ‘Cost’) and

do not explore deeper (e.g. Upfront cost, life-cycle cost, value-for-money, etc.). This

shows there is value in exploring barriers at a deeper level than is typically done.

According to survey respondents, upfront cost was the most significant barrier

in the cost category. Within DOI theory, ‘price’ is one of the many attributes that

influences the adoption of innovations (Rogers, 2003). This is consistent with previous

research on sustainable procurement, and upfront cost is also often highlighted as a

barrier to sustainability more generally. Identifying strategies and opportunities that

can overcome this barrier would therefore be of value.

Barriers related to ‘tools and guidance’ emerged as some of the most significant

barriers in Part 2 of the questionnaire. This is interesting because the Tools/Guidelines

category was initially rated as one of the least significant barrier categories in Part 1.

In Part 2, Tools/guidelines barrier items occupied four of the top ten positions. The top

barriers were related to monitoring tools, emissions databases, life-cycle cost

information, and decision-making tools. These topics will be explored in further detail

in the subsequent case studies.

Interestingly, items related to monitoring and reporting emissions continually

ranked highly in Part 2 of the questionnaire. This suggests that issues relating to

monitoring and reporting are a concern for the procurement staff surveyed and present

a barrier to the uptake of low-carbon public procurement practices. It would therefore

be valuable to develop and consolidate tools that could help overcome this barrier. It

would also be valuable to explore procurement strategies that avoid the need for

procurement staff to be involved in monitoring and reporting activities. These issues

will be explored in the subsequent case study phase of the research.


Skills and knowledge barriers ranked highly as a barrier category in Part 1 and

also featured prominently in Part 2. The most significant individual barrier items were

a lack of skills to monitor carbon outcomes, and lack of knowledge about low-carbon

goods, services and works. Skills and knowledge type barriers are commonly ranked

highly in similar research, such as for sustainable and green public procurement. There

are additional skills specific to carbon that will present new challenges to procurement

departments as the impacts of climate change continue to be felt and as the world

moves increasingly towards carbon pricing.

Supply chain barriers consistently ranked low in Part 1 and Part 2 of the

questionnaire. This is interesting because indicates that procurement professionals

generally feel that the market may be relatively well-equipped to deliver low-carbon

goods, services and works, and that procurers are generally aware that low-carbon

goods and services are available. However some authors (for example (Zhang et al.,

2015) have suggested that markets such as the energy services market is relatively

undeveloped in Australia.

Regarding Part 3 of the survey, whilst it is clear that inclusion of energy

efficiency criteria is becoming relatively common, low-carbon criteria is seldom

incorporated into the procurement of state and territory government building-sector

projects. Due to the strong link between energy consumption and greenhouse gas

emissions it can generally be assumed that energy efficiency improvements are likely

to result in reduction in greenhouse gas emissions. As energy efficiency is already

being incorporated into procurement to some degree, and is becoming an increasingly

important government priority, this is an area that could be focussed on in greater detail

in order to accelerate the uptake of low-carbon public procurement.

When carbon criteria are actually included in tenders, such criteria very rarely

affect the contract award decisions. This suggests that low-carbon criteria are not being

used effectively at present and is likely not resulting in the reduction of emissions to

the extent that it could be. More assistance may be required to improve the

effectiveness of low-carbon criteria in procurement processes.


4.2.5 Summary

This chapter presents the results of a nation-wide Survey of Australian state and

territory government public procurement staff involved in the procurement of

building-sector projects (goods, services, or works). The survey identified key barriers

affecting the adoption of low-carbon public procurement practices for building-sector

projects in Australia. It also surveyed the current use of low-carbon and energy

efficiency criteria in public procurements.

The survey results proved to be valuable for the research for a number of reasons.

Firstly, the survey results help identify important barriers to LCPP, which helps to

answer RQ3: ‘What is the status of public procurement practices for low-carbon

outcomes, including barriers to uptake and opportunities for implementation?’

Secondly, it provided insight into the current use of low-carbon and energy efficiency

criteria in government procurements. Thirdly, it validated the barriers uncovered

through the literature review. Finally, survey results informed case study selection in

the subsequent case study phase of the research, which focuses on initiatives that could

inform strategies to overcome key barriers to low-carbon public procurement.

Chapter 5: Case Study – GGB Program 119

Chapter 5: Case Study – GGB Program

This case study focuses on the Greener Government Buildings program of the

State Government of Victoria, Australia. The chapter begins with a summary of

aspects of the program relevant to low-carbon public procurement. Key lessons are

distilled with regard to overcoming important barriers, in particular those identified

through the survey as being significant. The case study was developed using document

analysis and interview research methods. Interviewees included stakeholders from

government and industry who were involved in the design and operation of the

program. The stakeholder interviews were included to facilitate a more in-depth

exploration of the case studies and allow inquiry into considerations not reported in

publicly-available documents. The primary objectives of the interviews were to

explore opportunities for further harnessing public procurement as a mechanism to

transition Australian public buildings towards low-carbon operations.

5.1 PROGRAM BACKGROUND

The Greener Government Buildings (GGB) program is an initiative of the

Department of Treasury and Finance (DTF) within the Victorian State Government in

Australia. The program was initially established in 2009 with the objectives of

“reducing the energy use of Victorian Government buildings and infrastructure as a

means of cutting Government’s operating costs and greenhouse gas emissions”

(Department of Treasury and Finance, 2013). This was to be achieved primarily by

facilitating energy efficiency retrofit projects throughout the existing state government

building portfolio.

There have been three somewhat distinct periods of the program’s history,

referred to in this thesis as “GGB1” (2009-2013), “EGB” (2014-2016), and “GGB2”

(2016-onwards), summarised in the following paragraphs. From the establishment of

the program in 2009 through to 2013 the program was titled the ‘Greener Government

Buildings’ (GGB) program. On 25 March 2014 the program name was changed to the

‘Efficient Government Buildings’ (EGB) program and a number of changes were

made to the design and operation of the program. Then, on 22 August 2016 the

120 Chapter 5: Case Study – GGB Program

program name was changed back to the ‘Greener Government Buildings’ and several

program characteristics were reinstated or otherwise altered.

5.1.1 GGB1 Phase objectives and outcomes

The two main objectives of the GGB program were to ‘reduce greenhouse gas

emissions’ and ‘cut government’s cost of operating buildings’ (Department of

Treasury and Finance, 2013). The 2009-2012 period target was to encompass 20 per

cent of the government’s building portfolio GHG emissions within the program

(Department of Treasury and Finance (VIC), 2012). These targets were enforced at a

departmental level, with the DTF mandating that “by 30 June 2012, facilities

accounting for at least 20 per cent of a public sector entity’s total energy consumption

must be committed to an EPC or equivalent project” (Department of Treasury and

Finance (VIC), 2011). Longer-term objectives were for departments to commit 90 per

cent of their facilities to such projects by 30 June 2018 (Department of Treasury and

Finance (VIC), 2011). The overall aim of the GGB program as stated by the Victorian

Government was to contribute to the goal to reduce government greenhouse gas

emissions by 20 per cent by 2020 (Government Procurement Group, 2011).

It is important to highlight that there were no specific output targets, such as

requirements to achieve a certain percentage reduction in energy consumption or GHG

emissions reductions. The requirements were simply that departments must commit a

percentage of their facilities to participate in the program. This type of target can be

referred to as an ‘input target’, since they control only inputs such as the participation

of an organisation or the number of buildings that should be committed to the program;

they do not control ‘outputs’ such as a 15 per cent emission reduction. In the GGB

Program this was a deliberate strategy implemented to simplify the program and

overcome certain barriers for departments, so is discussed further in the following

section.

The GGB1 phase of the program was successful in committing the targeted

percentage of buildings/facilities to the program. Additionally the program performed

better than expected in terms of GHG reductions. It was estimated that the program

would result in a 25 per cent reduction in government’s emissions over ten years

(Department of Treasury and Finance, 2013). At the end of the GGB1 phase the

program had successfully committed 20.48 per cent of total government portfolio

emissions to GGB projects and reduced average GHG emissions by 42.8 per cent


(Department of Treasury and Finance, 2013); well above the initial estimate. The

program was also awarded the Premier’s Sustainability Award in 2011.

5.1.2 EGB Phase objectives and outcomes

The primary stated objective during the EGB phase of the program was to

“reduce the cost of delivering government services, enabling its agencies to redirect a

greater portion of their funding to the provision of front-line services” (Department of

Treasury and Finance (VIC), 2014a). It is interesting to note that the framing of

objectives under the EGB program focus only on reducing operating costs. This is in

contrast to wording of objectives in the initial GGB1 phase, which focused on

greenhouse gas and energy savings in addition to the financial savings. In particular,

references to greenhouse gas emission reductions (which featured prominently in the

language and objectives in the original GGB documents) were largely removed from

EGB phase project documents.

There were no specific targets or objectives for the EGB phase of the program.

Under the EGB phase the program became voluntary and the initial GGB1 input

targets (which committed a portion of the government’s building portfolio to

participate in the program) were removed. The loan component of the program was

also removed, which meant that agencies wishing to participate needed to finance

projects through core departmental budgets.

There is minimal data available regarding outcomes of the program during the

EGB phase. However, comparing reports discussing current and completed projects

through the GGB1 and EGB phases it can be seen that program changes during the

EGB phase resulted in the cessation of new projects and in some cases also stalled

projects that were already underway. This suggests that strategies employed during the

GGB1 phase (such as setting objectives, mandating input targets and provision of

funding) contributed greatly to program success.

5.1.3 GGB2 Phase objectives and outcomes

In August, 2016 the State Government of Victoria reinstated the Greener

Government Building program and committed an additional $33 million over two

years (Government of Victoria, 2016). For clarity, this phase of the program is referred

to as ‘GGB2’ in this dissertation. The stated objective of the GGB2 program is to


“improve the energy efficiency of existing government buildings to reduce operating

costs and greenhouse gas emissions” (Department of Treasury and Finance (VIC),

2016a). It is notable that the reference to greenhouse emissions reductions was

reintroduced into the language after it was removed during the EGB phase.

There are a number of specific focus projects for the GGB2 phase, including

upgrades to various educational and health facilities. Efficiency upgrades across

several hundred primary and secondary schools have been proposed using a simple

non-EPC approach primarily consisting of installation of solar photovoltaic systems

and lighting upgrades. The non-EPC approach has likely been proposed as a result of

limiting the upgrades to simple lighting upgrades and solar installation – since these

are not generally technically complex projects an EPC would only add to the cost and

complexity of the projects.

At the time of writing it is too early to report on program outcomes from the

GGB2 phase. The Victorian government estimates that the program will mitigate

25,000 tCO2e annually as a result of the upgrades (Government of Victoria, 2016).

Further, the program is expected to facilitate additional operational cost savings of $6

million annually until 2030 and up to a total of $100 million in the longer term. The

Victorian state government also highlight the additional expected advantages through

co-benefits such as avoided capital expenditure. According to the IPCC, such co-

benefits typically exceed the energy cost saving benefits and so offer “attractive entry

points for action into policy-making, even in countries or jurisdictions where financial

resources for mitigation are limited” (Lucon et al., 2014). As such, quantifying and

communicating these benefits to both policymakers and the general public is a useful

program strategy that can help change the mindset around low-carbon transitions and

bolster support.

In total over the three program phases the Victorian Government has facilitated

upgrade projects to almost 400 government buildings (Government of Victoria, 2015).

This equates to approximately fifteen per cent of the Victorian Government building

portfolio. Collectively these building upgrade projects have resulted in the mitigation

of an estimated 136,000 tonnes CO2e per annum, which equates to a five per cent

reduction on total public-sector building emissions (Government of Victoria, 2015).

The upgrade projects are expected to have a positive return on investment within a

relatively short payback period. Cost savings are estimated to total approximately $2


billion, with a total net present value of $400 million over 25 years (Government of

Victoria, 2015). Additionally the upgrades are expected to continue delivering energy

and greenhouse gas emissions reductions after the payback period is complete.

5.2 KEY PROGRAM CHARACTERISTICS AND STRATEGIES

The following section discusses key strategies and characteristics of the program

that have contributed to overall program success and led to improved carbon and

sustainability outcomes. The focus is on barriers that were rated highly by survey

participants as being key barriers to the uptake of LCPP (see Chapter 4).

5.2.1 Procurement approach

The primary procurement model used in the three phases of the GGB program

was Energy Performance Contracts (EPC) (Department of Treasury and Finance,

2013). EPCs are a mechanism to achieve energy efficiency outcomes by engaging a

specialist contractor/s to deliver an energy efficiency project and guarantee key

outcomes such as financial savings and energy/carbon reductions. An EPC typically

involves engaging an energy services company (ESCO) to identify, implement and

verify energy efficiency opportunities in a single building or across a building portfolio

(Government of Victoria, 2015). The EPC process also allows bundling of multiple

small projects into a single contract which can streamline the tendering process.

The basic concept behind an energy performance contract is illustrated in Figure

8 below. The business-as-usual (BAU) curve represents the baseline cost of supplying

energy to a facility. In the example, the total BAU cost increases over time due factors

such as tariff increases and increasing energy consumption. At the beginning of the

EPC (year zero) an investment of $10 million is made which results in energy

consumption being reduced by thirty per cent. The ESCO guarantees this thirty per

cent efficiency improvement for each of the seven years of the contract, starting from

the beginning of year one (Government Procurement Group, 2011).


Figure 8: Hypothetical EPC scenario (Government Procurement Group, 2011)

In this hypothetical case, the thirty per cent energy efficiency improvements

deliver an energy cost saving of $1.4 million per year, equating to $10 million over the

seven-year payback period. These energy savings pay for the $1.4 million loan

repayments each year (blue area) over the contract period. The result is that the initial

investment is repaid completely through the energy savings during the contract period.

At the end of the contract period the energy efficiency measures continue to deliver

cost savings, but the benefit accrues to the customer (in this case, the government).

Due to the improved efficiency of the buildings, the energy consumption continues at

seventy per cent of the business-as-usual case. This illustrates how EPCs can be used

to facilitate energy efficiency upgrade projects and how the financial benefits pay for

the upgrades over time.

DTF describes the EPC process as a “low risk, investment‐oriented approach to

procuring energy efficiency through building retrofits” (Department of Treasury and

Finance, 2013). It is perceived by the government to be low-risk due to the contractual

provided by the ESCO guaranteeing that the agreed-upon energy efficiency

improvements will be achieved. If they aren’t achieved a subsidy is paid to the

government to recoup the investment.

Utilising the EPC process as a procurement methodology was a novel approach

for DTF. The program went through a trial phase during initial development which

involved undertaking EPCs at sixteen Victorian Government office buildings

(Government Procurement Group, 2011). This trial phase helped to refine the process


and ensure it would be appropriate to roll out more widely across Victorian

government departments. The EPC procurement approach utilised is outlined in

below, discussing the key program steps that help guide departments and suppliers,

and which contributed to program success:

− Project Planning: The primary purpose of this step is to identify the need and

scope the project (Department of Treasury and Finance, 2013). Templates are

available for departments to use and this assists with identification of project

risks, governance structures and timelines. The planning document is typically

completed in consultation with program team members from within DTF. The

planning stage helps to identify facilities where significant energy efficiency

improvements could be made that would fit within the specified payback

period.

− Request for Proposal (RFP): Prequalified providers who provide an expression

of interest are invited to prepare a proposal and take part in a competitive tender

process where they have the opportunity to audit the building to identify energy

efficiency opportunities. Three ESCOs are shortlisted. They must provide

details on building improvement measures and expected savings within an

accuracy tolerance. Templates are provided for departments and ESCOs in

order to simplify the process.

− Detailed Facility Study (DFS): Following the proposal, the winning provider

completes a detailed facility study to outline the exact scope of works. The

DFS is typically equivalent to a Level 3 energy audit under the Australian

Standard AS/NZS3598:2000. The purpose of this Standard is to ensure

“minimum requirements for commissioning and conducting energy audits

which identify opportunities for cost effective investments to improve efficiency

and effectiveness in the use of energy” (Standards Association of Australia,

2000). This step helps ensure efficiency upgrades are achieved as expected,

which contributes to project and program success.

− Energy Performance Contract (EPC): Energy performance contract terms,

conditions, scope, commissioning, maintenance, and costs are agreed upon.

The EPC also includes the performance guarantee.


− Measurement and Verification Plan: A measurement and verification plan must

be provided that outlines how the provider will measure energy efficiency

savings and how they will verify their accuracy.

Utilising the EPC approach was appropriate for the types of projects being

undertaken. Choosing a procurement approach that suits the size and complexity of

each specific project is an important strategy for making programs and projects cost-

effective. The EPC approach is suitable for large complex projects where the design

solution is not immediately apparent. This is often the case in complex cases such as

health and educational facilities, hospitals and large office buildings. The approach

carries a price premium, which can be justified for complex projects. In contrast, EPCs

are typically not ideal for relatively simple projects such as complex unnecessary costs

to simple projects such as lighting retrofits and projects for which measurement and

verification is not a key concern.

The EPC approach also facilitated the aggregation of multiple smaller projects

into single contracts, which can reduce time and complexity, avoid the use of multiple

disparate approaches, and streamline departmental engagement. GGB projects were

generally undertaken at the level of departmental portfolios. This meant that a single

contract could cover multiple buildings and facilities under the responsibility of single

departments or agencies. Having a single contract can reduce administrative resource

load compared with having separate contracts for each individual building. EPCs can

also make it possible to undertake numerous smaller individual upgrades that would

be impractical to tender for separately. From a Transaction Cost Economics viewpoint,

these factors also reduce the total equivalent cost to the Departments of undertaking

each of these smaller contracts individually.

In summary, important factors to note about the procurement approach used by

the program are that the EPC method should be used for the types of projects it is most

suited to; in particular larger complex projects. It also facilitates project aggregation

which can reduce complexity. The EPC method used in the program was well-planned

out which made the process clear for the various stakeholders including both

government departments/agencies and ESCOs. Key stages were sequential, and

templates helped streamline the process which reduced complexity. The trial stage also

helped to refine the process prior to larger roll-out of the program. These are all


important factors that contributed to the success of the program and which should be

considered in future program development.

5.2.2 Financial strategies

Financial barriers were frequently perceived to be amongst the most significant

barriers by survey respondents (see Chapter 4). As such, it is important to explore

successful low-carbon public procurement initiatives to identify characteristics and

strategies that could help overcome these cost barriers. This section explores the

financial strategies and characteristics of the Greener Government Buildings program,

highlighting key program elements that helped to overcome important cost barriers.

Each section discusses elements such as ‘access to capital’, and ‘guaranteed savings’

with respect to how these were implemented in the program and how such strategies

could inform low-carbon public procurement programs more broadly.

Access to capital

A critical factor in the success of the initiative was access to capital. Several

interviewees cited the importance of this strategy as an enabler of efficiency upgrades

(Participants B, G, & I). Under the GGB1 and GGB2 phases of the program DTF

provided funding to assist departments to undertake efficiency upgrades across their

facilities. This funding was provided in the form of temporary loans. It is important to

highlight that this arrangement entailed a loan – not a grant. Loan terms were dictated

by DTF on a case-by-case basis, but typically they were provided to agencies as

interest-free loans. The financial savings achieved by the reduced energy consumption

would then be used to repay the initial loan to DTF over an agreed-upon timeframe.

Once the initial loan was repaid the government continues to benefit from ongoing

operational cost savings since the upgrades typically continue to deliver financial

savings which reduces outgoings for government. These savings typically flow back

to the Department of Treasury and Finance.

Whether capital is made available to departments through the provision of short

term loans (as described above) or through other means it helps to overcome upfront

cost barriers, which have a significant impact on the uptake of LCPP practices. The

main benefit of this arrangement was that it improved the availability of capital for

agencies to undertake the upgrade projects (Participants B, G, & I). Zhang et al. (2015)

agree, stating that the availability of capital was critical in incentivising participation.


Since agencies could access capital through a dedicated fund this meant that projects

did not have to compete with other departmental budget items (Participants B, G).

Agencies now had access to a funding source that was separate from their core business

operations budget, and this was crucial in opening up opportunities to upgrade

government assets and infrastructure that were in need of work (Participant I).

There are numerous benefits to such a strategy. By providing loans to facilitate

performance upgrades which delivered operational savings that were subsequently

used to repay the initial loan, the GGB was effectively a cash-flow-neutral asset

upgrade program. Additionally, there are numerous other co-benefits delivered by the

program, such as avoided future capital expenditure, improved asset values and

quality, improved government credit rating, and the creation and support of local low-

carbon and energy efficiency industries. These factors help to make the business case

for undertaking more of these types of projects.

During the EGB phase of the program the loan component and the mandatory

participation targets were removed, with the result that agencies wishing to undertake

EPCs would need to provide the funding themselves though general departmental

budgets (Department of Treasury and Finance (VIC), 2014a). However, departments

and agencies typically have little incentive to pursue building upgrade projects, since

1) these reduce the total budget available to provide core business activities and 2)

once energy savings are achieved the financial benefit typically flows back to DTF;

not the agency or department who implemented the upgrade project. The stated reason

for removing the funding component of the program was to provide “greater flexibility

to agencies in seeking funding for projects, and improving the focus on achieving

utility cost savings” (Department of Treasury and Finance (VIC), 2014b). This is

interesting rhetoric.

The removal of the funding element during the EGB phase had a negative impact

on the ability of agencies to undertake projects (Participant-B). Comparing the list of

projects completed during the GGB1 phase and the EGB phase of the program it can

be seen that new project initiation stalled during the EGB phase. This is likely due in

part to the removal of funding. For example, the Department of Health stated that “the

removal of funding had affected the Department of Health’s implementation plan, in

that projects which had not secured finance could not progress. Projects at the West

Gippsland Healthcare Group and Austin Health are continuing under the Greener


Government Buildings program as contracts were signed prior to the removal of

access to government loans” (Department of Treasury and Finance (VIC), 2014b).

What this shows is that projects that had undergone some preliminary stages (but

which had not yet received funding) still faced insurmountable barriers and needed to

be terminated, even though these projects would be likely to provide a return similar

to that seen in other GGB projects. In contrast, projects that commenced during earlier

stages when funding was readily available were able to overcome initial barriers and

proceed. It is worth noting that projects were terminated despite having the same

contractually binding guarantee to achieve high performance and repay the initial

investment through operational savings over a relatively short timeframe.

This suggests that funding is of key importance in helping to overcome financial

barriers. It may also be particularly important during the early stages of initiatives

while government agencies and the market become familiar with the initiative.

Financial barriers that were being overcome during the GGB1 phase reappeared with

the removal of the funding. This highlights the importance of funding in facilitating

LCPP initiatives during this early stage; even for projects with a positive net present

value.

A potential drawback to the loans arrangement is that programs reliant on a

constant stream of government funding can be disrupted if funding is withdrawn. This

is evidenced by the reduction in new projects during the EGB stage of the program

when funding was withdrawn, for example the termination of Department of Heath

EPCs discussed above (Department of Treasury and Finance (VIC), 2014b).

In the forthcoming GGB2 stage of the program capital will be provided through

an innovative funding strategy referred to as ‘Green Bonds’ (Department of Premier

and Cabinet (VIC), 2016). Green Bonds are “bonds that are used to finance new and

existing projects that offer climate change and environmental benefits” (Department

of Treasury and Finance (VIC), 2016b). These bonds are verified through the Climate

Bonds Initiative (CBI) and investors purchase these bonds, typically because of their

financial security and environmental benefits while funds are used to pay for

greenhouse gas mitigation projects. The Victorian Government is taking a leading role

in trialling this innovative funding strategy and it could be expanded to other

jurisdictions and levels of government if successful.


Issues of cost are frequently cited barriers to sustainability and to innovation

broadly. Thus, it is important for program strategies to target the potential financial

benefits of sustainability initiatives in order to reduce the barriers, and indeed even

turn sustainability outcomes into drivers for change. In Diffusion of Innovation theory,

‘price’ and ‘funding’ are two key attributes that impacts uptake of innovations

(Mustonen-Ollila and Lyytinen, 2003, Rogers, 2003), and this is consistent with the

findings in this thesis, since cost issues frequently feature. In the case of the GGB

program innovation is evident in multiple strategies, for example through the adoption

of innovative procurement approaches such as EPC and green bonds.

Guaranteed savings

In the GGB program all project contracts included a performance guarantee. The

presence of this guarantee was an important factor that contributed to program success

(Participants G, E, & I). Within the EPC model the customer (in this case the

department or agency) is provided with a guarantee that a project will result in an

agreed-upon level of performance improvement. The stated rationale of this guarantee

is to “minimise impact on department and agency cashflows” (Department of Treasury

and Finance (VIC), 2011). Since cashflow is a limited resource and of key importance

to agencies this strategy functions as a powerful enabler for LCPP.

The performance guarantee is provided by the ESCO contracted to deliver a

project and warrants that the equipment and process upgrades it recommends will

result in an improvement in energy performance with a corresponding reduction in

energy costs. Energy efficient buildings have reduced energy consumption and hence

lower energy costs which can deliver financial savings to the owner over time. In the

event that the contracted performance improvement and cost savings are not achieved

the customer is reimbursed for any shortfall.

The justification for including a guarantee is as follows. The ESCO investigates

the facility and recommends a course of action to improve its performance, which may

include equipment upgrades and changes to building management practices. These

upgrades require financial commitment, and so the customer seeks a guarantee that

implementing the recommended strategies will actually result in cost savings. This

effectively reduces the financial risk to the government entity by transferring the

responsibility to the ESCO (Participant G). Additionally, it supports the department’s

business case for the upgrades and its ability to repay loans to DTF.


Using a procurement model with guaranteed savings can also facilitate access to

capital (Zhang et al., 2015), since finance is more likely to be made available to low-

risk ventures. Participant G discussed the benefits of the guarantee for higher-risk

procurement approaches, such as EPCs, and how the presence of the guarantee helps

facilitate access to capital by supporting departments’ ability to repay initial loans.

However, currently Australian state governments are typically prohibited from

accessing third-party finance, so whilst this factor cannot currently be considered an

enabling factor for LCPP for state government entities this may change in future.

The ‘guarantee’ strategy could become an even more relevant enabling factor

for LCPP in future as carbon pricing begins to be introduced. The scope for guarantees

could be extended from the current focus on guaranteeing energy efficiency and cost

savings to also incorporate greenhouse gas reduction guarantees. These could

potentially be linked to carbon trading markets, which would improve the business

case for LCPP further since carbon pricing provides access to additional revenue

streams for emissions certificates.

Finally, the ‘guarantee’ strategy has important links to some measurement,

reporting and verification barriers that survey participants reported were key

impediments to LCPP (See Chapter 4). As part of the program ESCOs were required

to include a detailed measurement and verification (M&V) plan for the full length of

the performance contract (typically 5-8 years). Participant E described the importance

of linking the guarantee strategy with the M&V plan as follows: “…if things stop

working and stop delivering savings after year two or three, this M&V process will

pick up the fact that the energy savings are not there, and the contractor will then need

to go back in and find out why, and fix the problem. So that’s another layer of

robustness within the EPC process – the fact that you have this very rigorous M&V

process”. The key concept expressed here is that linking the guarantee and the M&V

process contributes to the robustness of the program design and helps to ensure the

expected improvements are achieved.

Appropriate payback periods

Longer payback periods were an important enabling factor that contributed to

the success of the program. A longer payback period can be an advantage to LCPP in

several ways, such as through increased scope of retrofit opportunities, potential for


undertaking more holistic upgrades, and encouragement of longer-term thinking; these

will be discussed further below.

Initially the GGB1 program specified that projects must have an eight-year

simple payback period. A review of the GGB program conducted by DTF revised this

period down to seven years in March 2011 on the basis that “financial benefits would

be maximised by reducing the payback period to 7 years, and that only a minor

reduction in environmental benefits would result” (Department of Treasury and

Finance, 2013). For the majority of the program’s history a seven-year simple payback

has been used, which equates to approximately a five-year real payback once factors

such as avoided costs and interest charges have been taken into account (Burke, 2015).

However, during the GGB2 phase (from August 2016) the payback period was

further reduced from seven years to five years. This was despite the abovementioned

DTF review stating that “further reducing the payback period below 7 years would

significantly reduce the scale of investment opportunities and lessen the financial

benefits of the program” (Department of Treasury and Finance, 2013). It is too early

to report on the exact impact this has had on project success or greenhouse objectives.

It is likely that it will result somewhat in a reduction of scope for projects, since

projects will have two fewer years to repay initial investments.

The seven-year simple payback period for sustainability upgrades was a

significant increase over typical departmental practices (Participant B) and therefore

facilitated a greater scope of energy efficiency upgrade opportunities. Departments can

be limited to undertaking projects with a short pay-back period, which may often be

as short as one year (Participant B). When energy efficiency or building-upgrade

projects must be funded through existing departmental budgets this creates a situation

where these proposals must compete with expenses related directly to core business.

Whilst energy efficiency upgrades typically deliver a return on investment they may

take several years to pay back the initial capital outlay, and so even cost-effective

upgrades are often de-prioritised in favour of day-to-day expenses. The ultimate

outcome is often that cost-effective upgrades may be postponed for many years if they

are not seen as being related to core departmental business (Participant B).

Participant I discussed the drawbacks of the shorter payback period and the

impact this had on the potential for significant efficiency improvements and assets

replacement that could have ‘left a real legacy’ for the client, stating that “it started


out with everything that was better than a seven year payback was on the table, then

it changed to everything better than a five year payback. And somewhere in there was

a lot of threshold good stuff that made it worth chasing down, that disappeared out the

back door. Because a lot of the big, more interesting, more worthwhile capital plant

that would have left a real legacy for the ultimate client and also made it worthwhile

from a contracting perspective, it all disappeared out the back door because of the six-

and-a-half-year payback or something like that. And that change half-way through the

program was based on a whole lot of ‘evidence’, but I’d suggest it was some fairly

debateable analysis of the evidence. It’s also at odds with this view about this program

being an asset replacement exercise, and the assets usually having lives of greater

than 15 years, as opposed to a short-term, bang-for-your-buck, get-the-program-out,

driven-by-other-considerations exercise” (Participant I).

Similarly Participant I discussed that the reduction of the payback period reduced

opportunities for whole-system upgrades and in their view diminished the value-for-

money outcomes, stating “when we went from a seven year payback to a five year

payback, there was a whole lot of good chunky asset stuff that made good sense from

a whole range of holistic perspectives that just no longer made the cut for the program.

It also meant the scalability became a little bit skewed as well. You go from the

situation where there’s an opportunity to put tri-gen in and do something with chillers,

and central plant, and something seriously good around control systems, and so on.

But then it turns out to be a lose collection of things like a few lighting upgrades, and

why would you bother because there’s no point putting in the overhead associated with

an EPC.”

Using longer payback periods could add significant value to future LCPP

programs. Comparing the payback period used in the GGB program with common

practice internationally, the five- and seven-year payback period could be considered

short. For example, in the United States of America payback periods for EPC projects

are typically 10 to 20 years, which according to Deng et al. (2014) “allows longer

payback periods for retrofits, including windows, heating system replacements, wall

insulation, site-based generation, advanced energy savings technologies, and other

retrofits”. Retrofitting these sorts of building elements is typically more expensive and

complex, but also has a significant impact on energy and carbon performance of


buildings, so allowing longer payback periods facilitates their inclusion in upgrade

projects.

Longer payback periods can also facilitate whole-system design retrofit projects

such as those discussed by von Weizsacker et al. (2009) and Rocky Mountain Institute

(2013), where multiple building systems are upgraded synergistically in order to

achieve larger whole-system improvements. This means that larger energy and carbon

savings of 50-80 per cent or more become possible (von Weizsäcker et al., 2009). For

example, with a short payback period it may only be financially permissible to upgrade

lighting and control points, but with a longer payback period it may create

opportunities to upgrade HVAC and building façade elements to drastically improve

the energy performance of a building. Allowing a longer payback period can therefore

open up opportunities for these more extensive refurbishment projects to be

undertaken. This is particularly relevant in cases where the building owner or leasee

intends to occupy a facility for an extended period of time, since it creates an incentive

to reduce operational costs over the longer term. This is often the case with

government-owned facilities.

In summary, the GGB program designated a typically five- to seven-year

payback period which could be considered a small improvement over common

practices and allowed for a greater scope of works to be included. However it still falls

short of best practice internationally. Facilitating longer payback periods allow for

greater scope of upgrade opportunities, and if sufficiently long they can also allow for

true whole-system design outcomes, which can deliver significant energy and carbon

savings.

Life-cycle cost analysis

Life-cycle cost (LCC) analysis entails accounting for the full cost of ownership

over the life of a product or asset. Some LCC strategies were incorporated into the

GGB program, such that proposed solutions were broken down to show the expected

life-cycle costs, energy efficiency improvements and greenhouse gas emission

reductions to make it clear to the client department what was being proposed and what

each strategy was expected to deliver in terms of carbon, energy and cost savings.

Participant E explained the significance of these factors: “when (the

departments) get a performance contract, for example, all of the energy savings, the


carbon emissions, the life cycle performance and the expected lifetime of equipment

proposed is detailed. For example (a recent project) that we just did – we put in about

25 different energy conservation measures, ranging from solar photovoltaics, to

chiller upgrades, to boiler upgrades, changes in building management systems,

changing lighting, putting window film on – there were 25 different things, and against

each one of those we did very detailed calculations in terms of what the energy savings

would be, and it might be electricity, gas and water; whatever it was, and we would

calculate that and model it - we have very sophisticated tools to do that. For each of

those 25 measures would determine what the energy savings would be, what the water

savings would be if applicable, and what carbon emissions would be associated with

every single one of those. We also did life-cycle costing for any new equipment that

was put in, or any old equipment that was taken out. So all that amount of detail is

included in an EPC” (Participant E).

The interviewee went on to point out the key benefit of this strategy, explaining

“It’s one of the benefits of an EPC – government procurement staff can’t be experts in

all these measures, like knowing what effect putting window tinting on a building

would have; they can’t do that. They wouldn’t know, for example, if you put a variable

speed drive onto a motor, what effect that would have, and how many tonnes of CO2

would be reduced by putting that VSD on; procurement people can’t do that. And I

guess the beauty with an EPC is that it’s all detailed, it’s all calculated, it’s checked

in a lot of cases by an independent body, and it’s all guaranteed” (Participant E). This

helps to highlight how the inclusion of life-cycle cost information helps to

communicate the value of each upgrade strategy proposed to procurement staff and

decision-makers who may not be experts in carbon and energy efficiency.

Using a life-cycle costing strategy can help facilitate the uptake of LCPP by

clearly presenting the value proposition to decision-makers that more sustainable

equipment and processes can deliver value over the life of an asset. Considering longer

payback periods (discussed above) can also link with this strategy. There are numerous

tools and guidelines available to assist with determining LCC in order to make the

process simpler and more affordable. This strategy should be considered for

incorporation in future programs.


Utilising input targets

A strategy of the GGB program that helped improve the overall cost-

effectiveness of the program was the decision to use input targets rather than output

targets (Participant I). The input targets require only that agencies commit to

participating in the program; there were no specified output targets, such as

requirements to achieve a certain percentage reduction in energy consumption or

carbon emissions. Specifically, the GGB program required that by 30 June 2012 sites

making up 20 per cent of their department property portfolio energy consumption

should be engaged in the program. There were initially also proposed targets for 2018,

however these appear to have been dropped when the program transitioned to the EGB

program phase.

There were a number of benefits to using an input target approach. Firstly, in

cases where a specific building was already performing with a high level of energy

efficiency, achieving an additional 20 percent energy efficiency improvement could

potentially be less cost-effective from an emissions mitigation perspective than

investing the same amount of money into a poorly performing building (Participant I).

In this case, the lack of output targets helped to ensure program funds were focused on

projects most likely to achieve cost-effective emissions and energy reductions.

Secondly, by not setting output targets at, for example, 20 per cent, this allowed the

opportunity for the competitive tender process to potentially identify a greater level of

energy efficiency improvements. Setting a defined output target could potentially limit

aspirations for achieving larger improvements.

The decision to mandate input targets (instead of output targets) was apparently

driven by an important assumption; the assumption that agencies did not necessarily

have the skills and capacity to achieve a predetermined output target (Participant G).

Instead, input targets required only that agencies participate in the program and then

relied on the competitive tender process to allow the private sector to identify which

energy efficiency improvements were appropriate in each case. A co-benefit of this

was that drawing on private-sector energy efficiency experts helped overcome skills

and knowledge barriers. This aspect will be discussed further in Section 5.2.4.

Aligning incentives

One aspect of the program that could potentially be improved is the degree to

which the incentive to save money through low-carbon upgrades is aligned with the


benefits to the departments that are in a position to implement them. On the one hand,

the financial rationale for implementing energy efficiency is clear – if government

facilities use less energy and provide a positive return on investment then the

government will save money. But in many instances, the specific departments that are

in a position to implement efficiency measures do not directly receive any of the

financial benefit of doing so. The impact is that these departments are less likely to

implement them, since there is no real financial incentive to do so. It typically takes

resources, time and upfront capital to implement efficiency improvements, which

distracts from core business, and when the benefits are realised they do not flow to the

department but to the central government more broadly. In the words of Participant J

“in a global sense across government it’s an economically prudent thing to do. But the

department doesn’t see any of that benefit – the incentives aren’t very well lined up.”

This is often referred to as a ‘split incentive’ and is a commonly-discussed barrier to

implementing sustainability initiatives.

Participant J discussed the importance of mandates and a centralised process in

helping to overcome this barrier. Mandates are important for obvious reasons – if there

is a mandate for a department to achieve some particular outcome then it is in the

interests of staff and managers to achieve this. The mandate forces the department to

participate in the program and prompts stakeholders to understand what efficiency

improvements are possible within their facilities. The centralised process is important

primarily because a central department is likely to have significant organisational

influence. A central department such as DTF controls the financial actions of other

organisations within the government so can have significant authority over

departmental decisions. A less centralised process would be likely to have less

organisational influence.

However, in addition to relying on mandates and centralisation it would help to

align incentives so that a department that chose to invest in upgrading its facility would

recoup some of the financial savings delivered. This could potentially also act as an

incentive to reinvest some of the savings into further upgrades. If departments directly

saw some of the financial benefit from improving efficiency, and if this sum of money

was available to them to continue improving efficiency through further projects or to

inject additional funds into core business, then there would be a clear financial


incentive for departments to seek out and implement efficiency projects. Currently the

financial savings flow to the government more broadly, so departments are less likely

to expend limited resources and time exploring them.

Leveraging the value-for-money advantages of co-benefits

One of the significant cost barriers reported by survey participants was ‘Level of

opportunity within the ‘Value-for-money’ determination process to account for carbon

emissions’. One way that the GGB program helped to overcome this barrier was to

design the program in such a way that the upgrade projects would be required to pay

for themselves, thus delivering good value for money.

The GGB program set investment criteria to ensure projects would pay for

themselves by improving energy efficiency and therefore delivering cost savings, and

this contributed to the business case. A number of program characteristics contributed

to overcoming the perceived value for money barrier. Using investment criteria that

specified projects must pay for themselves and be cost effective over (typically) seven

years helped to overcome value-for-money barriers that were previously limiting

departments undertaking such upgrades (Participant G). In words of one interviewee

“it was the fact that the savings would be returned that helped get the government to

support the program; that this wasn’t a grant of funds to a department or agency. So

I think it’s the fact that energy efficiency pays for itself - that’s the principle on which

the program was always likely to succeed - because it is cost-effective, and it does pay

for itself if you do it in the right way” Participant G.

It has been estimated that the projects implemented within the program up to

2015 will deliver financial savings over the next 15 years of $335 million, resulting in

a net present value (NPV) of $107 million (Government of Victoria, 2015). However

there are numerous additional value-for-money factors that can be delivered by

building upgrade projects, such as improved occupant comfort, improved equipment

reliability, and de-risking ageing infrastructure by accelerating upgrade projects.

Participant B explained that aligning building upgrade projects with other

outcomes desired by the departments would help to facilitate projects: “Our focus is

energy efficiency, but it’s not necessarily what gets us through the door, or what gets

a client to sign on to a project. There might be something that’s more urgent. So our

first question is generally what do you want to achieve, and sometimes we’ve got to


fish a little bit to find out what that is. It might be visible savings, it might be an

environmental driver. It could be comfort, or equipment that needs replacing, or

capacity of their existing transformers or steam system, or equipment becoming

unreliable and difficult to maintain. Often we can solve those problems and save

energy and save time, solving multiple problems at once. So they’re some other sorts

of outcomes that have been achieved through the program.” These sorts of benefits

should be explicitly accounted for and helps to highlight how intentionally leveraging

co-benefits can help contribute to the business case and facilitate future projects.

In addition to the real cost savings there are additional ‘avoided’ costs that are

often not explicitly included in decision-making. These include avoided costs of future

energy price increases (Government Procurement Group, 2011) and avoided future

capital expenditure (Department of Treasury and Finance, 2013). In the GGB program

approximately 30 per cent of total project costs were asset replacement costs (Burke,

2015). This financial investment provides benefit to departments by avoiding future

capital expenses while also reducing energy and carbon. These sorts of strategies have

tangible value to departments and should be considered for future LCPP initiatives.

Strategic implementation plans

A key strategy for optimising LCPP program outcomes is to identify

opportunities to closely align projects with future planned expenditure. This requires

more forward planning to identify opportunities to coordinate large upcoming capital

expenditure with low-carbon procurement opportunities. The strategy employed by the

GGB Program was to require departments to develop Strategic Implementation Plans

(SIPs) detailing how participation targets would be met and how their facilities and

properties would be incorporated into the program. These SIPs were mandatory and

covered all department portfolio agencies. There were a number of benefits to using

the strategic plans, which are discussed below.

Firstly, the SIPs helped identify a strategy for program implementation to ensure

the interim and final participation targets were met. As an example, the Department of

Health released a 5-year strategic plan as part of the GGB program (Department of

Treasury and Finance (VIC), 2013b). This outlined in detail how the department would

implement EPCs across the Health portfolio, including which facilities would be


prioritised and allowing decision-makers time to align with considerations such as

future works.

Secondly, using Strategic Plans helps can engage key decision-makers from

early in each project process. In the very early stages of the GGB1 phase key decision

makers were sometimes not engaged early enough, leading to delays in project

approval. This had impacts on project success and engagement of industry, often

leading to inefficiencies and frustration. In some cases key decision-makers were not

engaged until after a large percentage of the detailed technical and engineering work

had already been completed, causing last-minute scope changes resulting in delays to

project implementation. This impacted program success, individual project success,

and industry engagement. However, this appears to have only been an issue in the early

stages and this aspect was improved over the course of the program. A key lesson

learned from this is the importance of ensuring early engagement of key decision-

makers. This should be priorities for future program designs.

Developing strategic plans can also help facilitate deep retrofit opportunities

(where multiple building systems are designed/upgraded with a focussed perspective

on whole-system-design outcomes). This can potentially deliver larger efficiency

improvements, carbon savings and long-term value-for-money. Having a strategic plan

allows some lead time to consider the integration of building upgrade opportunities

and to develop a well thought-out whole-system retrofit plan. Without strategic plans

it can be more difficult to plan accordingly, and opportunities can potentially be

missed.

5.2.3 Tools and guidelines strategies

Tools and guidelines barriers came up multiple times in the survey as being

important barriers limiting the uptake of LCPP. The highest rated tools and guidelines

barrier items were 1) ‘Availability of monitoring mechanisms (e.g. carbon reporting

or audit mechanisms); 2) ‘Availability of inventories/databases with information about

carbon emissions from goods/services/works’; 3) ‘Availability of information about

whole-life-costs of low-carbon goods/services’, and 4) ‘Availability of procurement

tools to assist low-carbon procurement decision-making’. This section therefore

explores the strategies and characteristics of the program relevant to overcoming tools

and guidelines barriers with a focus on how these were implemented in the GGB


program and how such strategies could inform low-carbon public procurement

practices more broadly.

Simplifying low-carbon procurement decision-making

The survey results suggest that many procurement professionals view the lack

of low-carbon procurement decision-making tools as a barrier to undertaking more

LCPP. The GGB program model helped to overcome this barrier by drawing directly

on the experience of the energy efficiency industry as a key stakeholder in the decision-

making process, particularly regarding decisions about which technologies and

processes would be most suitable to cost-effectively improve the performance of

government buildings.

In a conventional procurement process a department would typically need some

internal technical or engineering knowledge in order to determine what equipment and

process improvements would be necessary to achieve better building performance. The

department would then specify the equipment and approach the market with a request

for proposal/tender. This requires a level of in-house skills and knowledge to

determine what the best solution would be, and the internal capability to make the best

decision about the specific technology and operational improvements that are needed.

The value of the GGB program model is that the energy efficiency industry

contributed to the decision-making process by utilising the specialist energy efficiency

skills of the participating ESCOs to determine the best course of action for each

individual project. The department needs only to put forward a candidate building, yet

does not need any technical knowledge regarding what solutions would be best to

apply in each situation. The GGB process engages three ESCOs in a competitive

process to develop a solution that will reduce energy consumption and greenhouse gas

emissions, which could include upgrading or replacing equipment and refining

operational processes. Through this process the ESCO actually helps define the scope

of works and determine the most suitable equipment upgrades and process

improvements. This reduces the responsibility and necessary technical knowledge of

department staff.

Additionally, all proposed solutions are broken down to show the expected life-

cycle costs, energy efficiency improvements and greenhouse gas reductions to make

it clear to the client department what is being proposed and what each strategy is


expected to deliver in terms of carbon, energy and cost savings. Participant E explained

the significance of these factors: “when (the departments) get a performance contract,

for example, all of the energy savings, the carbon emissions, the life cycle performance

and the expected lifetime of equipment proposed is detailed… (Then, the ESCO) would

determine what the energy savings would be, what the water savings would be if

applicable, and what carbon emissions would be associated with every single one of

those. We also did life-cycle costing for any new equipment that was put in, or any old

equipment that was taken out. So all that amount of detail is included in an EPC. It’s

one of the benefits of an EPC – government procurement staff can’t be experts in all

these measures, like knowing what effect putting window tinting on a building would

have; they can’t do that. They wouldn’t know, for example, if you put a variable speed

drive onto a motor, what effect that would have, and how many tonnes of CO2 would

be reduced by putting that VSD on; procurement people can’t do that. And I guess the

beauty with an EPC is that it’s all detailed, it’s all calculated, it’s checked in a lot of

cases by an independent body, and it’s all guaranteed” (Participant E).

Participant G makes similar points regarding the benefits of integrating ESCO

experience in shaping the scope of works stating “I think the EPC is good… (for)

identifying what actually forms the scope of works. Because we don’t know before we

start. And a competitive process to determine that scope of works is sometimes quite a

valuable thing in those cases. You have three teams of engineers working out what the

best solution to save energy might be. You might get three very different types of

solutions, and they’re all driven to try to find the largest savings in order to win the

tender.” (Participant G).

The key benefit being referred to above by both participants is that it takes the

onus off procurement staff to become experts in additional competencies. When

procurers already need to have skills and awareness across a multitude of different

areas such as financial, compliance, and health and safety considerations, etc. then

continually needing to add additional competencies can be burdensome and/or

impractical. Within this program model however the ESCO helps to determine the

scope of works and contributes to the decisions about the best approaches to achieve

the energy and carbon saving objectives. Multiple ESCOs also compete to win the

tender, so are driven to identify the most cost effective and appropriate strategies.


Development of clear guidelines and templates

Decision-making barriers were also minimised within the program through the

development of clear guidelines, templates and policy positions outlining how

procurement decisions were to be made. The program sets out rules that department

staff were required to follow when undertaking EPCs, including that departments must

identify and implement all upgrades that fit into a predetermined payback period. The

payback period has varied during the three phases of the program, however at each

stage it was still clear to procurement staff what investment criteria they must apply.

This clear guideline simplifies the decision-making process and means that

procurement staff only need to follow the steps in the process.

The guidelines and templates were important factors that helped to overcome

barriers for procurement staff. Participant I discussed the usefulness of the

Australasian Energy Performance Contracting Association (AEPCA) EPC guidelines

and methodologies, upon which the GGB EPC process is largely based. Using known

guidelines helps simplify the process for all stakeholders involved. Similarly,

Participant G stated that the development of good guidelines and investment criteria

assisted departments in overcoming decision-making barriers: “I think (the perceived

decision-making barriers) are dealt with through the policy, in that (it) basically stated

how departments should go about doing it. (The policy) set an investment criteria… it

said that ‘you must go through your building and find everything that fits into an

overall 8-year payback period and you must implement it’. It’s clearly stated – that’s

the decision, and the decision has basically already been made, they just need to follow

the steps in the process” (Participant G).

In addition to the guidelines the program also provided departments with access

to templates for different stages of procurement, from initial planning stages right

through to the measurement and verification stage. The templates described above

were developed for department and industry use. This provision of templates and

resources reduces the time required for individual departments/agencies to develop

their own processes and documents and reduces the administrative complexity. This

helps to simplify and expedite the procurement process for both the procurers and the

suppliers. These sorts of strategies contributed to program success and should be

considered for future programs.


Mandates

Following on from the strategy discussed above, which focussed on providing

clear guidelines and templates for departments to follow, a further strategy employed

was the institution of mandates on participation. Several interviewees discussed the

benefits of having mandates. Participant E discussed the perceived differences

between the GGB program in Victoria and other sustainability initiatives not

employing mandates in other jurisdictions. The interviewee stated that from their

experience the lack of participation mandates results in agencies de-prioritising it since

it is not core business, leading to much lower participation rates. The interviewee

stated that mandates were a “key issue” and meant that departments could no longer

say “we’re too busy; we’ll concentrate on other things and look at that later’”

(Participant E). In their opinion mandates were “one of the main reasons…the GGB

was extremely effective”.

Participant G also discussed the importance of the mandates. In their view

without mandates there still would have been some participation, but significantly less

than there actually was. The key reason being that mandates provoke interest from

senior staff in each department to ensure they are meeting policy requirements. This is

similar to the view expressed by Participant G, namely that this strategy of formalising

mandates makes the program goals a priority and part of core business; hence senior

staff then take an active interest in achieving outcomes. This strategy can be supported

by running the program from within a department with significant institutional

influence (such as a Department of Treasury or similar) since such departments often

have a position of power relative to other departments in many cases.

Institutional influence

The mandates and central facilitation also leveraged institutional influence that

helped to legitimise the program. The GGB program was developed and managed from

within the Department of Treasury and Finance; a department with a commanding

institutional influence. Other departments and agencies are accustomed to taking

orders from DTF, and so having the program instigated from within this department

help to lend legitimacy and significance to the mandates and instructions (Participant

J). There is some anecdotal evidence that some past programs elsewhere that were not

run from a central department have not achieved the same level of traction and

influence on other departments.


Through the lens of Institutional Theory, these sorts of strategies are instances

of ‘coercive isomorphism’, where one stakeholder exerts coercive pressure on another

to adopt certain practices; in this case through the setting of mandates. This kind of

strategy is undoubtedly most effective when it comes from an organisation with

institutional leverage. Therefore central and relatively more influential government

departments are likely to be a more effective ‘host’ organisation for such initiatives,

as compared to an agency with less influence.

Framing

At various points in time the ‘framing’ of the program was changed. This appears

to have been in order to align with the varying political and ideological tendencies of

different political parties that have come into office during the program’s history. This

may have contributed to the survival and longevity of the program. Maintaining

flexibility to adjust to political changes and restructures could make programs more

resilient and long-lasting by highlighting the various benefits delivered by the program

such as energy efficiency, cost reduction, risk mitigation, emissions reductions, and

sustainability, and so forth. As such it is a strategy that could be considered for future

programs and initiatives.

In the initial GGB1 phase of the program there was a significant focus on both

carbon emissions reductions and cost reductions. This can be seen through an analysis

of program documents from this period and the inclusion of emissions and cost

outcomes in the aims of the program. Carbon emissions were referred to frequently

and were a significant driver for the program (Participant J) during the first stage.

During the EGB phase the program was framed primarily around energy

efficiency outcomes, rather than carbon emissions outcomes. Energy efficiency

outcomes are easy to quantify and are a familiar concept for procurement staff and

decision-makers to understand. Additionally, they have an immediate and tangible

benefit to government departments – they result in reduced energy consumption and

therefore reduced energy costs. In contrast, although reduced carbon emissions have a

long-term benefit for government and society they have less immediate benefits

directly for departments. Due to the strong relationship between energy use and carbon

emissions, upgrades that reduce energy will almost invariably reduce emissions.

Therefore focusing the program on the reduced energy consumption provided a clear


value for money proposition for departments while still achieving carbon emission

outcomes.

Even cost-effective projects may still have difficulty competing with shorter-

term interests without additional drivers and incentives to justify the expense in the

mind of the public and/or decision-makers. Participant G explained that “in terms of

the financial benefits of the program; they’re good, but they’re a long-term investment.

So something that pays for itself in 8 years, then delivers good savings for the next 7

years – it’s a good investment over a 15-year period – but a policy like that is probably

not going to stand on its own legs unless it’s got something else. There’s always

shorter-term investments, and investments that have more public interest associated

with them, like any investment in rail, or a new hospital or a new school; those things

are always going to win out over slightly improving the efficiency of government

buildings. So I think (the environmental benefits) was probably the key thing that

enabled it to get up in the first place”. Importantly, the GGB Program emphasised the

dual financial savings and environmental benefits that would be achieved through the

program, and this helped boost support for the program.

In the current economic climate where carbon emissions reductions may not yet

have an immediate value-for-money outcome for departments, focusing on the value-

for-money benefits related to energy efficiency instead of trying to justify the benefits

of carbon emission reductions can be a valuable strategy. This can help avoid or limit

politicisation of carbon-related policies. However, it is worth noting that the incentives

for emissions reductions will likely improve in future as carbon pricing is introduced.

Use of a pre-qualified panel

A panel of prequalified providers was established to deliver EPC services to

departments and agencies. This had several benefits for overall program consistency

and simplifying decision-making. Firstly, having a pre-qualified panel improves

efficiency and consistency within the program. Panel members are vetted at the outset

to ensure they have the appropriate skill set to carry out the sorts of projects being

undertaken through the program. This has efficiency benefits since departments no

longer need to vet each provider for each new project.

Secondly it helps simplify the decision-making process. Since members of the

panel have already demonstrated required competencies and previous experience in


delivering energy efficiency projects, departments do not need to go through a

decision-making process. In the GGB program, prequalified suppliers who provided

an expression of interest were invited to prepare a proposal and take part in a

competitive tender process where they had the opportunity to audit buildings to

identify energy efficiency opportunities. They were then required to provide details on

building improvement measures and expected savings within an accuracy tolerance.

5.2.4 Skills and knowledge strategies

In the survey, ‘skills and knowledge’ rated highly as a barrier to government

departments undertaking more low-carbon procurement. The highest-rated

skills/knowledge barrier items were ‘Lack of skills within my department/organisation

to monitor carbon performance of projects during operation’, ‘Lack of knowledge

within my department/organisation about low-carbon goods/services/works’, and

‘Lack of skills within my department/organisation to develop effective low-carbon

tender criteria’.

Interview participants generally also felt that there was a lack of skills and

knowledge regarding low-carbon and energy efficiency within many government

departments and agencies (Participants B, G, & I). Whilst some departments/agencies

have staff with sufficient technical knowledge to undertake such procurement

activities, many do not (Participant G). It is also difficult or impossible for

procurement staff to be experts in all areas, and to keep up to date with rapidly

changing technologies and practices…“There are some projects they are able to

handle in-house, but like anything there are some that a specialist will be able to do

that the in-house facilities managers might not have seen. It’s like the difference

between a GP and a specialist” (Participant B). This section therefore considers the

GGB program in light of the key skills/knowledge barriers mentioned above and

highlights key program elements and characteristics that can inform strategies to

overcome these barriers.

Provision of centralised technical support

The GGB program incorporated a strong focus on providing support to agencies

undertaking an EPC project. Within the GGB program Victorian government

departments are supported by a team in DTF who had technical knowledge and

experience in energy efficiency projects and energy performance contracting. Several


interview participants mentioned the critical importance of having a program team that

had experience both within industry and within government to help design and

implement the GGB program. This has been integral in ensuring the success of the

program.

Interviewees discussed the importance of technical support for assisting

departments to identify and implement projects. This was particularly important for

smaller agencies that do not occupy a large building portfolio and are not regularly

involved in building-sector procurements. Since many client agencies lack the

capability to undertake LCPP in-house this central facilitation support helps overcome

the capability barrier since the program team will “hold the hand of the department

and agency and show them how to engage with the market” and “become the brokers

between the markets and the departments” (Participant G). However even for larger

departments such as Health and Education, which are regularly involved in building-

sector procurement, having access to support through the central Department of

Treasury has still been beneficial.

Participant G went on to explain that in their opinion, there was “virtually no

understanding of energy performance contracting prior to this policy. I think without

that understanding as to how to go about doing energy efficiency, such as through an

EPC, departments would go and buy an audit of someone, and there were no real

parameters around what that audit should be looking for in terms of investment

criteria” (Participant G). The program provided access to a team within the central

Department of Treasury and Finance that had experience with energy performance

contracts and building upgrade projects. Additionally, DTF provides support through

key stages such as providing guidance on the evaluation of tenders and assistance

choosing suppliers.

Participant E had a similar viewpoint, stating “EPCs are a completely different

procurement model than people are used to. All government agencies are very well-

versed in procurement, but EPCs are a shift in thinking for them. So I guess

procurement people need to get their head around EPC procurement and the different

ways of doing it…. I guess one of the key things is that you need… someone, or a group,

to really drive this… you really need someone in there to drive the program, and get

whole of government engaged. I think that’s a key thing (Participant E)”.


Participant E explained the importance of the central facilitation and support,

saying “I think (the program) overcomes the capability barrier that exists within

departments in that it’s being centrally facilitated. I think that’s important. There

needs to be that capability somewhere (in order to) skill-up those departments as they

participate in the program. But we can’t rely on them to determine how to go about

doing it, because they don’t have that prior capability. That’s the assumption – it’s not

necessarily the reality; there’s a few very good people (in the departments) who are

quite capable. But we think they still benefit (from access to the central facilitators)

involved. It helps with consistency of approach as well, and that is good for the market

too….So certainly that central facilitation overcame the capability barrier”. This

statement highlights the numerous benefits that stem from having expert facilitation at

a central level.

When considered as a factor of Institutional Theory, this kind of strategy could

be considered a sort of ‘normative’ driver, where central facilitation helps to establish

accepted ‘norms’ of practices and approaches. This both reduces the uncertainty that

agencies are faced with when trying to adopt new sustainable practices, and also paves

a way for expected operational norms. This has the advantage of also helping to ensure

similar practices are in use throughout the various agencies within a State government,

reducing confusion and allow for knowledge sharing.

Program champions

Several interviewees stressed the value of the GGB program manager, Sam

Burke, in particular. For example, Participant J stated that this was a “real success

factor” that “contributed heavily to the success of the program”. The interviewee went

on to state that “having someone like Sam with industry expertise, but who also

understood how government functions, and to be able to bring those things together,

that was absolutely critical” (Participant J). Another interviewee reinforced the

importance of having a program champion, again highlighting the value of program

manager, stating that “one of the key things is that you need a champion in there to get

it all happening. I think that’s a key thing… Each State needs a Sam Burke”

(Participant E).

Whether or not this program characteristic was intentionally selected for when

developing the program, or whether it arose simply because of the personal leadership


qualities of the program manager, it appears to have been an important aspect

contributing to the success of the program. Reflecting on the actors and stages of

Diffusion of Innovation theory, the program manager in this case could be seen as an

‘innovator’ or ‘early adopter’, helping to pave the way for the later majority within the

State Government and in other jurisdictions to engage in a program such as this. By

helping to prove the concept it can encourage others to firstly become aware of the

innovative idea and to test it themselves, having some confidence in its legitimacy and

a scaffold to build from. Future programs would be wise to facilitate and empower

potential program leaders to help drive programs.

Outsourcing technical and engineering skills and knowledge

Many government departments and agencies do not have the in-house technical

engineering skills to determine the best equipment upgrades to subsequently put out to

tender. One of the strengths of the GGB model is that the EPC process does not require

government procurers to have the specialist knowledge in-house to determine the

optimal energy efficiency strategies for a particular building or portfolio, since this

role is outsourced to energy services companies. The ESCO is charged with

determining what improvements are suitable. In this way, the EPC model uses the

skills of the ESCO to identify what actually forms the scope of works (Participant G).

The EPC is a competitive process where several providers compete to determine the

maximum efficiency improvement that can be delivered in the most cost-effective

way. The ESCO is then contractually obliged to deliver the specified performance

improvement. This is a key strategy for overcoming the lack of skills and knowledge

within government.

Measurement, reporting and verification

The GGB program includes an inbuilt measurement, verification and reporting

(MRV) process. The ESCO is required to monitor and verify all upgrade works in

order to justify that the work has been done and that the financial and carbon savings

that were promised have been delivered to the client (Participant G). By removing the

responsibility for measurement and verification tasks from the client departments and

outsourcing this element to the ESCO the program deals with many of the skills and

knowledge barriers previously faced by departments (Participants G, E).

The MRV plan is developed at the outset and forms part of the contract

document, which is binding. The process, guidelines and templates are based on the


International Performance Measurement and Verification Protocol (IPMVP), which

specifies methods for undertaking such tasks. These range from the simple and cheap,

to the complex and costly. On the simple/cheap end of the scale, much of the energy

and CO2 information can be deduced from the energy retailer’s billing information,

which reduces the need for complex monitoring technology and processes (Participant

F). On the complex/costly end of the scale, additional monitoring technology can be

installed as part of the upgrade process to monitor performance with a high level of

precision, but with equivalent increase in contractual complexity and cost (Participant

F). Whichever the case, since the MRV becomes a contracted responsibility of the

ESCO, the use of the EPC model removes the need for departments to deal with MRV

tools and mechanisms, which helps to reduce this factor as a barrier to increased uptake

of LCPP.

Integrating MRV into the procurement process

Survey participants identified the time and cost issues of MRV as barriers to

undertaking more LCPP. The GGB program, and by extension the EPC process, deal

with these barriers by incorporating MRV components into the structure of the process.

Measurement and verification is an inherent part of the EPC process in order to

guarantee that savings have been delivered to the client, and the cost of undertaking

these MRV activities is factored into the cost of the contract (Participant E). Since the

EPC contract is designed to be cost effective over an acceptable payback period, the

MRV component is effectively paid for over the contract period through the energy

and operational savings. Once again, since this MRV component is handled by the

ESCO it helps resolve the time and cost barriers previously faced by departments.

The EPC process has an inbuilt MRV component to it, where ESCOs are

required to monitor and verify all upgrade works in order to justify that the work has

been done and that the financial (and carbon) savings have been delivered to the client

(Participant G). The MRV plan is developed at the outset and forms part of the contract

document, which is binding. The MRV plan also covers the entire contract period, so

if the upgrade works don’t perform as intended, the MRV process will identify issues,

which adds a level of rigour to the process (Participant E).


Knowledge sharing

Formalising knowledge sharing opportunities between government, industry and

community appears to be associated with program success. Firstly, simply

implementing these programs helped to raise awareness of low-carbon and energy-

efficient procurement practices amongst public procurement staff and amongst

industry. At this early stage of uptake simply increasing awareness is of critical

importance. For the vast majority of procurement staff sustainability and low-carbon

outcomes have not been part of core business. As such there is a general lack of

awareness and understanding. The United Nations has stated that raising awareness of

sustainable procurement practices is one of the most important instruments to increase

uptake (NSW Treasury, 2009). Both programs had a significant impact on wider

awareness.

Knowledge sharing was not a formal part of the program model however it was

observed that there was a degree of knowledge sharing by some participating

departments. For example, the Department of Health provided some feedback and

knowledge sharing regarding their experience participating in the GGB program and

specifically about EPC submissions received from ESCOs. This was posted publicly

on the Department of Health website.

In addition to helping to increase uptake of the program within the State of

Victoria, the program team was also proactive in spreading awareness and sharing key

lessons learned with stakeholders in other nearby State governments and jurisdictions

(Participant E). This demonstrates how program champions can also facilitate

knowledge transfer to neighbouring jurisdictions and other levels of government,

which can help to mainstream such initiatives more widely. Participant E noted that

“(New South Wales) got all that from Victoria and change it a little to suit New South

Wales. They’ve also had a number of Victorian people involved in what they’re doing

to help them set things up. They have called on people from Victoria to help them in

lots of different areas, which has been excellent.”

These sorts of actions are often referred to in Diffusion of Innovation theory,

where early adopters help spread a new innovation through influence of social and

professional networks. Similarly, through the lens of Institutional Theory this is a form

of mimetic isomorphism, where one organisation mimics the behaviours and strategies

of another organisation. In this case the openness of key personnel in the GGB program


to share skills and knowledge has helped facilitate this mimetic isomorphism to occur

across jurisdictional lines.

The impact of this knowledge and information sharing is that it can contribute to

skills and knowledge development both for the various government departments and

for the ESCO industry. The net result is a mutual development of skills and knowledge

which contributes to future program success. Future programs should consider

incorporating a knowledge-sharing process as a formal part of future initiatives.

5.3 CHAPTER SUMMARY

In this chapter the Greener Government Buildings (GGB) program of the

Victorian Government in Australia was investigated as an example of a public

procurement program delivering low-carbon outcomes. Important program strategies

and characteristics were discussed with respect to the transferrable lessons they could

provide to inform similar future initiatives. Of particular interest was the insights that

key stakeholders interviewed could provide regarding opportunities to overcome

important barriers currently limiting the uptake of LCPP practices, particularly barriers

that survey participants rated as being significant.

There were numerous program characteristics and strategies that contributed to

the success of the program. Some of these were employed overtly while others were

more emergent – evolving as a result of efforts and leadership of key stakeholders. It

is likely that the program has been successful and has managed to survive multiple

changes of government in part due to the diverse range of strategies and characteristics

that have been implemented. This in itself could be viewed as a strategy conducive to

success.

There were several characteristics that were discussed by interviewees which

appear to be of particular importance. For example, facilitating some form of access

to capital was essential, since low-carbon projects often compete for limited resources

with core business activities, and may be postponed for many years even if they are

cost-effective. As the GGB program shows, this can be cost-neutral for government

by using temporary loans rather than grants. The withdrawal of the funding and

mandatory participation targets during EGB phase contributed to a cessation of new

projects, highlighting the importance of facilitating a funding source.


More could be done to highlight and account for the multiple co-benefits

achieved through such a program such as risk mitigation and asset renewal that add to

the business case. Additionally, better communicating and leveraging the value-for-

money advantages of not investing public money in high-carbon built assets. The

relatively long payback period also facilitated more comprehensive upgrades than

could have been achieved with shorter payback periods, whoever is still short by

international standards. The guaranteed savings approach reduced risk to government,

and the use of input targets reduced project costs and complexity for departments

Chapter 6: Case Study – GPP 2020 155

Chapter 6: Case Study – GPP 2020

This case study focuses on the GPP 2020 project of the European Union,

addressing RQ3 pertaining to opportunities for implementation of low-carbon

procurement practices that have led to improved carbon outcomes. The case study has

been generated through analysing project documents and interviews with project

stakeholders. The chapter begins with an outline of the key program elements and

strategies relevant to low-carbon public procurement. The chapter then summarises

program strategies and their characteristics that appeared useful in overcoming key

barriers to low-carbon public procurement for the European Union.

6.1 BACKGROUND

The GPP 2020 project was an initiative coordinated by the organisation ICLEI

– Local Governments for Sustainability (hereafter referred to as ICELI) that aimed to

“mainstream low-carbon procurement across Europe” using low-carbon tendering to

achieve significant greenhouse gas emissions (ICLEI, 2014a). The initiative ran for

three years, from May 2013 to April 2016, involving eight target countries; Austria,

Croatia, Germany, Italy, the Netherlands, Portugal, Slovenia and Spain. Various other

project partners contributed to the initiative, including Procura+, the United Nations

Development Program, and many government entities from the participating countries.

The project received funded under the Intelligent Energy Europe (IEE) program

of the European Union and was intended to contribute to the ‘Europe 2020’ Strategy.

The Europe 2020 Strategy highlights climate change, energy and resource efficiency

as key challenges facing society, and promotes procurement as an important

instrument for fostering innovation to respond to these challenges (European

Commission, 2010). Key Europe 2020 goals include reducing greenhouse gas

emissions by 20 per cent, improving energy efficiency by 20 per cent, and increasing

the use of renewable energy by 20 per cent, all by the year 2020. The GPP 2020 project

can be viewed as a sort of ‘umbrella’ initiative – engaging independent public

authorities in the target countries who choose to be a part of the project. It is a voluntary

156 Chapter 6: Case Study – GPP 2020

initiative, and participating organisations can receive funding and support from the

project to help them generate their own low-carbon tenders.

6.1.1 GPP 2020 objectives

The GPP 2020 project was developed to respond to the need to improve the

sustainability of public procurements throughout Europe. In the view of the project

proponents most public procurements in Europe were not incorporating effective

environmental criteria into the procurement process and were not achieving

sustainable outcomes (ICLEI, 2015). The guiding intention was that the GPP 2020

initiative would “serve to demonstrate the impact that can be achieved by including

low-carbon criteria in public procurement” (ICLEI, , 2013a). To achieve this the GPP

2020 project aimed to implement more than one hundred low-carbon tenders to

achieve emissions reductions through projects such as low-carbon buildings, street

lighting, vehicles, and electricity (ICLEI Europe, , 2014).

The project also aimed to conduct training and networking events, and to set up

public procurement support structures in the participating countries. Specific aims, as

stated within the IEE project funding database included “Building capacity amongst

public authorities for the implementation of GPP for energy related products, services

and works procurement”; “Building capacity amongst procurement training

providers, to enable the integration of GPP into regular procurement training

programmes”; “Promoting knowledge transfer of GPP approaches, and innovative

technologies and services between purchasing bodies and GPP support bodies across

Europe”; and “Enhancing permanent GPP support structures in the target countries”

(European Commission, 2016). It is interesting to note that many of these actions focus

as much on ‘soft’ non-technical strategies as they do on building capacity through

‘hard’ technical actions. This appears to have been an important success strategy for

the initiative in helping to build capacity for LCPP.

The GPP 2020 project had defined targets for the total number of tenders,

number of training events and success of support activities for each year of the

program. The initiative set internal KPIs that were linked to these goals in order to

track progress. For example, targets for the first year were to achieve eight low-carbon

tenders with resulting emissions reductions of 15,945 tonnes CO2e/year (ICLEI,

2014a). Over the entire project period the targets were to deliver one hundred low-

carbon tenders resulting in ‘significant’ emissions reductions. Targets for training


events included 36 ‘Train-the-procurer’ training events delivered to at least 540

procurement staff and 13 ‘Train-the-trainer’ events delivered to at least 130

procurement trainers (ICLEI, 2016a). Targets for the support activities were to aim for

90 per cent of help desk users reporting that they feel better-informed after using the

service (ICLEI, 2014a).

Strategic planning actions within the program included setting Key Performance

Indicators (KPIs) from an early stage, and ensuring there were measurable targets at

various stages throughout the three-year program (Participant-C). These were

designed intentionally to link directly to the core objectives of the program which is

important for ensuring program success. There were also agreements made with

individual governments and departments to contribute targeted numbers of projects to

the overall program.

For example, Rijkswaterstaat in the Netherlands aimed to contribute a total of

ten projects over the course of the three years. This helped to ensure commitment to

the program even during periods of staff changes etc. This involved stakeholders from

both GPP 2020 and Rijkswaterstaat working together to identify suitable future

projects for incorporation. Targets were often ‘input targets’ rather than output targets,

meaning that a department would commit to a certain number of projects without

necessarily setting a specific target for emissions reductions. This helped to reduce

complexity and allowed some flexibility for projects. According to Participant-C

allowing some design freedom in suitable projects created opportunities to push the

market to innovate in design and use of materials to achieve good outcomes.

6.1.2 Program outcomes

The GPP 2020 project ran for three years and was concluded in early 2016. The

initiative engaged over forty public authorities within the eight targets countries across

the European Union. In total 113 low-carbon tenders were facilitated through the

initiative (ICLEI, 2016a). This outcome surpassed the objective to facilitate one

hundred low-carbon tenders. It is estimated that these tenders will reduce greenhouse

gas emissions by 922,936 tCO2e over the life of the products and projects (ICLEI,

2016b). This figure is calculated based on a comparison between the low-carbon

tenders and previous or typical tenders for similar goods, services and works (ICLEI,

2013b). This is a significant greenhouse gas mitigation outcome.


The first-year targets for number of tenders and other activities were mostly

achieved; ten tenders were awarded in the first-year period, estimated to reduce

greenhouse gas emissions by 14,263 t CO2e/annum (approximately 90% of the first-

year target figure). An evaluation of the first ten low-carbon tenders has estimated that

the cumulative greenhouse gas emissions reductions delivered over their operational

life-cycle will be approximately 67,795 tCO2e in comparison with a baseline or

reference value (ICLEI, , 2014).

During the second-year period an additional 21 low-carbon tenders were

awarded. These are expected to reduce greenhouse gas emissions by 119,900 tCO2e

and energy use by 11,130 TOE over their operational lifecycle. The CO2e reductions

achieved were significant, ranging from 15% - 100% compared to the benchmarks

(ICLEI, 2015). Several are of relevance to LCPP of goods, services and works in the

building sector. These included a Spanish tender for green electricity, two energy

performance contracts in health facilities, and a number of tenders for office equipment

and services such as computers and print management services. These will be

discussed further throughout the following sections.

During the third period a further 82 tenders were facilitated, collectively

expected to reduce emissions by 39 per cent or approximately 734,000 tCO2e (ICLEI,

2016a). The third period saw a significant increase in the number of tenders completed,

highlighting that such initiatives may take time to implement and scale up. It also

shows that certain types of tenders deliver significant emissions reductions. In

particular, energy performance contracts, energy contracts and infrastructure projects.

Many of these have transferrable lessons of value to LCPP which will be discussed

further below.

6.2 KEY PROGRAM CHARACTERISTICS AND STRATEGIES

The primary focus of this case study is to explore successful low-carbon public

procurement initiatives that have resulted in the reduction of carbon emissions, and to

distil key strategies and program characteristics that provide insight into how barriers

to LCPP can be overcome. The following section discusses strategies and

characteristics of the GPP 2020 program, with particular attention to key lessons that

can inform financial, tools/guidelines, and skills/knowledge barriers.


6.2.1 Procurement approach

Over the course of the three years more than one hundred low-carbon tenders

were awarded for products, services and works across various sectors including

buildings, ICT, energy, transport, and infrastructure (ICLEI Europe, , 2014). A number

of different procurement strategies and approaches were used in these tenders; some

conventional and others more innovative. Relevant examples will be discussed briefly

below. The two most common contract award approaches were the ‘lowest price’

approach and the ‘most economically advantageous tender’ approach. Each of these

has strengths and weaknesses with regard to emissions reduction potential, and these

will be discussed further below.

Contract award - lowest upfront price

Many contracts were awarded using the ‘lowest price’ approach. For example,

five tenders were awarded using a ‘lowest price’ method during the first period of the

project, and an additional nine tenders in the second period. The majority of the ‘lowest

price’ contracts were for relatively simple tenders such as recycled paper and ICT

equipment (as opposed to complex projects such as infrastructure or energy

performance contracts). This reinforces that a variety of approaches should be

facilitated within LCPP initiatives to account for variable levels of procurement

complexity, since one approach will not always be suitable for all types of projects.

Whilst the ‘lowest price’ method does not commonly result in improved

sustainability performance, it is the specific way the approach was used in the GPP

2020 tenders that help facilitate low-carbon outcomes. To ensure carbon reduction

outcomes were delivered in these tenders the low-carbon criteria were included as

technical specifications or in contract clauses. The result of this is that these become

mandatory parts of the tender which must be delivered, rather than being included in

the award criteria where they would typically be weighted (usually lowly) against other

competing criteria (ICLEI, 2015).

Contract award - most economically advantageous tender

A number of GPP 2020 tenders were awarded based on the ‘most economically

advantageous tender’ (MEAT) approach. This approach allows the procuring entity to

account for sustainability impacts through award criteria, which can potentially allow


them to more directly influence the procurement decision-making process (Parikka-

Alhola and Nissinen, 2012).

The MEAT approach can have benefits over a ‘lowest upfront cost’ approach

since it can help to highlight the value of sustainability opportunities that can

potentially deliver better long-term value to the government and the public. For

example, under the MEAT approach it is possible to include energy efficiency or

greenhouse gas emissions in award criteria (ICLEI Europe, , 2014).

According to Participant-A, using the MEAT approach helped to show decision-

makers that a low-carbon tender could deliver good value, stating “It’s mostly because

we used the MEAT methodology – the tender which takes into account quality criteria,

not only price but also quality. Environmental quality is one of those criteria”

(Participant-A).

However, simply using the MEAT approach does not necessarily guarantee good

carbon or sustainability outcomes (Parikka-Alhola and Nissinen, 2012). There are

potential issues with transparency of the award criteria and calculation methods, where

‘strategic manipulation’ can result in sub-optimal outcomes. Parikka-Alhola and

Nissenen (2012) provide several recommendations for the correct application of the

MEAT approach, including early publishing the scoring system, appropriate weighting

of environmental criteria, and assigning monetary value to ‘quality’ factors. The

MEAT approach is a more complicated method for procurers to use and is still being

developed. There is still a lack of research and practice on effective implementation

(Dreschler, 2009), yet it is potentially a promising approach that with further

development may be able to facilitate the uptake of LCPP.

Public-private partnership contract models

Several tenders submitted to the GPP 2020 project utilised Design-Build-

Finance-Maintain (DBFM) or Design-Build-Finance-Maintain-Operate (DBFMO)

contract models, which are types of public-private partnerships (PPPs). Under these

models the private sector takes an ongoing role in the operation and/or maintenance of

an asset.

According to Participant-A, the DBFM approach helped facilitate innovation

and demonstrate that a more sustainable tender could provide good long-term value,

stating that “what also helped was that we shifted from a design-build methodology to


a design-build-finance-maintain methodology, so (the providers) can earn money by

making it very cheap for maintenance, and use better materials that last longer et

cetera, so there’s an incentive for them to innovate”. This suggests there may be an

opportunity to further explore PPPs as a means to improve low-carbon outcomes.

There is research to suggest that the use of a public-private partnerships can

potentially improve sustainability outcomes and can act as a catalyst for more

innovative sustainability practices. One reason for this is that the provider has an

incentive to design and construct infrastructure and buildings that have a high level of

quality and the lowest possible maintenance and operation costs, since they will be the

entity responsible for these future costs. However, there are a variety of potential

drawbacks that need to be accounted for to ensure long-term sustainability,

transparency and cost-effectiveness.

6.2.2 Financial strategies

This section discusses elements of GPP 2020 tenders provide some insight into

strategies for overcoming cost barriers to LCPP. Financial barriers were frequently

perceived to be amongst the most significant barriers by survey respondents. As such,

it is important to explore successful low-carbon public procurement initiatives to

identify characteristics and strategies that could help overcome these barriers. This

section therefore explores the financial strategies and characteristics of the GPP 2020

initiative. It highlights key elements that helped to overcome important cost barriers.

Each section discusses these key characteristics and strategies with respect to how

these were implemented in the program and how these could inform low-carbon public

procurement programs more broadly.

Longer payback periods and life-cycle cost analysis

Several tenders incorporated a full life-cycle cost calculation into the

procurement decision-making process. Life cycle costing can be defined as “the sum

of acquisition cost and ownership cost for an asset over its life-cycle from design stage,

manufacturing, usage, maintenance and disposal” (ANAO, 2001, p.7). Procurement

approaches that account for full life-cycle costs can act as an enabler for low-carbon

procurement since low-carbon options are often more energy efficient and can have

lower operational costs. Energy audits can be used to validate purchases that will

reduce operational energy use and other life-cycle costs (Annunziata et al., 2014).


Several interviewees discussed the life-cycle costing strategy as an important element

of various tenders (Participants-A, -C, & -D).

Since building-sector plant and works often have long life-cycles it generally

makes sense to consider the financial implications over a longer timescale by adopting

a life-cycle costing approach. However, LCC is still often not done sufficiently

covering the full period from acquisition to disposal. This can impact long-term value

for money. Additionally, it can make assets vulnerable to future policy and socio-

cultural developments. There is a risk that if whole-of-life costs are not factored into

procurements from an early stage it can leave a building exposed to “environmental,

political, economic and social forces and, furthermore, subject to the risk of

obsolescence, volatile utility prices, deterioration and depreciation” (Highton, 2012).

Several interviewees discussed the pervasiveness of a more ‘traditional’

approach where LCC isn’t explicitly included in the procurement process. Participant-

A stated that “everybody says ‘environmentally friendly products are more expensive’,

and they’re afraid of the price that they have to pay because they only think of the

short term. But as well we say you have to take into account the market prices, for

instance if you allocate a price to human toxicity, or ecology, and you take it into

account. Well they weren’t accustomed to that to take into account these

environmental costs. So only after our Director says we are going to do this, then they

started reluctantly to use these methods – you have to overcome the traditional way of

thinking about technology and how prices are made, because the cheapest price isn’t

always the best price”. One strategy that was employed in this instance to overcome

the perceived barrier was the use of pilot projects to demonstrate the value of the LCC

method. This will be discussed further in the following section.

Participant-D also referred to the general lack of understanding about LCC

amongst procurers, stating that “If you’re not used to life-cycle costing this will always

remain a barrier”, which that lack of awareness and familiarity with LCC may

contribute to the persistence of the perceived barrier. This is likely to have had a

bearing on the limited uptake to date, however Participant-D posited that the use of

LCC was increasing, in part due to the promotion of LCC as a strategy within the

program, stating “it’s moving more and more in the direction of introducing life-cycle

costing. I would say that’s also from the policy or strategy element of this project you

can clearly see”. Participant-A also discussed the use and development of a life-cycle


costing tool called ‘Dubo-Calc” which was developed to help departments calculate

whole of life costs. This highlights the value of programs such as GPP 2020 in helping

to raise awareness and familiarity with low-carbon concepts.

Participant-C pointed out that LCC can be particularly influential for assets with

have longer lives, such as for building-sector works: “in the case of the low-carbon

procurement, because you always have economic savings, in some cases it might be

that the product itself is more expensive, and this might be the case for vehicles, but

for buildings you get your money back, so there’s no problem. In other products there’s

also an economic saving which you can see through calculating this life-cycle cost, the

electricity, and so on.” Yet LCC can also be used to calculate the benefits of equipment

with shorter life-cycles, but which nonetheless provide an economic advantage. A

number of GPP 2020 tenders that are relevant to procurement within the buildings

sector used an LCC approach, including tenders for printers and print management

services in Germany and Italy, energy-efficient commercial dishwashers in Germany,

and the procurement of 800 vehicles in Austria (ICLEI, 2015). The tender for the

commercial dishwasher in Germany included the upfront cost as well as the full 15-

year life-cycle costs to the agency, which included electricity, water and wastewater

costs.

Several GPP 2020 tenders were contributed by the government agency

‘Rijkswaterstaat’ in The Netherlands and favoured a life-cycle approach. The agencies

incorporate the life-cycle cost of electricity into the tender contract and this played an

important role in the decision-making process. Participant-A explained, “if you have

an installation which uses electricity, and that is also taken into account in the bidding

price – you have to calculate how much electricity you will use in the future, the

amount, the quantity, and the price is stated for this moment (and will fluctuate in the

future, but the kWh price is fixed for the tender) in order to have a comparable bid

from multiple bidders, it is taken into account in the bidding price, so the bidder with

the most energy efficient installations has an advantage… We have contracts for 25 or

20 years, so every year they have to pay their own bill for the electricity that is used,

and we charge them with that” (Participant-A). This highlights firstly how LCC can

be used to influence decision-making and facilitate energy-efficient low-carbon


outcomes, and secondly how taking a long-term view (e.g. 20-25 years) can be

mutually advantageous for value-for-money and low-carbon outcomes.

Pilot projects for evaluating cost-effectiveness

A useful approach seen in many tenders under the GPP 2020 project was to

undertake pilot projects as a first step towards facilitating the uptake of low-carbon

procurement before larger-scale contracts were implemented. Several interviewees

discussed this strategy (Participants A, C, & D) Such pilot projects can be a practical

approach for trialling low-carbon procurement processes and for building the business

case, and this may be particularly useful in regions that have not previously had much

exposure to sustainable or low-carbon procurement.

Pilot projects can be used to trial particular low-carbon products to determine if

they will be cost-effective. For example, Participant-D discussed a pilot tender for

police scooters in Barcelona, explaining that “Barcelona city and other regions, there

are cases it takes this into account. Say, they purchase electric scooters for the police,

also as a pilot project they roll it out. This type of electric scooter was a bit more

expensive (upfront) than the other ones, but they realised that over a longer time it’s

more cost effective”. In this case the pilot tender allowed the agency to trial the vehicles

in use on a small scale to check suitability. Additionally, pilot tenders help demonstrate

the potential for what could be achieved if implemented on a large scale (Participant-

D).

Using a pilot stage helps to keep the procurement complexity low while also

raising awareness and knowledge about what LCPP looks like in practice. Participant-

D stated that pilot projects assisted in demonstrating that low-carbon tendering wasn’t

necessarily something that had to be complicated. They stated that “it’s not a

technology that’s rocket science. It’s about convincing people to make use of existing

technologies, and assess them, and pilot them” (Participant-D). This reinforces the fact

that many technologies already exist to achieve significant carbon reductions, they just

need to be implemented.

The pilot strategy was used within the GPP 2020 in an informal way to simply

encourage agencies to try low-carbon procurement, even if it was just for very small

projects. Although it was not an official strategy of the GPP 2020 initiative, it appears

to have simply occurred naturally and was adopted by a number of individual


participating agencies. Sometimes this occurred through a program champion

promoting the use of a pilot project in order to demonstrate the business case for a low-

carbon option. For example, Participant-A stated “you have to overcome the

traditional way of thinking about technology and how prices are made, because the

cheapest price isn’t always the best price. We had to find ways to take them to our

side, to persuade them. It took us a while and it took us some pilot projects to show

that it worked, and also to show that it makes a difference in tendering, because you

can get a better tender. First they thought it would only become more expensive, but

then we found out that once you take the electricity price into account it became

cheaper sometimes”. In this case the pilot helped to get the organisation behind the

idea that it doesn’t necessarily cost more and to show that it could contribute to a better

outcome.

Product-service systems for reducing upfront cost

The GPP 2020 project included a number of tenders that made use of a product-

service system (PSS) model, which involves providing a particular service or utility to

a customer, rather than selling the product itself. Using a product-service system model

can reduce upfront costs for a customer while also providing an incentive for the

provider to reduce resource use, emissions, and energy consumption. For example, the

procurement of a product-service systems entailing installation, support, maintenance,

monitoring and optimisation of office equipment including consumables such as paper

over a defined period of time. In this case the supplier retains ownership of the

equipment and instead contracts out the provision of an office technology service to

the public entity. This can reduce upfront costs for the procurer. If done correctly it

can also give suppliers an incentive to improve the energy efficient so they can retain

a higher percentage of the operational costs as profit.

In the PSS model the provider typically maintains ownership of products that

may be needed to deliver the desired service to the procurer. The provider essentially

uses those products as part of their service delivery. In this model there is an incentive

for the provider to use resources as efficiently as possible, because using more than

necessary or disposing of products before the end of their life becomes costlier. This

also reduces the incentive for providers to simply sell more of a product to a buyer.

The focus shifts from selling the product to delivering the utility that the customer


needs. However it should be noted that the PSS model does not inherently lead to

reduced resource use and emissions reductions, but merely has the potential to achieve

these outcomes.

Incorporating functional specifications in tender processes

The Dutch infrastructure agency Rijkswaterstaat used functional specifications

in a number of tenders committed to the GPP 2020 project. Functional specifications

were used in order to allow providers some flexibility in their approach to the tender;

allowing them to identify innovative approaches that would still fulfil the stated project

need. This strategy resulted in the winning bid incorporating innovative low-carbon

materials and construction techniques that delivered emissions reductions (Participant

A). The use of functional specifications thus facilitated innovations which helped

achieve greater emission reductions than initially expected.

Research by Uyarra et al. (2014) found that setting specifications that were too

rigid was a significant barrier to innovation. Research has long suggested that

functional or ‘performance-based’ specifications can facilitate more innovation from

industry, for example see Rothwell and Zegveld (1981), however there are a variety of

reasons proposed for the lack of uptake, including potential for increased transaction

costs and a lack of knowledge about how to develop ‘defendable’ evaluation criteria

(Uyarra et al., 2014). This reinforces the importance of a multi-pronged approach in

any program that focuses on skills and knowledge strategies in addition to policy and

technical strategies.

Provision of funding

The GPP 2020 program is funded by the Intelligent Energy Europe programme

of the European Union. The project is made up of key central purchasing bodies

(CPBs) that have committed to mainstreaming low-carbon procurement across

Europe. The European Commission committed a total of 1,873,176 € to the project

over the three years. This was used to provide technical assistance, staff, training,

development of the calculators and tender models database. According to the

Intelligent Energy Europe project report a key lesson learned was that “appropriate

resources are needed to provide a timely and professional in-consortium helpdesk for

calculating the achievements” (European Commission, 2016). This funding was

critical in overcoming a number of important barriers to LCPP previously faced by

governments.


Participant-C stated that prior to the program government agencies experienced

barriers due to human resourcing, and that accessing funding helped to overcome this

barrier: “It’s a matter of time or resources - because you need a lot of human

resources… If you want to introduce low-carbon criteria you have to do some market

engagement to see what the availability of low-carbon products is like in the market,

you have to then prepare the tender specification, the evaluation of the tender, and

then also the dissemination of results in the GPP 2020 project. So there’s a lot time

involved in each tender. The procurers don’t want to do that by themselves, because

it’s more workload for them. The limited result in Catalunya before the GPP 2020

project is related to human resources and to the decentralisation of procurement.”

They went on to explain that the funding gives each of the departments the resources

to put a tender model together at the end and report perform calculations of energy and

carbon saved and put together a report, which was a key outcome of the project.

Participant-A also discussed how the funding allowed their department to

undertake staff capacity building activities and to assist with calculations and tender

evaluations, which previously had not been carried out: “We received funding for staff

capacity building to make calculations. Because in the first projects people were very

reluctant to make these calculations, but using the funding from GPP 2020 we could

hire people to do these calculations. Another aspect that was very good was it gave us

the time and capacity to do the evaluation of those tenders, because previously we had

not been able to do a thorough evaluation or calculation of carbon emissions

reductions. Previously we only did the tender and that was it, but now we had the time

and money to do these evaluations. That was very useful because now we could

compare it with other tenders that were being done within the GPP 2020 program.”

The availability of funding facilitated tender evaluation and reporting, helping

to overcome resource-related barriers, particularly the time and cost required to

undertake MRV activities. Within DOI theory this funding would improve the

‘trialability’ of the innovation and also bring down the cost of participation to the

procuring organisation, thus facilitating diffusion of the innovative practices. In the

opinion of Participant-C “The program has helped with resource-related issues. So for

example having more time to work on tender evaluation…. This gives each of the

departments the resources to put a tender model together at the end and say ‘this is


how much we saved’, and to do the calculations of energy and carbon saved.”

Similarly, Participant-A agreed that funding facilitated the ability of departments to

undertake evaluation of outcomes, stating “it gave us the opportunity to actually

evaluate the effectiveness of the approach and method and to calculate the amount of

reduced CO2 emissions in the projects”. Without such funding it is unlikely that these

activities would have been possible.

Value carbon emissions in procurement decision-making

Many of the tenders use a tool called the ‘CO2 Performance Ladder’, which

calculates a theoretical deduction on the bidding price based on the carbon

performance of the provider (ICLEI Europe, , 2014). The CO2 Performance Ladder is

a staged certification tool that has been developed to confer a competitive advantage

in the tender process to companies who commit to reducing project carbon emissions

(Rietbergen and Blok, 2013).

Tools such as this may provide strategies for overcoming certain cost barriers

which have limited the uptake of low-carbon procurement practices. By allocating a

theoretical discount, the tool confers an advantage to projects that can reduce carbon

emissions and provides an incentive for providers to investigate opportunities for

carbon reduction. The larger the emissions reductions of the provider, the larger the

advantage, so there is also an incentive to seek larger reductions. The discount is

theoretical but helps to show decision-makers the impact of low-carbon options. An

example project is the A12 Motorway upgrade project in the Netherlands. The bid that

was awarded the final contract managed to achieve a theoretical cost advantage of

400,000 € on a 2,987,000 € project due to the carbon efficiency improvements they

identified (ICLEI Europe, , 2014). Certification tools and schemes have great potential

for driving low-carbon public procurement.

In the GGB1 phase of the GGB program (but not the later EGB phase), emissions

reductions were estimated and reported, suggesting there was at least some level of

value attached to the recording and tracking of emissions reductions, even if these were

not given a theoretical or actual economic value (as with the projects that used the CO2

Performance Ladder, discussed above). Even so, this can help to make stakeholders

more aware of the emissions impacts of procurement decisions. In doing so, this may

help to shift ‘cultural values’ and ‘community norms’, which are two DOI attributes

associated with adoption of innovations.


6.2.3 Tools and guidelines strategies and characteristics of the program

Despite the wide availability of green procurement tools and guidance “the vast

majority of public tenders in Europe still do not incorporate effective environmental

criteria and do not result in the purchase of sustainable solutions” (ICLEI, 2014a).

More is clearly needed to help procurers transition to sustainable and low-carbon

procurement. The GPP 2020 program had a number of key strategies that made the

development and use of tools and guidelines a more successful endeavour.

The project provides examples of a number of tools and guidelines that help

enable further uptake of low-carbon public procurement. These can be organised under

several categories; informational databases, calculator tools, help-desks, monitoring

and reporting systems, and low-carbon procurement guidelines. Key characteristics

and strategies of the GPP 2020 project that provide insights into opportunities to

overcome barriers to LCPP are discussed further below.

A critical strength of the GPP 2020 program was that guidelines and tools were

not delivered in isolation; they were packaged with support structures, technical

assistance and capacity-building activities that helped to reinforce key actions.

Additionally the development and promotion of the database of over one hundred real-

world examples of low-carbon public procurement helps to increase awareness and

knowledge, providing tangible examples allowing procurers to see in detail what LCPP

looks like in practice. The European Commission refers to the package as “a rich and

comprehensive set of activities are implemented such as a tender database, national

networking events, a one-stop information platform or the establishment of an online

GPP helpdesk. Starting early in the project in identifying those concrete activities was

crucial for the interim success” (European Commission, 2016).

Informational databases

A key outcome of the GPP 2020 project has been the development of a tender

model database; a collection of best practice examples of low-carbon public

procurement that have been supported through the initiative. The database is publicly

available to procurers and the public through the project website, with new low-carbon

tender models published within a few months of each new tender being completed.

This tender model database represents a valuable tool that can enable greater uptake

of LCPP.


One characteristic of this database that makes it a valuable tool for procurement

decision-making is that each tender model is presented in a short case study format

intended to convey key information to other procurers so that successful tender models

can be easily replicated. Each document provides details of the tender, including key

contract details, procurement methods, calculation methods, outcomes, and key

lessons learned. Additionally, the database is searchable by project type (goods,

services, or works) and by product type (e.g. lighting, printers, vehicles, etc.).

Participant-H said that the project had delivered added value by collecting these cases

to be used for inspiration and education in other regions.

The information in these tender models can be used by public authorities to

facilitate LCPP. For example, it could help identify potential products and projects that

could be suitable to procure or trial. In the words of Participant-D “it is a really useful

resource for public authorities to make the business case.” The tender model

documents typically contain calculations of saved electricity, carbon, water or other

resources, which provides valuable information that allows procurers to identify high-

performance products and to estimate potential financial and carbon savings and how

they might perform in their region.

Many of the tender models in the database are for small tenders that have been

piloted by one of the participating public authorities, however they provide an

indication of the potential scale of emissions reduction that could be achieved if the

tender was scaled up or implemented in a larger agency. As Participant-D explains, “if

you go into products and click on ‘paper’ (you can view) one case of the purchase of

100% recycled paper, saving 2 tCO2e. Then you can click on something else like

vehicles, and you get big volumes and big figures, and you get a sense of where it

really matters in terms of looking into low-carbon procurement. You can make your

priorities, if you want to make priorities”. This sort of information can be helpful for

government entities wishing to identify priorities for low-carbon procurement, such as

focusing first on cost-effective procurements that deliver significant carbon

reductions.

Development and promotion of tools and calculators

The GPP 2020 project developed a number of calculators to assist low-carbon

procurement decision-making. The calculators are built as simple spreadsheet tools

that are freely available through the GPP 2020 project website. Tools were developed


for building energy performance contracting, office and ICT equipment, vehicles and

street lighting. Additionally, methodology guidelines were developed to explain the

procedure for calculating carbon savings. These are discussed further in the following

sections. The existence of these tools overcomes some skills barriers, since procurers

just need to plug in a few figures and the calculator performs the calculations.

The calculators can assist low-carbon procurement decision-making at different

stages throughout the procurement process. For example, during initial tender

development when tender criteria are being established, the calculators can be used to

compare various alternative options that might be available to a public authority. This

helps inform the decision-making process by giving decision-makers access to

information on potential energy and carbon savings at a crucial time in the decision-

making process. Procurers can then use this information to refine tender criteria and

specifications to facilitate greater carbon reductions. In the words of Participant-C

“you can compare the actual situation with your low-carbon requirements and the

offers you get from the tenderers…. when you’re trying to compare different options

and you can see very clearly with the calculator that normally the low-carbon options

are also saving energy and money”.

Once tenders have been awarded, the calculators can be used during the

subsequent tender evaluation stage and in subsequent reporting phases to compare the

performance of the procured option to a reference case or previous tender. This can

help government agencies to estimate the reduction of greenhouse gas emissions

achieved through the procurement, if desired. Participant-C explained “it’s also useful

after the tendering process when you are preparing the results. In the Tender Models

we calculate the difference between the old contract and the new contract, and then

these calculators are very useful because you try to calculate it the same way in the

different countries and circumstances” (Participant-C). Publishing these tender models

on the GPP 2020 public website also allows other government entities and even private

sector organisations to see what was procured, how it was procured, and what

difference it made to sustainability performance. This could assist with overcoming

skills and knowledge barriers to help mainstream low-carbon procurement.

An internal helpdesk was made available for procurers to provide assistance with

tasks such as calculating emissions reductions and defining appropriate baselines from


which to compare outcomes (Participant-D). Low-carbon procurement is an emerging

space that requires the development of new knowledge and carbon skills. Procurers

don’t necessarily have the existing knowledge or skill set to undertake low-carbon

public procurement, so some assistance is critical to overcoming barriers. This access

to technical experts can help overcome many of the skills barriers that limit the ability

of agencies to undertake LCPP.

There are some limitations to the use of the GPP 2020 calculators in the

procurement process. In particular, the calculators cannot be used during the award

phase. Procurement regulations within the European Union prevent discrimination of

foreign providers, and since transport-related emissions could have a significant

impact on the overall carbon performance of the tender the calculators cannot be used

to inform the award decision since this would be deemed to be discriminatory (ICLEI,

2013b). This is an issue with the EU procurement regulations, rather than an issue with

the calculators, and it could be argued that this rule may need to be addressed in future

as efforts to reduce emissions become more concerted.

A second limitation is that the GPP 2020 tools do not always account for life-

cycle emissions, particularly emissions caused during production and disposal. The

decision to limit the scope of the tools solely to the operation phase was made due to

budget limitations of the GPP 2020 project and in order to make the tools easy to use

for average procurers (ICLEI, 2013b). Since a significant portion of emissions can be

generated during the production and disposal stages of product life-cycles, this is an

important limitation to be aware of. However, since LCPP is an emerging competency

that is still in the early stages of evolution, the development and dissemination of these

calculator tools arguably still makes an important contribution to the further

development of low-carbon procurement methodologies.

In addition to developing novel calculation tools, the GPP 2020 project also

promotes the use of existing tools wherever feasible. Some key existing calculators

and tools promoted by the program include the DuboCalc tool (for infrastructure), the

Energy Star ICT calculator (for ICT), the EPC calculator (for buildings), and third-

party Environmental Product Declarations based on European product category rules

(ICLEI, 2013b).

Participant H believed that the project had helped to increase the use of existing

tools, but that more uptake was necessary: “I think basically there were tools available


(previously), but not used enough. To a limited extent the GPP 2020 project has

increased the use of these tools, but we still need to do better.” Regardless, increasing

awareness of such tools can help to overcome knowledge barriers preventing or

limiting LCPP.

The DuboCalc tool was developed by the Dutch Rijkswaterstaat for use in

infrastructure projects. The tool is designed to encourage tendering parties to identify

opportunities for carbon reductions by offering a bid price advantage tied directly to

carbon savings. Absent this incentive to identify carbon reduction strategies it is likely

that low-carbon opportunities may not have been identified or prioritised. The

DuboCalc tool was used in the procurement of several projects, including the

procurement of a section of motorway in the Netherlands. The DuboCalc tool helped

identify opportunities for carbon reductions, such as through innovations in road

surfacing materials that delivered life-cycle emissions reductions compared to a

standard approach. It is estimated that the project will deliver carbon emissions

reductions of 8,944 tCO2e over the life-cycle of the road section compared to a

reference design (van Geldermalsen, 2015). The procurement approach was designed

to “ensure that bids that aim for lower CO2 emissions and high environmental quality

are preferred” (ICLEI, 2014b).

The CO2 Performance Ladder (CO2PL) is an emission management tool

developed by The Foundation for Climate-Friendly Procurement and Business

(SKAO) in the Netherlands. The tool is intended to improve the carbon performance

of companies, both in internal business operations and throughout their supply chains.

Performance is determined under four categories: insight, emissions reductions,

transparency, and participation. The scheme includes a certification and audit

component, and companies can be certified for achieving a given level of performance.

The tool can be incorporated into the procurement process to confer an advantage to

companies who perform higher on the Performance Ladder. As companies reduce

energy use and improve their carbon performance they gain extra ‘rungs’ on the

Performance Ladder. Actions taken by the company to reduce carbon can be

undertaken after the contract is awarded. The tool can therefore be used in the award

phase of a tender to influence the carbon performance of the provider.


An example of the use of this tool in the procurement process is the Dutch

Rijkswaterstaat agency, which used the tool on several tenders to favour providers who

pledged to reduce emissions in their business operations through the CO2PL tool. They

awarded a fictional discount of 1% of the tender price for every rung on the CO2PL a

provider was able to achieve. When the tender was awarded, the CO2PL performance

target became part of the contract (van Geldermalsen, 2014). Compliance with the

pledged CO2PL performance targets is then verified through SKAO. Formalising the

CO2PL ambitions in the tender contract conditions helps to ensure that the emission

reductions are actually achieved.

Monitoring, reporting and verification systems

Departments and client agencies often lack the skills and knowledge in-house to

monitor and verify outcomes. There were a number of formal and informal strategies

in the GPP 2020 program that helped to reduce these barriers somewhat.

Outsource MRV responsibilities:

One way of overcoming skills barriers is to outsource monitoring, reporting and

verification (MRV) tasks to a third-party. Whilst this was not an intentional strategy

in the program specifically to overcome MRV barriers, two program characteristics

did result in various MRV tasks being outsourced. These were 1) the use of the EPC

procurement method in some tenders; and 2) the use of existing tools to help report

emissions. A number of GPP 2020 tenders used an EPC process which typically had a

standardised MRV process based on the International Performance Measurement and

Verification Protocol (IPMVP). EPCs are discussed in detail previously in Chapter 5,

so this information is not repeated here. The promotion of existing tools is discussed

above in Section 6.2.3 so this information is not repeated here.

Avoiding undue complexity

The main purpose of the GPP 2020 project is to encourage procurers to try LCPP.

At this early stage of low-carbon procurement uptake where the main focus is on

increasing awareness of low-carbon tendering and trialling different strategies, the

GPP 2020 initiative made the decision to reduce the complexity of monitoring and

reporting to a practical level. Since the CO2 savings are being sought predominantly

to demonstrate the LCPP practice the project consortium were not overly concerned

with meticulous data and calculation methods. The calculations typically rely on a


number of assumptions, but since it is not critically important to have a high degree of

accuracy it was deemed to be an unnecessary complication to pursue it. In summary,

the GPP 2020 project partially overcomes the MRV barrier by simply reducing the

complexity as much as possible.

Participant-D explained that this was one strategy that contributed to the success

of the initiative: “It’s quite simplistic in terms of the design of the project, but maybe

that’s also one thing that makes it so successful. It’s a very simplistic project design -

It doesn’t have a whole complicated scientific baseline, assessment of LCA, with also

some social criteria in there. No, it’s quite straight forward; it’s focussed. It makes it

a bit different from other initiatives”. The interviewee also highlighted that future

stages of the initiative could potentially incorporate a higher degree of monitoring and

verification, if the initiative timeframe would be longer “the calculations are based on

assumptions. They are not based on real monitoring data. That would be a nice step

to include for the next time, and make it a five-year project”.

Facilitating flexibility

GPP 2020 project involves 100 tenders across many different sectors. It would

be likely be inappropriate to have a single method of evaluating CO2 reductions. In

some instances it is easier to compare CO2 savings to a previous tender, particularly

when the new product or equipment has a high degree of similarity to one previously

used. In other situations, such as when a procurement has a high level of complexity

and uniqueness, it is less appropriate to attempt to compare CO2 savings to a previous

tender. In this case it made sense to compare CO2 savings to a reference case

designated by the procurers with assistance from industry. Allowing some degree

flexibility can therefore be a useful strategy for helping to kick-start the LCPP process,

using whichever approach is most appropriate in a given situation.

Additionally, allowing the use of assumptions to simplify the process where

appropriate can be a useful strategy. In the words of Participant-C “this discussion

about measuring the results is very complicated. But we’re trying to do it accurately,

but I think it’s not an exact result that we have. And everybody knows that – it’s trying

to estimate as best as we can”. This acknowledges that it's difficult to get an exact


figure, so just making assumptions and simplifications and using calculators to get an

approximate figure is appropriate at this early stage of uptake.

Low-carbon procurement guidelines

In order to assist procurers with emissions and energy reduction calculations, the

GPP 2020 project developed calculation methodology guidelines. Supported by

“Comprehensive tutorial videos providing step by step guidance on how to use the

GPP 2020 calculators.” (ICLEI, 2016b). The calculation methodology attempts to

estimate emissions with a reasonable degree of accuracy while using a calculation

process that is simple enough and affordable enough for a typical government agency

to perform (ICLEI, 2014b). These are supported by a “series of practical fact sheets

giving hints and tips on implementing low carbon tenders within selected sectors”

(ICLEI, 2016b). These hints and tips can act as support materials for the guidelines,

providing agencies with an example of how they have been applied.

6.2.4 Skills and knowledge strategies and characteristics of the program

In the survey, ‘skills and knowledge’ rated highly as a barrier to government

departments undertaking more low-carbon procurement. The highest-rated

skills/knowledge barrier items were ‘Lack of skills within my department/organisation

to monitor carbon performance of projects during operation’, ‘Lack of knowledge

within my department/organisation about low-carbon goods/services/works’, and

‘Lack of skills within my department/organisation to develop effective low-carbon

tender criteria’.

A key strategy in encouraging increased uptake of low-carbon public

procurement practices is the development of low-carbon skills and knowledge. The

primary goal of the GPP 2020 initiative is to mainstream low-carbon procurement

throughout Europe, and the GPP 2020 consortium identify the development of low-

carbon skills and knowledge as central to achieving this goal (ICLEI, 2014a). This

section considers the GPP 2020 program in light of these key barriers, and highlights

key program elements and characteristics that can inform strategies to overcome these

barriers.

Replicable best-practice tender models

One strategy that has been used to support this outcome is the development of

best-practice low-carbon tender models, which are published on the GPP 2020 website


after each new tender is completed and awarded. Each tender model provides details

of the low-carbon tender awarded, including contract details, procurement methods,

outcomes, and key lessons learned. Models provide valuable information and

approaches that can help overcome two key barrier items ‘Lack of knowledge about

low-carbon goods/services/works’, and ‘Lack of skills to develop effective low-carbon

tender criteria’

The tender model database is publicly accessible and searchable by category.

Tenders are arranged under three categories; products, services, and works. Searching

the ‘products’ database allows the user to see all the low-carbon tenders that have been

undertaken as part of the GPP 2020 project organised under key themes such as

vehicles, computers, printers, whitegoods, electricity, and so on. The user can then

view and download the full tender model that summarises the key details of the tender,

such as the product/s purchased, key contract details such as low-carbon criteria

development, and the estimated energy and carbon savings that were achieved.

The tender models database is a useful resource to help overcome skills and

knowledge barriers by providing best practice examples for other procurers to learn

from and draw upon. According to Participant-C this was a “very important aspect

why this project has been successful”. It provides procurers with tangible examples of

what low-carbon procurement looks like in practice, and ideas about what sort of

products and services exist in the market that may be appropriate to trial in their

agencies. In the words of Participant-D “the more and more it gets known and there

are cases that show it’s practical, and it’s done, the less and less people can say it’s

too much to do”.

Training and networking events

The GPP 2020 project includes many training seminars and networking events.

The training seminars are directed at procurement professionals, procuring

organisations and procurement training providers and are delivered in two types of

events: ‘Train the Trainer’ (TtT) and ‘Train the Procurer’ (TtP) (ICLEI, 2014a). The

seminars were provided across the eight European target countries (Austria, Croatia,

Germany, Italy, Netherlands, Portugal, Slovenia, and Spain). The aim was to

“establish permanent support structures on low-carbon procurement across Europe”

(ICLEI, 2016a).


In order to evaluate the effectiveness of the training events, the GPP 2020 project

sets key performance indicators of follow-up activities. In particular this involves

determining an objective for the number of training events and procurement

professions attending. Key performance indicators were incorporated into the program

planning from an early stage (Participant-C). Targets for the three-year program were

to conduct 36 TtP sessions with at least 540 procurers, and 13 TtT sessions with at

least 130 trainers. This target was achieved, with 670 people trained (ICLEI, 2016b).

This reinforces the importance of setting KPIs and linking them to objectives.

Such activities can facilitate ‘normative’ and ‘mimetic’ isomorphism as they

help to create accepted norms for LCPP practices and also provide a template of

knowledge and practices that other procurers and organisations can mimic and adopt.

Both pressures help to increase the uptake of LCPP firstly among the participating

procurers, but also amongst wider networks in other organisations and jurisdictions

through the effect of networks.

Follow-up activities

A key characteristic of the GPP 2020 project is the inclusion of follow-up

processes that have been implemented as part of the training activities. Following the

‘Train the Procurer’ and ‘Train the Trainer’ events, the GPP 2020 project team

followed up with participants to check that they were implementing low-carbon

criteria and practices that they learned into their organisation’s future tenders and

training events. Follow-up activities were also conducted for trainers who have

participated in the ‘Train the Trainer’ seminars. This was done in order to encourage

procurement trainers to include part of the GPP 2020 materials in their own training

packages. Follow-up occurred approximately one year after participation in the

training event, to give attendees time to incorporate the new knowledge and

information into their activities.

In the view of Participant-C, participating in only one training event is not

enough to change procurement practices, so the follow up activities help to reinforce

the knowledge and behaviours. In doing so, the follow-up activities help to increase

the overall impact and influence of the GPP 2020 project. Strategies such as these

encourage the uptake of LCPP practices while also helping to reinforce the normative

pressures that can keep organisations invested in adopting LCPP behaviours. They can

also be regarded as mildly ‘coercive’, as procurers know that they will be followed-up


with to check if they implemented what they learned, thus it adds some pressure to

adopt the behaviours.

Technical assistance and support structures/activities

Low-carbon public procurement is an emerging competency, and procurement

staff don’t necessarily have the existing knowledge or skill set necessary to undertake

LCPP effectively or efficiently. It is therefore likely that implementing LCPP will

require the development of new skills and knowledge amongst procurement staff, such

as carbon management skills and knowledge of life-cycle analysis methods. The GPP

2020 project identifies training and capacity building as imperative for the

mainstreaming of low-carbon procurement so include these as key areas of focus for

the initiative.

Helpdesk technical assistance:

An important component of the GPP 2020 project was the provision technical

assistance for procurers. Low-carbon procurement is an emerging space that requires

the development of new knowledge and carbon skills. Procurers don’t necessarily have

the existing knowledge or skill set to undertake low-carbon public procurement, so

some assistance is critical to overcoming barriers.

The GPP 2020 project incorporated technical assistance elements which were

delivered in three key ways; 1) the creation of a low-carbon procurement helpdesk; 2)

the development of support structures; and 3) the facilitation of ‘communities of

practice’. These are discussed further below. The GPP 2020 project developed an

internal helpdesk that procurers could contact for assistance with low-carbon

tendering. Through the helpdesk, procurers have access to technical experts that can

inform various stages of the procurement process, such as defining appropriate

benchmarks to measure performance and outcomes and assistance to calculate the

resulting financial savings and emissions reductions (Participant-D). This access to

technical experts can help overcome many of the skills barriers that limit the ability of

agencies to undertake LCPP, particularly barriers related to skills, knowledge, cost and

time.

Secondly, the GPP 2020 project provided funding to assist with tender

evaluation and reporting, which helped overcome resource-related barriers,


particularly related to the skills, time and cost required to undertake MRV activities.

Participant-C stated that “the program has helped with resource-related issues. So for

example having more time to work on tender evaluation…. “This gives each of the

departments the resources to put a tender model together at the end and say ‘this is

how much we saved’, and to do the calculations of energy and carbon saved”

(Participant-C). Participant A agreed it had helped, stating “it gave us the opportunity

to actually evaluate the effectiveness of the approach/ method and to calculate the

amount of reduced CO2 emissions in the projects”. These are activities that

procurement staff generally would not have the time or resources to accomplish, but

which are necessary at this stage to evaluate and communicate to decision-makers

about the benefits delivered.

Facilitating knowledge sharing and building communities of practice:

An interviewee discussed the development of ‘communities of practice’ in

municipalities that were identified as not undertaking much low-carbon procurement.

The National Support Partners worked with the municipalities to assist with the

incorporation of carbon efficiency considerations in some of their existing tenders.

This demonstrates the influence that such programs can have outside their intended

scope of influence – transferring skills and influence from national governments to

local governments.

Networking opportunities internally and externally regarding potential mutual

benefit program opportunities and improvements. It can provide a platform for the

exchange of best practices. By facilitating the building communities of practice, it can

generate internal momentum between jurisdictions and regions that might otherwise

not have much interaction on the subject. It allows people with a natural passion and

interest in the benefits such as sustainability etc. to share ideas, help others and build

on the success of each other. One interviewee discussed building communities of

practice between different levels of government and the national support partners: “we

identified that some municipalities… were generally not very active in green

procurement – so we started a Community of Practice with seven municipalities… and

we worked through some tenders they were working on to help them make their tenders

more carbon efficient. The Community of Practice, it works very well”. This again is

another ‘soft’ strategy that appears to be a focus of the initiative; increasing the uptake

of low-carbon procurement by helping to establish communities of procurers and


interested stakeholders that are helping to spread awareness beyond the initial

participating organisations.

Such strategies could be classified as ‘normative’ pressures within Institutional

Theory. Creating communities of practice helps to spread an awareness and even an

expectation that LCPP practices should be adopted. Additionally, it can facilitate

further mimetic pressures, where new stakeholders can pick up the skills and

knowledge used by early adopters and use these as a template for adopting LCPP

practices in their own organisations. In this way, knowledge sharing is a key strategy

to increase the uptake of LCPP more widely.

This also helps to highlight that ‘soft’ strategies such as knowledge sharing and

facilitating communities of practice help to reinforce the development of the ‘hard’

technical strategies and can lead to good outcomes for government and industry. This

high level of knowledge-sharing and capacity building appears to have helped

contribute to greater awareness and knowledge about LCPP practices, with key

activities being the development of support structures, formal and informal knowledge

sharing, and networking to build communities of practice.

Pilot projects to improve knowledge of LCPP

The use of pilot projects may be a useful strategy to facilitate low-carbon

procurement skills and knowledge development. Pilot projects may help improve

understanding of what LCPP looks like in practice, while keeping tenders relatively

small and manageable. Often low-carbon outcomes can be achieved with readily-

available products, which procurers may not have realised could mitigate emissions…

“It’s about convincing people to make use of existing technologies, and assess them,

and pilot them.” (Participant-D)

In addition to trailing new products, pilot projects can also be used as an

opportunity to trial new methodologies, which is essential at this early stage in order

to assess effectiveness and to communicate the benefits. For example, life-cycle

costing (LCC) methods were used in many GPP 2020 tenders, including many small-

scale and pilot size tenders. Participant-A stated that “it took us a while and it took us

some pilot projects to show that it worked, and also to show that it makes a difference

in tendering, because you can get a better tender. First they thought it would only

become more expensive, but then we found out that once you take the electricity price


into account it became cheaper sometimes”. This was reinforced by Participant-D who

discussed the use of a pilot project and LCC to evaluate the purchase of electric police

scooters, stating that “this type of electric scooter was a bit more expensive than the

other ones, but they realised that over a longer time it’s more cost effective.” By

exposing procurers to sustainability methodologies such as LCC through pilot projects

it can increase familiarity with these new methods and facilitate skill development.

Unless procurers are exposed to sustainability tools and methods they will not

become confident in applying them. In the words of Participant-D, “if you’re not used

to life-cycle costing this will always remain a barrier.” There is a general lack of

knowledge about the potential economic and environmental benefits of low-carbon

public procurement at a political level. One interviewee described the value of

communicating the results to political decision makers… “When we prepared the first

tender of the GPP 2020 project and we prepared this case study with the results, which

was something like 17% reduction of energy or carbon, we presented it in this edited

form. It was really something that at a political level was much appreciated. And we

never did that before, before the GPP 2020 project, to communicate the results of one

tender in this way. (Participant-C)”. Communicating the benefits to decision-makers

can help to increase awareness and understanding, which can facilitate uptake of

LCPP.

6.3 CHAPTER SUMMARY

In this chapter the GPP 2020 program was investigated as an example of a public

procurement program delivering low-carbon outcomes. Important program strategies

and characteristics were discussed with respect to the transferrable lessons they could

provide to inform similar future initiatives. Of particular interest was the insights the

GPP 2020 program and the key stakeholders interviewed could provide regarding

opportunities to overcome key barriers currently limiting the uptake of LCPP practices,

particularly barriers that survey participants rated as being significant.

Chapter 7: Discussion 183

Chapter 7: Discussion

This chapter discusses the key barriers and opportunities for implementing low

carbon public procurement within the lens of Decoupling Theory. It draws on the

findings of the literature review and document analysis (Chapter 2), survey (Chapter

4) and two case studies (Chapters 5 and 6) explored through this dissertation.

Specifically, the chapter addresses the problem of facilitating transitions from

business-as-usual through to peaking and tailing greenhouse gas emissions from public

procurement spending within the context of the building sector. This includes an

exploration of:

− Five factors conducive to successful low-carbon public procurement

initiatives for achieving greenhouse gas emission peaking and tailing

outcomes (Section 7.1)

− A conceptual model for implementing low-carbon public procurement in a

decoupled environment (Section 7.2)

In the first part of the chapter the two case studies are discussed with regard to

how lessons learned can inform future approaches to low-carbon public procurement.

Comparative analysis of the case studies undertaken to explore their key characteristics

and to highlight areas of alignment and divergence, both within and across the different

contexts. Leedy and Omrod (2015) and Vohra (2014) suggest five key steps as a good

foundation for the analysis of qualitative research based on research by Creswell

(1998) and Stake (1994). The five steps include Organisation; Categorisation;

Interpretation; Identification of patterns; and Synthesis. These steps were followed

with each of the case studies to organise, categorise and interpret pertinent information.

Patterns were identified within and across the two cases and helped to guide synthesis

of the results, leading to the distillation of emergent strategies and factors seen to be

conducive to program success. In the second part of the chapter the various approaches

for low-carbon public procurement (LCPP) are brought together through a new model

of LCPP program success that was used to help synthesise key lessons learned.

184 Chapter 7: Discussion

Recommendations are also made with regard to potential improvements for future

programs in Australia and internationally.

7.1 FACTORS CONDUCIVE TO LCPP PROGRAM SUCCESS

The following sections present a suite of factors that are concluded to be

conducive to program success, identified through the analysis of survey responses,

interviews and document analysis findings in the previous chapters. As summarised in

Table 13, these ‘success factors’ are organised under five groupings, comprising

‘Management and planning’, ‘Program design – Financial’, ‘Program design –

Skills/knowledge’, ‘Engaging departments’, and ‘Engaging supply chains’. Each

factor is discussed in relation to its observed impact on the success of the case studies

and the potential to influence successful LCPP programs, where:

• Factors: are the five intentional components that are conducive to successful

LCCP program outcomes.

• Strategies: are the 24 individual actions within the factors that contribute to

the success of the program.

Characteristics: are features and qualities of the strategies, observed from the

survey, document analysis and case study investigation.

Table 13: Factors and Strategies conducive to LCPP program success

Factors and strategies Key characteristics

Factor: Management and planning Planning strategically - Aligned with considerations like future planned

capital expenditure - Across all departmental facilities/portfolios

Leveraging institutional influence

- Program leadership from central department with authority - Mandates for participation

Involving decision makers early - Front-loading the engagement from key stakeholders - Leverage experience of senior staff

Supporting program champions - Individual or team, internal and external to the department - Experience across industry & government to drive implementation

Setting effective objectives & targets

- Designing measurable objectives & targets - Utilising input targets and output targets as appropriate



Framing the ‘why’ - Flexible to adjust to political changes and restructures - Includes messages regarding sustainability, energy, cost, emission reductions

Harnessing policy and regulation

- Feeds into externally relevant policies and regulations - Clearly communicates and reinforces the program’s relevance and priority

Factor: Financial Facilitating access to capital - Openness to consider a spectrum of financing

opportunities - Contributes to business case, minimising impact on cash flow

Choosing best procurement approach

- Choose a procurement approach appropriate to size & complexity

Matching payback periods to long-term public value objectives

- Longer payback periods facilitate deep retrofits through whole system design - Procurement award decisions account for full life-cycle costs

Valuing and leveraging co-benefits

- Co-benefits valued in decision-making, balance financial and environmental outcomes - Account for value-for-money benefits of CO2 mitigation and energy efficiency

Facilitating whole-system outcomes

- Identify opportunities for deep-retrofits through whole-system design retrofit - Use procurement approaches that create whole-system design opportunities

Factor: Skills and knowledge Simplifying decision-making - Reduce complexity to participate in program

- Support with clear guidelines and templates Sharing knowledge - Integrate technical and communication strategies for

knowledge sharing - Formalising knowledge transfer opportunities both departments/industry

Supporting internal skills - Invest in departmental skills, ensuring engagement with senior staff - Training includes follow-up to check implementation of practices

Outsourcing some technical expertise

- Industry contribution for program-critical activities and knowledge - Leverage existing tools and programs, incorporate, collaborate

Factor: Engaging departments Aligning incentives - Considers shared savings - Agencies implementing

the program receive a share of financial dividend/benefits (addressing split incentive dilemma)



Building communities of practice

- Networking opportunities internally and externally regarding potential mutual benefit program opportunities and improvements

Providing seed funding - Catalyses innovation through kick-start and ‘base-load’ funding for programs - Funding is potentially cash-flow neutral (loans)

Developing pilot projects - Gives departments/agencies experience of LCPP in practice, from new-tech proof of concept to deep-retrofits through whole-system-design

Factor: Engaging supply chains Committing to program consistency

- Committing as much as possible to consistent programs - Build relationships and trust with industry, enhancing engagement

Streamlining processes - Provide standard templates, processes, methods, with pre-qualified panels - Minimise bureaucratic delays. Clear linkage of objectives, targets, mandate

Signalling future intentions - Clear project pipelines allowing for planning and up-skilling - Long term connection with regulation, policy, and professional capabilities

Influencing wider supply chains - Consider providing incentives to engage supply chain in emissions reduction

7.1.1 Management and planning

This section compares and contrasts important success factors of the two case

study programs with a focus on program strategies and characteristics related to

strategic leadership and vision. It includes strategies such as facilitating program

champions, setting effective objectives, and strategic planning. These were identified

to have had a key impact on the success of case study programs and projects.

The United Nations Environment Programme states that in order to become more

sustainable, significant innovation will be necessary, including innovation in systems

of knowledge, of behaviour, and of managerial and organisational practices (United

Nations Environment Programme, 2011). The following section details a number of

such innovation areas and presents the unique ways that the two case studies managed

to achieve such innovation.


Planning strategically

Strategic planning refers to higher-level activities and management practices that

help to set priorities and ensure resources and operations are focussed towards

achieving intended outcomes. Strategic planning was an important strategy associated

with success of the case study programs that were investigated.

A key strategic planning strategy for optimising LCPP programs is to identify

opportunities to closely align projects with future planned capital expenditure. This

requires more forward planning to identify opportunities to coordinate large upcoming

capital expenditure with other LCPP opportunities. This can also assist departments to

identify opportunities for deep retrofits, where multiple building systems can be

upgraded with a whole system design perspective potentially delivering larger

efficiency improvements, carbon savings and long-term value for money.

The GGB program required departments to develop Strategic Implementation

Plans (SIPs) detailing how their facilities and properties would be incorporated into

the program and how the participation targets would be met. These SIPs were

mandatory and covered all department portfolio agencies. The SIPs helped identify a

strategy for program implementation to ensure interim and final participation targets

were met. Similarly, the GPP 2020 program incorporated various strategic planning

strategies to help guide the overall program and contributions from participating

government agencies. Key performance indicators were identified for the program

from an early stage and linked to activities throughout the program’s three-year

timeline. Various objectives were set at an overall program level (e.g. number of

tenders, number of training events, etc.) and within individual participating

governments and departments (e.g. number of projects committed), and this helped to

guide program design and implementation. The overall program linked back to higher-

order EU goals of reducing emissions by twenty per cent by the year 2020, helping to

provide strategic guidance and add further legitimacy to the program.

Leveraging institutional influence

A key success strategy for low-carbon public procurement initiatives is to have

the program lead from within a department or organisation with a commanding

institutional influence. This helps to bolster the legitimacy and authority of the

program, and helps with setting mandates and targets. Centralising LCPP leadership


in such a way could assist with the uptake of LCPP across all departments. Suitable

choices within the context of a state government could include departments such as

Department of Treasury, Department of Premier and Cabinet, or Department of Public

Works. Such departments often have experience in collaborating across departments,

and often have experience in building-sector procurement. In contrast, departments

outside these central agencies may have less institutional influence and less experience

with large procurements.

Setting strong mandates also has an important enabling influence on the

development of skills and knowledge within departments. If procurement staff are

required to participate in the process and if that becomes part of their role they will

become more familiar with the skill-set required to undertake low-carbon and energy-

efficient procurement. If these incentives are absent procurement staff are less likely

to engage with the concepts and practices necessary to put low-carbon procurement

into practice. Having clear mandates meant that the GGB program was well-designed

from a policy perspective due to the clarity of the policy position, which removed

ambiguity for departments. There was a clear statement regarding mandates for

participation and a well-defined process for participating. Such clarity helps to remove

barriers for departments regarding how and when to engage with the initiative, and

what actions are required of them.

The Energy Efficiency Council, Australia’s peak body for the energy efficiency

industry, recently stated in their 2016 Energy Efficiency Policy Handbook that

mandates were a key strategy for increasing the uptake of efficiency projects, calling

for “a mandate on agencies to identify energy saving opportunities in their buildings

and invest in projects that meet pre-determined financial criteria” such as

predetermined internal rate of return. The Policy Handbook highlights that “the

incentive across government to invest in efficiency upgrades is much stronger than the

incentive for individual agencies, as agencies focus on their key indicators and

treasuries typically recoups recurrent savings” (Energy Efficiency Council, 2016).

This is backed up by a key document co-authored by the Government Property Group,

which states that successful government efficiency programs should incorporate

mandates as a key characteristic.

These various drivers for increased focus on energy savings and emissions

reductions can be viewed through a lens of Institutional Logics, with various structures


and influencers helping to create cultural forces that spur change. And create pressure

to adopt LCPP practices. The lead department for the GGB program was the

Department of Treasury and Finance, which has a coercive influence over other

departments, which added authority to the targets that were set. Within Diffusion of

Innovation theory (Rogers, 2003) this aligns with the attribute ‘management

hierarchy’, referring to the influence of management orders to adopt new practices and

technologies.

Creating roles within a centralised department to engage with agencies in

everyday procurement would help leverage this institutional influence further and to

create an additional level of innovation-push within the procuring organisations. For

example, creating a position within a central department for a procurement manager

with the role of managing and aligning carbon and energy efficiency objectives across

all State government procurement. In the GPP 2020 program an interviewee discussed

the creation of a ‘Category Manager’ position to manage the category of ‘carbon and

energy’ to identify opportunities for efficiency improvements across government

procurements. Having a ‘Category Manager for Energy and Carbon’ position to liaise

with could help facilitate LCPP at an agency and department level.

Involving decision-makers early

Early engagement of key decision-makers and senior staff was an important

strategy. Early engagement helps to streamline procurement processes and leverage

the experience of senior staff. By contrast, leaving this engagement too late in the

program development or too late in each individual project procurement can lead to

situations where key insights and objectives are not incorporated, which may result in

missed opportunities or significant redesign. In the GPP 2020 program the program

team worked closely with key stakeholders from participating government

departments to coordinate upcoming projects and identify opportunities to align these

with the wider program timeframes.

In the early stages of the GGB1 phase it seems that key decision makers were

sometimes not engaged early enough, on some occasions this was after a large

percentage of the detailed technical and engineering work had already been completed,

leading to delays in project implementation. This had impacts on project success and

engagement of industry, often leading to inefficiencies and frustration. However due


to good management and industry engagement practices this aspect was improved

quickly over the course of the program. This is therefore an important yet simple

element to prioritise and an important issue to consider in future program designs.

Supporting program champions

Having ‘program champions’ and an experienced support team with both

industry and government experience to help design and implement programs is an

important success strategy. Considering Diffusion of Innovation theory, this aligns

with the attribute ‘opinion leaders and change agents’, which act to influence

innovation decisions (Rogers, 2003)

Several GGB program interviewees discussed the experience of GGB program

manager as a significant enabler for the successful implementation of the program, and

commented of the value of his having industry and government experience. In the

words of an interviewee, having a program manager “with industry expertise but who

also understood how government functions, and to be able to bring those things

together, that was absolutely critical”. These sorts of personal characteristics are

supported by literature on the role and successfulness of organisational champions

(Taylor et al., 2011). The program manager has also been actively sharing knowledge

with other nearby jurisdictions, which is helping to increase the impact and uptake of

such programs in other regions.

Program champions need not necessarily be single individuals or teams, an

organisation can also function as a program champion, so LCPP initiatives should seek

opportunities to align with organisations that have a similar strategic interest. The GPP

2020 program had several program champion organisations including the ICLEI Local

Governments for Sustainability in addition to key organisations such as the European

Commission and others. These organisations provided critical support for the program

and helped spread awareness.

Within Australia the Energy Efficiency Council has functioned as another key

program champion since they are respected industry body with ties to the energy-

efficiency and low-carbon industry. The EEC advocated for the introduction of the

program in 2009 and then the reintroduction of the GGB program in 2016, and has

also advocated for the development of similar programs in other jurisdictions such as

New South Wales in 2013 and South Australia in 2015. This creates multiple


independent markets for the low-carbon industry to tender for, creating some stability

for industry and ensuring a more robust supply chain is available when government

requires services. In addition to helping to increase uptake of the program within

Victoria, both program champions were proactive in spreading awareness and sharing

key lessons learned with other stakeholders in other nearby States and jurisdictions.

Having a program champion can thus help to mainstream initiatives over a wider area

than the initial target region.

Setting effective objectives & targets

Both programs had clearly defined objectives and measurable targets, and this

was a crucial contributor to the success of both initiatives. The GPP 2020 program had

targets for the total number of low-carbon tenders that it aimed to facilitate over the

three-year period in addition to number of training events and success of support

activities for each year of the program. The initiative set internal key performance

indicators that were linked to these targets in order to track and measure progress.

The GGB program had specified short- and medium-term targets to commit

certain percentages of each department’s building portfolios to participate in the

program. Additionally, during the GGB1 phase of the program Department of

Treasury and Finance supported these targets with mandates for departments to

participate. The GGB program went through a period where the targets and mandates

were removed as well as the loan element of the initiative. Comparing annual reports

and other government documents it was observed that the removal of these program

elements resulted in the cessation of new projects. This suggests that these strategies

contributed significantly to program success.

Both programs adopted an approach of utilising input targets (as opposed to

output targets) to simplify the engagement process and help ensure investment was

directed at the most cost-effective projects likely to deliver efficiency savings. This

helped to make the program more cost effective. Government sustainability programs

often incorporate output targets, such as setting targets to reduce energy consumption

by a set percentage, however this can be inefficient and unnecessarily restrictive. In

contrast, setting input targets mandates that departments must participate in the

program, but does not place any requirement on a predetermined energy or carbon

efficiency improvement. Departments are simply required to participate in the program


and allow the methodology to determine the extent of efficiency improvements that

are possible in each individual facility or portfolio. This allows funds to be efficiently

directed to achieving cost-effective projects.

Framing the ‘why’

The politicisation around carbon can potentially be a barrier to program

instigation and longevity. As such, framing the ‘why’ of the program carefully can

contribute to program success. Large scale challenges such as climate change can

motivate governments and the public, however it can also be a potential risk for

programs. In the words of one participant who discussed the recent removal of many

sustainability initiatives in another Australian state following the election of a

conservative leader: “you get a (politician) who comes in to the picture and there’s not

even any process to work out what the program might be doing, it’s just like ‘this

sustainability stuff is a waste of time, so let’s get rid of it’”. Such occurrences appear

to be not entirely uncommon in Australian political cycles.

In the GGB program there appears to have been a shift in the level of support the

program received from within government during the EGB phase of the program. In

the prior GGB1 phase the program had strong bi-partisan support from major political

parties and was awarded the Premier’s Sustainability Award. During the EGB phase

there appears to have been a shift in the support for the program, including the removal

of references to carbon savings and environmental outcomes in project documents.

Instead the program wording was altered to focus on efficiency and cost savings. It is

possible the concept of carbon emissions and climate change may have become a

politicised issue in the State.

This raises an interesting potential barrier for similar programs that can

potentially be overcome through deliberate re-framing of the issue. In Diffusion of

Innovation theory, this aligns somewhat with the attribute ‘cultural values’, which

concerns the cultural beliefs (Rogers, 2003). In the case of the GGB program, re-

framing the program to focus on the efficiency savings may have helped the program

remain existing (if somewhat idle) throughout this period of uncertainty. Ultimately, a

societal shift in cultural values toward an overt valuing of climate change impacts is

needed, but in the meantime progress can still be made by focussing on the benefits

delivered by such programs within the accepted cultural values of the existing socio-

political environment; in this particular case, energy efficiency appears to have been


regarded as a valid goal by a broad set of government decision-makers from both

‘sides’ of politics.

Identifying and communicating the multiple co-benefits that could be delivered

by a LCPP program could help to facilitate flexibility to adapt to changing political

preferences. In terms of emissions mitigation it makes little difference if the program

is framed around efficiency improvements or carbon savings; the outcome is still a

reduction of emissions and energy consumption resulting in benefits to government

and society. This could be a useful intentional strategy to adopt in future initiatives.

Harnessing policy and regulation

An important success strategy for low-carbon procurement initiatives is to

identify opportunities to align wider legislation and policy in order to tie program

strategies to higher-order goals and objectives. In the case of the GPP 2020 program

the initiative was aligned with the European Union’s ‘Europe 2020’ Strategy, which

highlights climate change and energy efficiency as key challenges. Key goals include

reducing emissions by 20 per cent and improving energy efficiency by 20 per cent by

the year 2020. The Strategy promotes procurement as an important instrument for

fostering innovation to respond to these challenges (European Commission, 2010).

Within Australia the GGB program contributes to the forthcoming Victorian Energy

Efficiency and Productivity Strategy. In both cases the programs ensured they tied into

higher-level policy and regulation.

Aligning procurement initiatives with key international policies and initiatives

such as the Sustainable Development Goals (SDGs) will help contribute to the 2030

Goals for Sustainable Development. Governments who have committed to the SDGs

are expected to develop frameworks that can “facilitate the effective translation of

sustainable development policies into concrete action at the national level” (United

Nations, 2015). Aligning LCPP initiatives with such international efforts will

contribute to national actions while helping to build support and facilitate opportunities

for mutual benefits.

Likewise, aligning LCPP program with emerging carbon emission legislation

will be a strong enabler for uptake of low-carbon procurement practices. Australia

recently became the first developed nation to repeal carbon tax laws (Taylor and

Hoyle, 2014), which is a setback for the mainstreaming of LCPP. However


international movements suggest that carbon pricing is likely to become more widely

adopted. A price on carbon would unlock access to significant additional potential to

align low-carbon procurement with higher-order legislation and policy. Due to the

significant financial influence of government spending, procurement would be a key

mechanism to drive identification of emission reduction measures, which could then

be monetised and traded to recoup additional savings.

7.1.2 Program design – Financial strategies

This section discusses success strategies related to program design strategies

related to financial strategies. The literature review revealed that cost barriers are

frequently cited as key barriers to green and sustainable public procurement. Likewise,

the survey undertaken as part of this research (Chapter 4) identified numerous

important cost barriers that are impacting the ability of departments to undertake

LCPP. Nearly half of respondents thought ‘cost’ was a major barrier to procuring

goods, services or works with reduced carbon emissions.

Key financial barrier items reported by survey participants included ‘upfront cost

of low-carbon goods/services/works’, ‘cost to monitor/report the carbon outcomes of

projects during operation’ and ‘level of opportunity within value for money

determination process to account for carbon emissions’. Case study interview

participants agreed that cost barriers had often limited such projects from being

implemented prior to the introduction of the case study programs. The case studies

explored in Chapter 5 and 6 provide a number of insights into strategies that can reduce

these and other important cost barriers. Critical success strategies that helped to

overcome financial barriers in the two case studies are compared and contrasted below.

Facilitating access to capital

Access to capital is one of the most critical success strategies evident in the two

case studies. Many interviewees discussed the impact that the lack of access to finances

had previously had on the ability of agencies to undertake low-carbon procurement

activities prior to the introduction of the programs. In the GGB program, access to

capital (in the form of temporary loans from the Department of Treasury and Finance)

was a key enabling strategy that facilitated departments to undertake upgrade projects

across their building portfolios. When access to funding was removed it had a

significant negative impact on the implementation of new projects despite the


existence of a savings guarantee through the procurement model and the significant

cost savings demonstrated by previous contracts within the program which collectively

are estimated to deliver financial savings over the next 15 years of $335 million,

resulting in a net present value of $107 million (Government of Victoria, 2015).

Departments considering an efficiency upgrade project are typically required to

fund any such project out of their existing core budget. Typically, departmental

budgets don’t have significant surplus funding to pursue projects not considered

central to their primary function. Thus, any sustainability upgrade project needs to

compete with other day-to-day operational costs, meaning often these sustainability

projects are delayed or not pursued at all. Such sustainability upgrade projects may

often have significant upfront costs, and while many can repay themselves over several

years this nevertheless presents a significant barrier in situations where other more

immediate spending commitments often take priority.

To overcome these sorts of barriers both the GPP 2020 and the GGB program

made use of a procurement model called an Energy Performance Contract (EPC),

which is a procurement approach designed specifically to overcome funding barriers.

The strength of the method is that it leverages the skills of an expert energy services

company to identify the most cost-effective building upgrades, then acquires funding

on the basis of guaranteed cost savings that are subsequently used to pay for the retrofit

over the ensuing years. Since it is a low-risk strategy, it contributes to the business

case, which can help secure funding internally or through third-party finance (where

permitted by government policies).

The Energy Efficiency Council (EEC) recently highlighted the accessibility of

funding as a key issue in their Energy Efficiency Policy Handbook, stating that

“agencies need access to funds to pay for works, but are generally only allowed to

borrow funds from Treasury. Requiring each energy efficiency project to go separately

through a budget process increases administrative costs and creates delays that

undermine efficiency upgrades” (Energy Efficiency Council, 2016). This statement

from the EEC helps to reinforce that facilitating access to funding is critical to the

success of program uptake. The EEC’s recommendation is to “set up a system that pre-

approves funding for energy efficiency projects outside the budget cycle, as long as

the projects meet specified financial criteria” (Energy Efficiency Council, 2016).


In both the GGB and GPP 2020 programs interviewees discussed how access to

funding helped overcome various barriers related to aspects such as human resourcing

and capacity-building, technical assistance, and training activities. In the GPP 2020

program the inclusion of these strategies greatly facilitated the uptake of LCPP

practices across the eight target countries, helping to increase awareness and skills.

Funding also helped undertake follow-up activities to encourage participants from the

training events to incorporate what they had learned into the procurement practices of

their agencies. The funding provided staffing to develop the best practice case study

tender models for each of the low-carbon tenders that were facilitated through the

project, and to host these on a public website. This now acts as a database of invaluable

information and examples. The funding was critical in facilitating these outcomes and

overcoming several important LCPP barriers previously faced by governments.

Choosing best-fit procurement approach

Choosing a procurement approach that suits the size and complexity of each

specific project is an important strategy for making programs cost-effective. For

example, EPCs were the typical approach used throughout the GGB program and they

also featured prominently in the GPP 2020 initiative. The EPC approach is suitable for

large complex projects where the design solution is not immediately apparent, for

example in many complex facilities such as health facilities, hospitals and large office

buildings. The approach carries a price premium, which is justified for complex

projects and where monitoring, reporting and verification (MRV) are an important part

of project success, but this can add unnecessary costs to simple projects such as simple

lighting retrofits and projects for which MRV is not a key concern. Thus using such a

procurement method is appropriate in some, but not all, circumstances.

A non-EPC approach has been proposed in the upcoming phase of the GGB

initiative for a number of relatively simple projects (Department of Treasury and

Finance, 2013). These include lighting upgrades and solar photovoltaic installations in

educational facilities and various other government facilities which are deemed to be

appropriate. The non-EPC approach makes sense where the cost of the EPC process

would outweigh the benefits. It can reduce project complexity and cost by avoiding

elements such as the monitoring and verification which are inherent in the EPC

process. This is a sensible strategy for improving the cost-effectiveness of projects.

However, there should be an appropriate level of consideration given to the suitability


of this approach since there could be missed opportunities for carbon and energy

savings if upgrade projects are limited only to measures such as lighting upgrades.

Bundling contracts can enhance cost-effectiveness of projects. Low-carbon and

energy efficiency retrofit projects may often require numerous small installations,

maintenance and operational adjustments, that if tendered for separately would require

many individual contracts, often with different contractors. The result is that it is often

too cumbersome and administratively complex to procure numerous small contracts.

The benefit of using a model where numerous small contracts can be bundled is that

these myriad small projects can be rolled together into a single contract, making it

simpler and more cost-effective to manage and implement. Importantly, this approach

also facilitates a ‘whole-system’ approach, so that interrelated systems within the

building can be designed and finely tuned to operate at maximum efficiency. In

contrast, if these myriad small projects are tendered for separately there is significantly

less potential to design and implement a whole-system solution.

In the GPP 2020 program many contracts were awarded with a simple ‘lowest

upfront cost’ approach, and a small number were evaluated using the ‘most

economically advantageous tender’ (MEAT) and some with linked contract stages.

The majority of the ‘lowest price’ contracts were for relatively simple tenders such as

recycled paper and ICT equipment (as opposed to complex projects such as

infrastructure or energy performance contracts). Whilst the ‘lowest price’ method does

not commonly result in improved sustainability performance, it is the specific way the

approach was used in the GPP 2020 tenders that help facilitate low-carbon outcomes.

To ensure carbon reduction outcomes were delivered in these tenders the low-carbon

criteria were included as technical specifications or in contract clauses. The result of

this is that these become mandatory parts of the tender which must be delivered, rather

than being included in the award criteria where they would typically be weighted

(usually lowly) against other competing criteria.

In contrast, the MEAT approach used in some tenders allows the procuring entity

to account for sustainability impacts through award criteria, which can potentially

allow them to more directly influence the procurement decision-making process

(Parikka-Alhola and Nissinen, 2012). It can help procurers account for criteria that

impacts quality, and bring attention to future maintenance and operation savings over


the entire life-cycle at the contract award stage (de Leonardis, 2011). However, simply

using the MEAT approach does not necessarily guarantee good carbon or

sustainability outcomes (Parikka-Alhola and Nissinen, 2012). There are potential

issues with transparency of the award criteria and calculation methods. There is still a

lack of research and practice on effective implementation (Dreschler, 2009), yet it is

potentially a promising approach that with further development may be able to

facilitate the uptake of LCPP.

The tenders that were delivered using PPP contract models such as Design-

Build-Finance-Maintain (DBFM) or Design-Build-Finance-Maintain-Operate

(DBFMO) helped to facilitate innovation that resulted in reduced carbon. According

to Lenferink, Tillema, & Arts (2013) such integrated contracts can improve

sustainability because of the “lifecycle optimization incentives” that come from linking

design, construction and in-use contract stages such as maintenance and operation.

One reason for this is that the provider has an incentive to design and construct

infrastructure and buildings that have a high level of quality and the lowest possible

maintenance and operation costs, since they will be the entity responsible for these

future costs.

Likewise, the decision to incorporate ‘performance-based’ specifications rather

than overly-prescriptive technical specifications can help to facilitate innovation.

Overly-specified tender criteria can be a barrier to innovation (Uyarra et al., 2014)

because it reduces the scope for a supplier to offer a creative innovative solution. Yet

in order for such specifications to be adopted there are numerous skills and knowledge

barriers that must be dealt with in tandem, since procurers need a certain level of

sustainability skills in order to develop appropriate specifications and evaluation

criteria, and even a certain level of base knowledge to know how to write specifications

in a way that will achieve the desired sustainability outcomes. This reinforces the

importance of a multi-pronged approach that focuses on skills and knowledge

strategies in addition to policy and technical strategies.

Matching payback periods to long-term public value objectives

The payback period is calculated to determine the amount of time needed to

deliver a return on initial investment. Payback periods are arguably often set at an

arbitrarily short length of time. However matching payback periods to long-term

public value objectives could enable greater uptake of LCPP. A longer payback period


can be an advantage to LCPP in several ways, such as through increased scope of

retrofit opportunities and greater ability to facilitate deep retrofits that can deliver

significant energy and emission savings that provide long-term public value.

Departments can often be limited to undertaking projects with a short pay-back

period, which may often be as short as one year. When energy efficiency or building-

upgrade projects must be funded through existing departmental budgets this creates a

situation where these proposals must compete with expenses related directly to core

business. Whilst energy efficiency upgrades typically deliver a return on investment

they may take several years to pay back the initial capital outlay, and so even these

cost-effective upgrades are often de-prioritised in favour of day-to-day expenses. The

ultimate outcome is often that cost-effective upgrades may be postponed for many

years if they are not seen as being related to core departmental business

In the GGB1 program the relatively long payback period (initially 7-8 years

simple payback; later reduced to 5 years during GGB2) facilitated more

comprehensive upgrades than could have been achieved with typical shorter payback

periods. However even an 8-year payback period is relatively short by international

standards. Outside of Australia energy performance contract payback periods can often

range up to twenty years. There can typically be greater financial and carbon outcomes

from retrofits that include significant capital upgrades. Alajmi (2012) suggests that

measures with “no or low capital investment only saved 6.5% of building annual

energy consumption, while the retrofitting (measures) with significant capital

investment can save up to 49.3% of annual energy consumption”. Thus significant

energy and carbon savings are achievable but often require a deeper retrofit including

energy-intensive capital plant. Considering extending payback periods requires a

cultural change and more awareness-raising about the potential benefits that are not

currently being regularly considered.

Procurement methods that account for full life-cycle costs can act as an enabler

for low-carbon procurement. Life-cycle cost (LCC) analysis entails accounting for the

full cost of ownership over the life of a product or asset. Since many government

assets, buildings in particular, have long lifecycles it often makes sense to consider

life-cycle costs and longer payback periods. However within procurement decision-

making there is commonly still a focus on the lowest upfront price as the key


determining factor (Loosemore and Richard, 2015). For example, in Australia, concern

has been expressed about the focus on upfront price. A report by the Queensland

Department of Public Works stated that “value for money decisions seem to be too

focused on price at the exclusion of other qualitative issues. Decisions need to be made

over the whole-of-life rather than just at the front end of major procurement

processes” (Department of Housing and Public Works, 2015). This acknowledges the

need for greater consideration and emphasis on life-cycle costs.

There were variations between the two programs with regard to the extent to

which life-cycle cost analysis was incorporated and the degree to which it influenced

decision-making. However, both case study programs are helping to facilitate greater

awareness about the use of life cycle cost analysis in procurement decision-making. In

order for factors such as these to be widely taken up it will require innovation in policy,

in behaviour, and in managerial practices.

Valuing and leveraging co-benefits from projects and procurements

There are numerous ‘co-benefits’ that can be delivered by low-carbon

procurement. These co-benefits are the benefits that are achieved that are additional to

the primary solution that the procurement provides. Co-benefits should be explicitly

valued in decision-making processes as much as possible, since they can have a

significant impact on long-term public value and contribute further to the business case

for LCPP.

Low-carbon public procurement can deliver cost-reductions to governments

through reduced energy consumption of equipment and facilities. In addition to the

real cost savings there are additional ‘avoided’ costs and value-for-money benefits that

are typically not explicitly included in decision-making. These include avoided costs

of future energy price increases (Government Procurement Group, 2011) and avoided

future capital expenditure (Department of Treasury and Finance, 2013). Other value

for money outcomes that can be delivered by building upgrade projects include

improved comfort, improved equipment reliability and de-risking ageing infrastructure

(Australian Sustainable Built Environment Council, 2016b). A greater focus on

identifying, evaluating and communicating these co-benefits is needed.

Additionally, there are significant long-term value-for-money benefits of

reducing greenhouse gas emissions and energy use. These include reduced risk of the


impacts of dangerous levels of climate change, greater energy security, reduced impact

on energy distribution grids, and so on. The likely future development of carbon

pricing mechanisms has additional profitability risks for energy-intensive facilities and

equipment. According to the IPCC, such co-benefits typically exceed the direct energy

cost saving benefits and so offer “attractive entry points for action into policy-making,

even in countries or jurisdictions where financial resources for mitigation are limited”

(Lucon et al., 2014). As such, quantifying and communicating these benefits to both

policymakers and the general public is a useful program strategy that could bolster

support and help change the mindset around low-carbon transitions.

In the GGB project approximately thirty per cent of total project costs were for

asset replacement (Burke, 2015). This financial investment provides benefit to

government by avoiding future capital expenses while also reducing energy and carbon

emissions. Better aligning investment in upgrade projects with future asset renewal

can also facilitate better whole-system design outcomes, since key equipment and

building systems can be upgraded in tangent to deliver greater efficiency

improvements, allowing simultaneous upgrade of equipment nearing end-of-life,

which can piggyback carbon emissions reductions onto planned upgrades. These co-

benefits need to be accounted for explicitly in program design and procurement

decision-making processes, rather than omitted as a result of an arbitrarily narrow

consideration of what actually constitutes ‘value for money’ for society.

Alternative financial analysis approaches could also help to focus attention on

the value these co-benefits contribute. A ‘simple payback’ method based on energy

cost savings is often a financial approach taken by government agencies, however it

has been suggested that this method does not appropriately account for other co-

benefits that contribute to the value proposition such as future avoided capital

expenditure and operational expenditure savings (Rocky Mountain Institute, 2012).

Using an alternative financial analysis approach, such as discounted cash flow analysis

over the remaining ownership period could facilitate better accounting of the actual

long-term financial benefit to the building owner (Rocky Mountain Institute, 2012).

Cost is continually discussed in the wider GPP/SPP research field as being a

significant barrier to the adoption of more sustainable procurement practices. This may

be because of a perception that sustainability entails additional expenses that do not


provide a significant financial return. Yet low-carbon public procurement can be one

of the most cost-effective ways to achieve greenhouse gas emission mitigation (Lund,

2007). In the GGB program the proposed solutions were broken down to show the

expected life-cycle costs, energy efficiency improvements and greenhouse gas

reductions to make it clear to the client department what was being proposed by the

Energy Service Company (ESCO) and what each strategy was expected to deliver in

terms of carbon, energy and cost savings. This helped to communicate the value of the

upgrades to decision-makers.

An additional co-benefit to governments and the community is that by

facilitating innovation and market breakthroughs, procurement can provide support for

innovation by catalysing commercialisation of new technologies rather than simply

subsidising their development (Lund, 2007). Supporting industry to become

innovative has benefits far beyond individual projects. It can benefit industry, support

job and skill development, and have carbon efficiency impacts on the wider building

sector (Australian Sustainable Built Environment Council, 2016b). It will be important

to account for emissions and these numerous additional co-benefits directly in the

decision-making process. Finally, further to simply reducing barriers to LCPP, it is

also important to identify drivers for LCPP that may not yet have been tapped for their

potential. A unique opportunity for LCPP is the potential for cost to be a significant

driver of LCPP adoption, rather than a barrier.

Facilitating whole-system design outcomes

Whole-system-design allows for interrelationships between building systems to

be optimised to improve efficiency and deliver large savings. This principle of

considering all the key design elements of a building (e.g. façade, HVAC, lighting,

ICT equipment, BMS, etc.) can deliver savings of carbon, energy, resources and

financial benefits (von Weizsäcker et al., 2009). The procurement model used in the

GGB program and in several of the GPP 2020 projects has the potential to facilitate

consideration of a broader whole-system-design scope for retrofit projects.

Significant energy and carbon savings are possible when buildings undergo a

whole-system design retrofit, often called a deep-retrofit. This is because there is far

greater potential to achieve efficiency improvements when a whole-system design

approach is taken. For example, there is an interrelationship between lighting systems,

building envelope and HVAC systems that can impact energy efficiency. In climates


which require cooling, the excess heat transmitted through an inefficient building

envelope and emitted by inefficient lighting systems creates excess load for the

heating, ventilation and air-conditioning (HVAC) system to deal with. Often in a basic

upgrade project (particularly one with a short payback period) these systems would be

upgraded in isolation, or only one or two of the systems would be retrofitted.

However, if an upgrade project can optimise multiple related systems

simultaneously then the interrelationships between the multiple systems can be

considered and a whole-system strategy implemented that can result in much greater

energy efficiency improvements and carbon reductions than simply retrofitting a single

system in isolation. The five-year and seven-year payback periods utilised in the EGB

phase of the GGB program can limit the opportunity to undertake deep-retrofits

(Aliento, 30/10/2014). As Zhang et al. (2015) point out, “by their nature the potential

of EPC is maximised when it encompass all the building systems, and are designed

with the synergy between individual systems in mind”. Extending this principle even

further, there is opportunity to look at multi-building or precinct-level projects to

identify synergistic outcomes. This should be considered for future program

improvements.

7.1.3 Program design – Skills and knowledge strategies

This section compares and contrasts important success strategies of the two case

study programs with a focus on skills and knowledge strategies. These were identified

to have had an impact on the success of the case study programs.

Simplifying procurement decision-making

The survey results showed that a lack of decision-making tools to assist low-

carbon procurement decision making is limiting the uptake of LCPP. Therefore

identifying opportunities to reduce complexity in procurement decision-making can

help to overcome barriers procurement staff can face as a result of unfamiliarity with

low-carbon concepts and lack of technical expertise. Within Diffusion of Innovation

theory (Rogers, 2003), this aligns with the attribute ‘ease of use’, which posits that

innovations are obviously more likely to be adopted if they are perceived to be easy to

use and understand. For obvious reasons it is beneficial to make the process as easy as

possible for procurers, and this relies on good program design, clear decision-making

protocols, and good alignment with industry practices.


The GGB program model helped to overcome this barrier by using the energy

efficiency industry as key stakeholders in the decision-making process, helping to

simplify the decision-making process for departments. The value of the GGB program

model is that a department only needs to select a building it would like retrofitted, yet

does not necessarily need any technical knowledge regarding what solutions would be

best to implement in each situation. Several ESCOs are involved in a competitive

process to develop a solution that will reduce energy consumption and greenhouse gas

emissions, which could include a variety of solutions such as upgrading or replacing

equipment and refining operational processes.

Through this process the ESCO actually helps define the scope of works and

determine the most suitable equipment upgrades and process improvements.

Additionally, all proposed solutions are broken down to show the expected life-cycle

costs, energy efficiency improvements and greenhouse gas reductions to make it clear

to the client department what is being proposed and what each strategy is expected to

deliver in terms of carbon, energy and cost savings.

In contrast, in a typical procurement process a department would usually need

some internal technical or engineering knowledge in order to determine what

equipment and process improvements would be necessary to achieve better building

performance. They would then specify the equipment and approach the market. This

requires a level of in-house skills and knowledge to determine what the best solution

would be, and the internal capability to make the best decision about technology and

operational improvements that are needed.

The benefit of using a model like the GGB program is that procurers do not need

sophisticated training or expertise to allow them to make an informed decision that is

likely to deliver legitimate emissions and energy outcomes. Supporting programs with

clear guidelines and templates to assist this strategy also helps gives department staff

clear pathways for taking ownership and knowing what decisions are required at each

step. These are useful strategies that should be considered for future initiatives.

Sharing knowledge

Formalising knowledge sharing opportunities between government, industry and

community was also associated with program success. One important finding of this

research is to highlight that the ‘soft’ strategies are often as important as the ‘hard’


technical strategies, and that a strength of the two case study programs was the

integration of the two approaches. ‘Soft’ strategies such as knowledge sharing and

facilitating communities of practice help to reinforce the development of the ‘hard’

technical strategies such as skills development and can lead to good outcomes for both

government and industry stakeholders. The two programs showed a high level of

knowledge-sharing and capacity building that contributed to greater awareness and

knowledge about LCPP practices. These included the development of support

structures, formal and informal knowledge sharing, and networking to build

communities of practice.

Within the context of Institutional Theory, sharing knowledge can be considered

a facilitator of both mimetic isomorphism (by providing a scaffold of knowledge that

future adopters can take on) and normative isomorphism (by helping to lay the

groundwork for common LCPP norms and practices). At a base level, simply

implementing these programs helped to raise awareness of low-carbon procurement

practices amongst public procurement staff and amongst industry. At this early stage

of LCPP uptake simply increasing awareness is of critical importance.

When considering DOI theory, knowledge sharing helps to increase DOI

attributes such as ‘visibility’, ‘personal contact network’, and can even influence

factors such as ‘user need recognition’. For the majority of procurement staff

sustainability and low-carbon skills have not been part of core competencies and as a

result there is a general lack of awareness and understanding. This is an area of key

importance to address in order to increase uptake.

In terms of formal knowledge-sharing and capacity-building activities, both

programs demonstrate some valuable approaches. A primary objective of the GPP

2020 program was to conduct training and networking events, and to set up public

procurement support structures in the participating countries. In total 540 procurement

staff and 130 procurement trainers received training on low-carbon tendering over the

three years and KPIs were set to track and report on the number of events and attendees

to ensure objectives were met. This reinforces the importance of setting KPIs and

linking them to specific objectives. Additionally, follow-up activities were conducted

to encourage attendees to implement new knowledge in their organisations’ future

tenders.


Similarly, there has been a significant amount of collaboration and knowledge

sharing between the State of Victoria (where the GGB program was implemented) and

the neighbouring states of New South Wales (NSW) and South Australia (SA) which

has recently been ramping up energy efficiency and emission mitigation initiatives.

Key program team members from GGB program have been involved in knowledge

sharing with NSW, helping to ensure there is some standardisation between the two

programs so that industry in the region does not need to learn and understand two

different sets of rules and approaches. This collaboration should be commended as it

contributes to future program success and facilitates wider uptake of LCPP practices.

Supporting internal skills

A key area in need of development are low-carbon skills and knowledge amongst

procurers. Skills and knowledge barriers ranked highly on the survey as key barriers

impacting uptake of LCPP so incorporating strategies to further develop departmental

skills would help contribute to program success and increase adoption of LCPP

practices.

A key characteristic of the GPP 2020 project was a focus on skills development,

both of procurers and of procurement training providers, described briefly above.

Follow-up activities were also conducted for participants in the ‘Train the Trainer’

seminars in order to encourage wider adoption of GPP 2020 materials into

procurement training packages. A primary reason for this was the acknowledgement

that participating in only one training event is not enough to change procurement

practices, so follow up activities help to reinforce the knowledge and behaviours. In

doing so, follow-up activities help to increase the overall impact and long-term

influence of programs.

Outsourcing some technical expertise

Several items within the top ten barrier items in the survey related to monitoring,

reporting and verification (MRV) issues, such as lack of skills and time. It is therefore

important to explore strategies to overcome these perceived barriers. Several strategies

and characteristics of the two programs are useful for overcoming MRV barriers,

including outsourcing some of these tasks to industry, and using simplified calculators

to undertake basic levels of measurement and reporting where appropriate.


It is possible that MRV is perceived to be a barrier to LCPP for several reasons.

Firstly, emission monitoring and reporting is still relatively new territory for

government departments; particularly within the procurement space and is not

something that has typically been considered during the procurement process. There

may also be uncertainties and risks associated with MRV, simply because buildings

are complex systems, with myriad operational and behavioural elements that impact

performance, and depending upon the level of MRV being undertaken it can require

new skills to be developed within an organisation. For these reasons, it is perhaps

unsurprising that survey respondents rated MRC relatively highly as a barrier.

One simple strategy utilised in the GPP 2020 program to overcome MRV was

simply not requiring it. The main focus of the GPP 2020 program was to encourage

agencies to become aware of and begin to adopt low-carbon procurement processes –

so simply not complicating the program at this early stage by requiring MRV helped

to ensure the main objective of increasing uptake was achieved. To estimate emissions

outcomes for projects the program accepted generalisations and assumptions based on

previous tenders and similar products etc. and also developed simple calculators and

guidance for procurement staff to undertake a basic level of reporting.

A second strategy that helped overcome this barrier was the use of energy

performance contracting, which has an inbuilt MRV component. The ESCOs are

required to monitor and verify all upgrade works in order to justify that the work has

been done and that the expected financial, energy and carbon savings have been

delivered. By removing the responsibility for MRV from the client departments and

outsourcing this element to the ESCO, the programs effectively deal with many of the

skills barriers that departments would otherwise face. It reduces or eliminates the need

for government procurement staff to be skilled in MRV activities. Since procurement

staff simply can’t be highly skilled in all areas this could be a useful strategy to apply

to other LCPP initiatives.

Another opportunity to outsource tasks and to reduce costs is to leverage existing

programs and tools. Using existing tools such as energy performance labels (e.g.

Energy Star) and building sustainability tools (e.g. NABERS) within procurement

criteria can often reduce complexity and costs. In the case of the GPP 2020 program a

variety of existing tools were promoted, such as an EPC tool developed in Austria and


the CO2 Performance Ladder in the Netherlands that helps departments factor in the

carbon performance of suppliers. Use of tools such as these where practical is a simple

way to supplement internal skills gaps.

7.1.4 Engaging departments



incentivising departments and agencies to engage with and participate in initiatives

that can encourage the decoupling of development decisions from emissions. It

includes strategies such as aligning incentives, building communities of practice,

providing funding, and incorporating pilot projects. These strategies were identified to

have had a key impact on the success of individual projects and the wider programs.

According to UNEP, it is increasingly being recognised that innovations are not

limited simply to technological improvements, but also include institutional and

relational innovations (United Nations Environment Programme, 2011). Institutional

innovations refer to improvements in management and organisational systems, which

are discussed in Section 7.1.1, above. Relational innovations focus on improving

interactions that can foster sustainability, such as social learning and benefit sharing,

and it is these sorts of innovations that feature commonly in the following sections.

The various approaches employed in the case studies to foster innovation and

encourage engagement across institutions and stakeholders are discussed below.

Aligning incentives

Individual government agencies often do not have any direct financial incentive

to invest in low-carbon or energy efficient purchases. This if often because such

expenditure reduces the total budget available to provide core business activities. Even

more importantly, once energy savings are delivered the benefit typically flows back

to central government, not the agency or department who implemented the upgrade

project. These financial arrangements mean that agencies that invest in energy

efficiency often do not see the financial benefit, especially if there is no mechanism

for allocating the savings back to the agencies who initially invested in the energy

efficiency measure (Hoejmose and Adrien-Kirby, 2012, Borg et al., 2006). Addressing

this split incentive dilemma is of high importance and opportunities to share savings

with agencies could help to increase uptake.


One aspect of the program (and government spending more broadly) that could

be improved is the degree to which the incentive to save money through low-carbon

upgrades is aligned with the benefits to those organisations in a position to implement

them. On the one hand, the financial rationale for implementing energy efficiency is

clear – if government facilities use less energy and provide a positive return on

investment then the government will save money. The impact of the benefits not

flowing to the departments is that these departments are less likely to implement them

since there is no real financial incentive to do so. This is often referred to as the split

incentive problem. It typically takes resources, time and upfront capital to implement

efficiency improvements and when the benefits are realised they do not flow to the

department but to the central government more broadly. This is an element that could

be improved upon and incorporated into future programs.

Building communities of practice

A unique aspect of both programs was the formal and informal building of

‘communities of practice’, which helped to increase awareness and engage people in

the program and other LCPP activities. By facilitating the building communities of

practice it can generate internal momentum between jurisdictions and regions that

might otherwise not have much interaction on the subject. It allows people with a

natural passion and interest in the benefits such as sustainability etc. to share ideas,

help others and build on the success of each other. The GPP 2020 program was

particularly active in this respect. One interviewee discussed building communities of

practice between the national support partners and various government jurisdictions

that were not officially involved in the program. Communities of practice can be

fostered through networking opportunities internally and externally and can provide a

platform for discussion and exchange of best practices.

Building communities of practice allows ideas and strategies to be shared and

built upon. Sometimes it can also generate healthy competition, which can push LCPP

innovation forward. In the words of one interviewee, who became aware of other

countries’ low-carbon tendering efforts through such networking and community

elements, “we thought we were the best, but you can see for instance in Italy and

Germany there is a lot being done on the subject which is also very good. So, to look


around Europe and see what is being done elsewhere, it helps to get a benchmark of

where we are”.

Whilst in the GGB program knowledge sharing was not a formal part of the

program model, it was observed that there was a degree of knowledge sharing by some

participating departments and by the program leadership. This knowledge sharing

occurred between different Departments, but crucially also with other nearby State

governments and jurisdictions. Within Diffusion of Innovation theory, early adopters

typically help spread a new innovation through influence of social and professional

‘peer’ networks (Mustonen-Ollila and Lyytinen, 2003). Through an Institutional

Theory lens, the openness of key personnel in the GGB program to share skills and

knowledge has helped facilitate ‘mimetic isomorphism’ to occur across jurisdictional

lines, since certain practices are beginning to be adopted by other nearby governments,

based on the Victorian experience.

Providing seed funding

The provision of funding is undoubtedly an enabler for program uptake, since it

helps to catalyse innovation and kick-start the program. Additionally, it can help to

keep projects afloat by providing ‘base-load’ funding to maintain program staff and

provide key resources for government staff and industry to use and interact with.

Funding can potentially be cash-flow neutral, as in was the case with the GGB

program, since funding was made available to agencies through temporary loans rather

than grants, with the resulting energy savings used to repay the loans.

Many interviewees discussed the impact that the lack of funding had previously

had on the ability of agencies to undertake low-carbon procurement activities prior to

the introduction of the programs. In the GGB program, temporary loans were a key

enabling strategy that facilitated departments to undertake upgrade projects across

their building portfolios. When access to funding was removed it had a significant

negative impact on the implementation of new projects, despite the significant and

guaranteed cost savings demonstrated by previous contracts within the program.

Within the GPP 2020 program funding was provided to assist with tender evaluation

and reporting. This helped to overcome resource-related barriers, particularly related

to the skills, time and cost required to undertake MRV activities. This would therefore

be a useful strategy to implement in future programs.


Developing pilot projects

The use of pilot projects is a useful strategy to facilitate low-carbon procurement

skills and knowledge development. Pilot projects help improve understanding of what

LCPP looks like in practice, while keeping tenders relatively small and manageable. It

gives departments and agencies experience of LCPP in practice. Pilot projects can be

used to trial innovative ideas from initial proof of concept and is particularly useful for

new emerging technologies. It can also be used to trial more ambitious innovation

projects such as deep-retrofits through whole-system-design which may have larger

upfront costs but have potential to deliver significantly better efficiency

improvements.

Within the GPP 2020 program interviewees described pilot programs as helped

to increase agency awareness of existing technologies and equipment that had existed

for years but which they had simply not yet tried. In the words of one interviewee “It’s

about convincing people to make use of existing technologies, and assess them, and

pilot them”. It is often the case that low-carbon outcomes can be achieved with existing

readily-available technologies, which procurers may just not have realised could

mitigate emissions.

In addition to trailing new products, pilot projects can also be used as an

opportunity to trial new methodologies. For example, life-cycle costing (LCC)

methods were used in many GPP 2020 tenders, including many small-scale and pilot-

size tenders. The inclusion of LCC was encouraged partly so that it would expose

procurers to the LCC concept. By exposing procurers to sustainability methodologies

such as LCC through strategies such as pilot projects it can increase familiarity with

these new methods and facilitate LCPP skill development. Unless procurers are

exposed to sustainability tools and methods they will not become confident in applying

them.

Within Diffusion of Innovation theory, ‘trialability’ and ’learning by doing’ are

noted as key attributes facilitating innovation (Rogers, 2003). The degree to which a

given innovation can be trialled has a bearing on its uptake. Given that LCPP is still in

the very early stages of adoption it benefits enormously from such trials, particularly

when the organisation undertaking trials has an openness about sharing key lessons

learned. This helps to speed up the diffusion of innovations through wider networks,


since reduces the need for each individual organisation to undergo such trial periods.

Additionally, considering Institutional Theory, the sharing of pilot program outcomes

facilitates mimetic isomorphism, since other organisation have an easy task to simply

copy practices as reported on the GPP 2020 website to begin to adopt LCPP practices.

7.1.5 Engaging supply chains



engaging supply chains and wider industry. It includes strategies such as commitment

to program consistency, signalling future intentions, establishing pre-qualified panels,

and minimising bureaucratic delays. These strategies were identified to have impacts

on the success of individual projects and the wider case study programs.

Committing to program consistency

Committing as much as practicable to program consistency is a key aspect of

long-term program success. If programs continually change in their approach or if

commitment from government repeatedly waxes and wanes industry tends to get

nervous about future commitment and begins to withdraw and hold back from future

initiatives. This was a common grievance among interviewees in the GGB case study.

In order to enhance engagement therefore it is important to build relationships and trust

with industry by striving for consistent program approaches, targets, funding,

engagement strategies etc. within programs and, ideally, across geographically and

politically related areas.

This is important in instances where industry tenders for projects in multiple

states or regions, such as in the southern Australian states, since it allows for much

greater sector development potential. According to Staples & Dalrymple (2011)

“Australian state governments are not currently delivering the type of ‘joined-up’

approach to infrastructure procurement that has the potential to create public value

across a range of policy domains. There is very little evidence of government influence

involving active management of the supply chain, or improvement-related activities in

components of the supply chain”. This will be a key strategy to focus on for the

development and integration of programs going forward.

Where possible, bi-partisan support should also be sought through a focus on

common goals, whether these be on economic grounds or sustainability objectives or


other interests. The GGB program had bi-partisan support, at least on paper, and this

may have contributed to its ability to withstand total disruption during political cycles.

Key goals shifted from carbon and sustainability goals, to economic and efficiency

goals, then back to sustainability goals over successive political cycles, however the

program had aspects that could appeal to these different actors and was able to

maintain presence by highlighting how it appealed to various objectives.

Streamlining processes

Using standard templates, processes and methods wherever possible helps to

streamline processes for industry engagement, reducing delays and frustration and

making it more likely that providers will continue to engage in programs. This was

seen in both programs and was highlighted by numerous interviewees as important

strategies that helped to engage industry and other stakeholders. Within DOI theory

this relates to the attribute ‘ease of use’, such that innovations that are easy to

understand and use are more likely to be adopted.

An example is the provision of templates and similar resources reduces the time

required for individual departments/agencies to develop their own processes and

documents and reduces the administrative complexity. This helps to simplify and

expedite the procurement process for procurers and suppliers as they do not need to

adapt and become familiar with multiple templates and systems. This also facilitates

‘trialability’; another DOI attribute positing that innovations that are able to be

experimented with are more likely to be adopted. Having templates, tools, guidelines

and established protocols helps to improve trialability for agencies.

To facilitate efficiency and consistency within the GGB program a panel of

prequalified providers was established to provide services to departments and

agencies. Members of the panel demonstrated required competencies and had previous

experience in delivering similar projects. Prequalified providers who provide an

expression of interest were invited to prepare a proposal and take part in a competitive

tender process. Templates were provided for departments and ESCOs in order to

simplify the process. This streamlining of processes and practices helped to engage

industry more easily in the program.


Signalling future intention

Signalling program intentions to the market allows industry to plan for the future

and build capacity in key technologies and expertise in order to provide these services

to government where needed. Publishing a pipeline of projects can be a valuable

strategy which can reassure industry and encourage them to invest in skills and staff.

This has many positive flow-on effects for the program, for the private sector, and for

the continued development of jobs in key sustainability industries that will be

increasingly necessary as society transitions to more sustainable development models.

If signals of intention are absent the private sector can be slow to invest and engage in

the necessary capacity building. Providing clear intentions for low-carbon

procurement across government operations helps to grow the market.

Influencing wider supply chains

There is great potential for governments to influence wider supply chains

through procurement by providing incentives for emissions reductions. The GPP 2020

program encouraged these actions using an established industry tool called the CO2

Performance Ladder (CO2PL); an emission management tool developed by The

Foundation for Climate-Friendly Procurement and Business (SKAO) in the

Netherlands. The tool is used to improve the carbon performance of companies, both

in internal business operations and throughout their supply chains and can be

incorporated into the procurement process to confer an advantage to companies who

perform higher on the Performance Ladder. As companies reduce energy use and

improve their carbon performance they gain extra ‘rungs’ on the Performance Ladder.

The tool can therefore be used in the award phase of a tender to influence the carbon

performance of the provider and wider supply chain. An example of the use of this tool

in practice is referenced in Section 6.2.3 that demonstrates how formalising the

performance objectives in the tender contract conditions helps to ensure that the

emission reductions are actually achieved.

7.2 A NEW CONCEPTUAL MODEL OF LOW-CARBON PUBLIC PROCUREMENT PRACTICES

Reflecting on the factors, strategies and their characteristics, a new conceptual

low-carbon public procurement practices (LCPPP) model was developed. The model

was used to help synthesise the findings from the survey and case studies and find a

way of processing the key lessons learned. Such a conceptual model is useful for


government agencies at any point along the Decoupling pathway, whether

transitioning away from business-as-usual, peaking or tailing their greenhouse gas

emissions as a result of public procurement practices. This conceptual model can help

to operationalise the Decoupling process through the mechanism of public

procurement.

In the figure below, the five core ‘success factors’ can be considered to align to

three high-level program mechanisms of ‘Leadership and vision’, ‘Engagement’ and

‘Design and implementation’, where:

• ‘Leadership and vision’ relates to those actions that are taken to guide and

position the program within the government landscape, and other external

political, economic and environmental influences.

• ‘Engagement’ relates to the internal and external engagement actions that

can promote low-carbon public procurement practices and help to ensure

streamlined interactions and long-term collaboration between government

and industry.

• ‘Design and implementation’ relates to the design and implementation of

the procurement initiative targeting key financial and skills/knowledge

areas currently impacting uptake.

Figure 9: Low-carbon public procurement practices (LCPPP) model


From the results of the survey it can be seen that the barriers to LCPP are not

limited to a single category; they are many and varied, both technical and behavioural,

internal and external to the procuring organisations. Given that the barriers to LCPP

are multifaceted it will require a multifaceted approach to overcome them. No one or

two strategies appear on their own to be sufficient to overcome the varied barriers

currently limiting uptake of LCPP. In many cases the strength of the two programs

studied was that they employed a variety of strategies that were often mutually

reinforcing.

The conceptual model aims to highlight key success factors and also the

interlinkages between the constituent strategies where there can be potential for these

to create a reinforcing effect. It is put forward as a way of highlighting the benefit of

aligning multiple strategies and creating strong links between the strategies to develop

successful initiatives.

The model was developed and used as a tool to help synthesise these program

mechanisms and strategies into a logical and operationalizable structure. It was

developed by using an iterative approach to the analysis of the research findings,

including organisation, categorisation, interpretation, identification of patterns, and

synthesis of key findings from the research. ‘Organisation’ involved sorting case study

data into a logical structure for analysis; ‘Categorization’ was used to cluster

information into meaningful groups; ‘Interpretation’ involved analysing the various

strategies and characteristics of the programs that were in some cases intentional

premeditated elements and other times impromptu elements that appear to have been

emergent strategies that evolved over the course of the programs, but in all cases

looking for aspects that contributed to program success or otherwise helped to

overcome barriers; ‘Identification of patterns’ involved thematic analysis of the

various strategies and factors searching for underlying themes and relationships;

finally ‘Synthesis’ involved drawing together these findings to help process the key

lessons learned.

Strategies and characteristics were compared and contrasted to determine

opportunities to improve success of LCPP initiatives, and interlinkages between the

various factors and strategies were explored. The resulting conceptual model is

intended to convey important program elements and relationships in a way that is able


to be operationalised and that can help to overcome the multifaceted barriers currently

limiting the uptake of low-carbon public procurement.

The model builds on important earlier work by authors such as (Brammer and

Walker, 2011). Brammer and Walker focus more generally on sustainable procurement

(rather than LCPP specifically) putting forward a model suggesting it arises “primarily

because of pressures on the organisation to undertake it”. The authors propose four

influences on sustainable procurement practices: ‘perceived costs/benefits of policy’,

‘familiarity with policy’, ‘supplier availability/resistance’, and ‘organisational

incentives/pressures’. This PhD expands upon that discussion by exploring firstly what

stops organisations from undertaking LCPP, despite these pressures to undertake it,

and secondly what strategies have been successful in overcoming these barriers. The

new LCPPP model proposes an alternative structure and provides additional insight

into key success factors and strategies for low-carbon procurement at a detailed level,

as discussed further below.

7.2.1 Leadership and vision

As a program mechanism, ‘Leadership and vision’ relates to key actions and

personnel necessary to position and guide the program within government, considering

the surrounding political, economic and environmental landscape. The leadership and

vision strategies are typically higher-level elements that help to set priorities and

influence programs at a strategic level. These were identified to have a significant

impact on the success of programs.

The United Nations Environment Programme states that in order to effectively

decouple environmental impact from economic growth, there must also be “significant

changes in government policy, corporate behaviour and consumption patterns”

(United Nations Environment Programme, 2011). A strong focus on leadership and

vision will be an important ingredient if such changes are to be achieved. To be an

effective program mechanism the ‘Leadership and vision’ approach needs to surpass

the simple act of including one or several ‘Management and planning’ strategies into

program designs; instead programs should seek opportunities to build strong

interrelationships between the various factors and strategies to support an effective and

unified approach.


Strategies such as involving key decision-makers and supporting program

champions help to leverage these leadership qualities to build relationships between

change agents within the program and with key external collaborators. The

‘Leadership and vision’ approach should ensure clarity of focus and help direct

resources and operations towards achieving such outcomes. Examples include setting

effective objectives and ensuring that strategic planning considers future directions for

property portfolios, procurement programs and other wider government objectives.

There is support in the literature for the importance of ‘Leadership and vision’

type mechanisms in achieving sustainable development. For example, (Rost, 1993)

discusses concepts of influence, intention, and leadership that achieve higher-level

effectiveness, and (Taylor et al., 2011) discusses how program champions play an

important role in initiating and driving sustainability transitions. Brammer and Walker

(Brammer and Walker, 2011) also highlight the high importance of leadership in their

model of sustainable procurement. Rogers (2003) also suggests a number of

leadership-type attributes in Diffusion of Innovation theory and posits that these aid

the adoption and proliferation of innovations. From the findings in the two case studies

here there is good evidence that such attributes do have an important influence on the

success of initiatives.

There are many more examples in the literature of barriers that have a significant

impact on the uptake of LCPP but which could be mostly overcome through the

application of strong leadership and clarity of vision. Examples include the widespread

focus on upfront cost as the key determining factor in procurement decision-making,

made worse by often arbitrarily short payback periods which disadvantage LCPP

initiatives that may have an upfront premium. There is significant opportunity for

public authorities to consider and explicitly value these external and societal benefits

that can be delivered through reducing the contribution to emissions and which

arguably deliver better long-term public value by helping to mitigate climate change.

It can be argued that there is even an onus on governments to lead here. Leadership

and vision strategies can help facilitate this by encouraging cultural change around

concepts such as whole-of-life costs and what constitutes long-term value-for-money.

Leadership and vision mechanisms thus have many important interrelationships

with the other program mechanisms and their constituent factors and strategies. These

should be consciously identified and reinforced wherever possible. In order to


overcome the abovementioned challenges it will require skills and knowledge

development at all levels; from procurement staff to management and further up the

chain to ministers and elected officials. It will also require strong engagement within

and between industry and departments. But without strong leadership and vision these

sometimes-disparate strategies run the risk of hitting the same roadblocks that have

hitherto prevented them from taking hold.

It is important to see that there are opportunities for win-win outcomes, where

‘low-carbon’ isn’t simply an extra cost that must be borne or additional competency

that must be learned. There are numerous co-benefits that can be delivered through

low-carbon procurement, which the case studies programs demonstrate. What is

needed is strong intentional leadership and vision across boundaries to help facilitate

this and communicate it to other key decision-makers. There are also numerous

existing and emerging frameworks within the wider policy space that can align with

leadership and vision elements to achieve mutually beneficial outcomes. These should

be considered and incorporated into initiative planning wherever practical. For

example, the United Nations Sustainable Development Goals (SDGs) have numerous

areas of overlap where low-carbon public procurement initiatives could contribute to

national and international SDG objectives. Aligning to relevant SDG strategies by

creating strong linkages to LCPP ‘Leadership and Vision’ strategies could help to

create robust initiatives that can benefit from the high-level guidance and support of

the Sustainable Development Goals.

7.2.2 Engagement

As a program mechanism, ‘Engagement’ refers to creating program structures

that fully involve the two key stakeholders involved in the day-to-day

operationalisation of low-carbon public procurement; namely government

departments and the suppliers that provide goods, services and works to them. These

factors and strategies go beyond actions such as simply mandating participation of

government agencies or stipulating the use of particular guidelines, and so forth.

Rather, the intention is to incentivise lasting commitment and collaboration.

Engagement is a key area of focus since it is these two primary stakeholders that

are the actors participating in the actual daily processes of procurement. Depending

upon the level of commitment or incentive for these two stakeholders to undertake


LCPP many of the potential barriers may be either garrisoned or overcome, so creating

conditions conducive to long-term collaboration and proper engagement is a key

mechanism for facilitating long-term program success. These were identified to

significantly impact the success of both the wider programs and individual projects

within them.

The focus on ‘Engagement’ as a key program mechanism is reinforced by

stakeholder theory which posits that relationships between stakeholders are not dyadic

but instead involve multiple stakeholder networks, and that the building of these

relationships is of high importance to achieving change of procurement and supply

chain practices. As Webster (1995) suggests these procurement change processes are

“…not simply a technical-rational process of “solving problems”, it also involves

economic and political processes in articulating interests, building alliances and

struggling over outcomes”. The Engagement strategies presented in this thesis were

found to positively influence program success and if strong interlinkages can be

fostered between the various factors and strategies (as is intended through the structure

of the LCPPP model) it will contribute to alliance building etc. to overcome

challenges.

Similarly, there were found to be aspects of Institutional Theory at play within

the two case studies. Institutional Theory posits that so-called ‘isomorphic drivers’

place pressure on organisations to change and adopt new practices based on what

similar organisations are seen to be doing. Various isomorphic drivers were seen, such

as ‘coercive drivers’ like the existence of targets to prompt participation from

Departments, and also the impact of ‘normative drivers’ from external organisations

such as the Energy Efficiency Council helping to reinforce to successive governments

the social obligation to invest in efficiency measures. ‘Mimetic drivers’, where

organisations mimic the actions of successful competitors, were seen in the spread of

program structures, tools and knowledge from one Government to various

neighbouring jurisdictions; in one case as a central program strategy and the other case

due to the leadership qualities of key program champions and their networks. More

emphasis should be placed on encouraging such mimetic influences as overt strategies

of future programs.

A number of these sorts of strategies also align with Diffusion of Innovation

(DOI) theory attributes. For example, ‘personal contact network’ which posits that


innovators draw on the experience of their peers, and ‘community norms’ which

suggests that people are likely to adopt norms of practice evident in their wider

communities (Rogers, 2003). The strategy ‘Aligning incentives’ is not directly posited

within DOI, but could be considered a potential additional attribute that can influence

innovation adoption, since split incentives can still hinder the adoption of an

innovation that is otherwise regarded as possible and beneficial.

As with the other program mechanisms it is important to highlight that the two

‘Engagement’ mechanism (‘Departments’ and ‘Supply chains’) have important

interlinkages with the other core factors. The strategies that constitute the

‘Engagement’ program mechanism include aligning incentives, building communities

of practice, providing funding, and facilitating pilot projects to motivate participation

from departments. The power can often be in their acting in parallel as mutually-

reinforcing drivers for the adoption of LCPP (rather than one or two isolated strategies

implemented in isolation).

Some strategies, such as ‘building communities of practice’, can at first sound

esoteric, however it is in these communities of practice that ideas are exchanged and

collaborations are born. This can reinforce strategies in other factor categories, such

as ‘skills and knowledge’, and can thereby multiply the reach and impact of standalone

strategies. Thus, providing skills development and facilitating community building are

key program strategies that should be included as part of future programs, but perhaps

more important is going one step further to identify opportunities where skills

development can be integrated with ‘community of practice’ strategies and reinforced

by ‘Leadership and vision’ mechanisms.

Many of the barriers limiting the uptake of LCPP occur at a departmental or

agency level. Results from the survey stage of the research show that these barriers are

many and varied. In some cases these barriers are real and significant, as is the case

with access to finance where it is often the case that even projects that provide a

positive return on investment may be delayed for many years due to competition for

limited departmental resources, where core business necessarily takes precedence. In

such cases it would help to better align incentives for departments so that some of the

financial benefit flowed back to the department in order to finance further upgrades or


to supplement budgets. There is a role to play for leadership and visioning mechanisms

to foster the necessary innovation to overcome these issues.

In other cases the barriers limiting the uptake of LCPP are only perceived

barriers. Many survey respondents reported that monitoring and reporting tasks were

limiting their departments from undertaking LCPP. However as one interviewee noted

this is not likely to be a barrier in reality; merely a perceived barrier. It is nonetheless

important, since a perceived barrier can still limit action. As such, strategies to engage

departments should have strong links to ‘skills/knowledge’ strategies to improve low-

carbon knowledge and competencies.

Another ‘Engagement’ aspect worth highlighting with greater intention in future

programs is the value of potential co-benefits provided by LCPP. These include

benefits such as improvement in credit ratings due to improved asset quality and

reduced asset risk, aligning procurement practices more closely with higher-level

government policies on climate change mitigation, reduced future energy expenditure

and reducing long-term climate risk. These co-benefits can be significant and can

contribute to the business case and help to further engage departments in LCPP.

From the delivery side of the procurement process, a common concern amongst

case study interviewees from industry was the perceived changeability in

government’s commitment to such programs, and this often limited full engagement

by suppliers. As such, in order to make rapid and lasting transitions to low-carbon

procurement practices a commitment to true collaboration between government

departments and industry is essential. This will necessarily tie heavily to leadership

and vision mechanisms, requiring key decision-makers and change-agents to lay the

foundations for positive engagement.

Industry has a key role to play in the transitions needed to move towards a low-

carbon building sector, and it is important that supply chains are fully engaged in

contributing to low-carbon objectives wherever possible. There is an onus on

government to make the process of engagement as uncomplicated as possible so that

efforts are not wasted on program inefficiencies. As such, some ‘supply chain’

engagement elements are focussed on ensuring consistency and streamlining

engagement processes for suppliers.


There is also a role for government to influence wider supply chains. This can

be done through procurement in a number of ways, such as through tender criteria and

award decisions. In the GPP 2020 program this was accomplished through the use of

an established industry tool intended to improve the carbon performance of companies,

both in internal business operations and throughout their supply chains. The tool can

therefore be used in the award phase to confer an advantage to suppliers who perform

higher and thereby influencing the carbon performance of the supplier and the wider

supply chain. There are other similar tools that can be incorporated into the

procurement process and there could be opportunities to account for these carbon

emissions in value-for-money determination processes as these emissions reductions

could be shown to contribute towards wider governmental climate change mitigation

efforts.

7.2.3 Design and implementation

As a program mechanism, ‘Design and implementation’ relates to key program

focus areas and procedures that overcome important cost and skills/knowledge

barriers. The literature review revealed that these barrier categories were frequently

cited as significant barriers to more sustainable public procurement in general. The

survey results (see Chapter 4) confirmed that these barrier categories are also prevalent

for low-carbon public procurement. The survey further helped to identify important

individual barrier items within these categories.

The survey results also highlight that the barriers preventing LCPP uptake are

variable, and this suggests that solutions must respond to this variability and be

somewhat tailored. The various barriers and opportunities experienced or perceived by

departments are likely dependent on individuals and practices within the organisation

at any particular point in time, and attributes such as management’s support for LCPP

and wider organisational familiarity with low-carbon concepts. Thus, there is likely no

‘cookie-cutter’ approach to overcoming barriers: what works in one region may not be

ideal in another. However, it is highly likely that what will be required in all cases will

be multiple strategies to facilitate skills and knowledge development and overcome

financial barriers, and to create strong linkages between these strategies and those in

the other two program mechanisms discussed in 7.2.1 and 7.2.2.This will also require

cultural change, particularly to overcome ‘business-as-usual’ routines and mindsets,


and there will be a key role for management and other decision-makers to transition to

low-carbon development models such as LCPP. Following on from this, it is important

to emphasise the need to foster an environment in which this sort of multi-level

innovation can occur. The many Diffusion of Innovation attributes (Rogers, 2003) that

have been observed in the case studies highlights the validity of the many DOI

attributes that facilitate the adoption and proliferation of innovations. Key DOI

attributes in this context are those such as ‘ease of use’, ‘compatibility’, ‘price’ and

‘standards’, all of which fall within the ‘Innovation’ characteristics of DOI theory.

This cultural change will need to be informed by and linked directly with skills and

knowledge development strategies, since many of the top barriers in the survey were

concerned with skills and knowledge.

In order to overcome these challenges it will require a multi-pronged approach

focussed on strategies such as fostering awareness and appreciation of low-carbon

issues, partnerships with industry especially where technical skills can be capitalised

upon, and further development of simplified tools and procurement methods to aid

low-carbon decision-making. This is all likely to be more effective if developing

internal department skills and knowledge is as much a focus as that of management

and other decision-makers such as elected officials.

Many financial barriers are able to be overcome through the implementation of

relatively straightforward strategies. The interesting thing is that many of these

strategies have existed for many years and yet barriers to their use continues. What is

needed therefore is more than simply including one or a small number of isolated

strategies. Instead, strong and intentional linkages between the ‘Design and

implementation’ mechanism and the other ‘Leadership and vision’ and ‘Engagement’

program mechanisms and their associated factors will help support effective

implementation of these strategies.

Upfront cost is commonly discussed as a barrier to sustainability. Typically,

departmental budgets don’t have significant surplus funding to pursue projects not

considered central to their primary function. Thus, any sustainability project needs to

compete with other day-to-day operational costs, meaning these sustainability projects

are often delayed or not pursued at all even in cases where they provide a return on

investment. Furthermore, individual departments and agencies often do not have any

direct financial incentive to invest in low-carbon or energy efficiency since financial


benefits usually flow back to central governments. Again, these strategies can be

incorporated into program design with relative ease, but to improve the likelihood of

their effectiveness will require skills and knowledge development at all levels

(procurement staff, management, elected officials, etc.) concurrent with intentional

engagement and strong ‘leadership and vision’ linkages.

Access to capital is one of the most critical success factors evident in the two

case studies, and there are several options discussed that contribute to overcoming this

barrier. There are existing and newly emerging procurement and financing methods

such as energy performance contracting and green bonds, which are being trialled and

implemented in various regions and which are designed specifically to overcome

financial barriers, should be considered for inclusion in future programs. Even with

these more innovative approaches barriers can still remain, so exploring mechanisms

for sharing savings between central and client departments can help overcome residual

issues such as the split incentive problem.

Likewise, it is important to overcome the tendency to set arbitrarily short

payback periods which reduce opportunity for delivering sustainability benefits and

ultimately reduce long-term public value. This is particularly important when it comes

to life-cycle emissions and their impacts on climate change, where the impacts of

public procurement on future climate change have a very real potential to undermine

the public value benefits delivered by shorter-term government purchasing practices.

It is important to build from the success of programs such as those explored in this

research to apply key lessons learned and share knowledge and strategies for success.

In addition to the real cost savings there are additional ‘avoided’ costs and other

value-for-money benefits that are typically not explicitly monetised in decision-

making. These include, and are not limited to, avoided costs of future energy price

increases, avoided future capital expenditure, improved building occupant comfort,

improved equipment reliability, de-risking ageing carbon-intensive infrastructure,

reduced risk of climate change, greater energy security, reduced impact on energy

distribution grids, and so on. There needs to be a greater focus on these co-benefits,

which show great promise to incentivise LCPP and communicate the improved long-

term public value that can be delivered through low-carbon procurement.


Issues relating to ‘monitoring and reporting’ skills and knowledge were common

perceived barriers reported by survey respondents. Interestingly, there are actually a

variety of tools and approaches that are readily available and which can easily be

incorporated into government procurement processes. It may just be that procurement

staff are simply unaware of the options available to them. Nevertheless, this still

presents a barrier to low-carbon procurement, since a perceived barrier still creates

roadblocks to uptake if procurers believe overcoming them would be too difficult or

expensive. This reinforces the need for further development of carbon literacy skills

amongst all stakeholders and the importance of consolidating tools that could help

overcome key skills/knowledge gaps. Several strategies are discussed within the

dissertation that can facilitate this.

Once again there is an important link to create to leadership strategies to help

direct resources, build internal skills and support change agents so they can play a role

in developing a program that is suited to the prevailing government-industry-society

landscape existing at the time. For example, currently in Australia energy productivity

is a politically desirable issue with bipartisan support, so there is an opportunity to

establish key strategic relationships between energy efficiency and low-carbon

outcomes. Going further, leveraging opportunities to facilitate deep retrofits (where

multiple building systems are upgraded with a whole-system-design perspective) can

deliver larger efficiency improvements, carbon savings and long-term value-for-

money than piecemeal approaches that consider only single building systems.

Strategies in the ‘Leadership and vision’ category should capitalise on opportunities

to align these opportunities and to support the internal skills and knowledge necessary

to make informed decisions about these variable barriers and opportunities.

7.3 CHAPTER SUMMARY

This chapter has presented five overarching factors and 24 strategies and their

characteristics that are concluded to be conducive to implementing successful public

procurement programs. Reflecting on the strategies, factors and characteristics

described above the case studies and survey data were reviewed to develop a new

model for facilitating the uptake of low-carbon public procurement, providing a

starting point for considering the development and implementation of future LCPP

programs and a context for discussing existing program improvement opportunities.

The model illustrates the relationship between observed strategies conducive to


successful program implementation where the strategies can be considered aligning to

three program mechanisms of ‘Leadership and vision’, ‘Engagement’ and ‘Design and

implementation’.

Chapter 8: Conclusions 229

Chapter 8: Conclusions

Society is facing a host of significant and complex challenges related to

development and sustainability. Climate change in particular represents one of the

most pressing problems for society and it is clear that nations must rapidly reduce

greenhouse gas emissions to mitigate the threat of further climate change. There are

increasingly urgent calls for transitions to low-carbon development models from a

range of private and public-sector entities internationally and in Australia.

Public procurement – the processes by which government authorities acquire

goods, services and works using public funds – has been identified as a key mechanism

available to governments to pursue low-carbon transitions. Public authorities around

the world spend billions of dollars each year procuring goods, services and works, and

this expenditure means there is potential for government procurement policies to play

a major role in driving low-carbon outcomes. However, the majority of this spending

does not currently appear to be supporting such low-carbon goals.

Research and practice in ‘low-carbon public procurement’ (LCPP) is still

somewhat emergent and ad hoc, with certain regions and jurisdictions more progressed

than others. Though much has been written on the topic of ‘green’ and ‘sustainable’

public procurement, the majority of this literature discusses broad environmental or

social considerations rather than the use of public procurement to achieve low-carbon

outcomes specifically. Research on the topic has been insufficient to provide clear

direction or motivation for government entities considering a transition to low-carbon

public procurement practices. In particular, further investigation is needed to

understand and address barriers limiting uptake of low-carbon public procurement

practices.

Within this context the purpose of this thesis is to contribute to the development

of this emerging research area, asking, “How can public procurement be used to

transition public buildings towards low-carbon operations?”. Focusing on state

government jurisdictions in Australia, the research has explored the role of public

procurement in transitioning public buildings towards low-carbon outcomes.

230 Chapter 8: Conclusions

To address this research problem the dissertation addressed four research sub-

questions within the theoretical lens of Decoupling, exploring: RQ1) how public

procurement practices can lead to low-carbon and sustainability performance

outcomes; RQ2) how Australian state governments address the carbon performance of

public buildings; RQ3) the current status of public procurement practices for low-

carbon outcomes, including barriers to uptake and opportunities for implementation;

and RQ4) what can be learned from examples of low-carbon public procurement

initiatives to deliver low-carbon outcomes in public buildings.

This chapter presents a series of conclusions and recommendations that have

been distilled from a synthesis of key findings across the literature review, survey, and

case studies. Conclusions and recommendations are informed by the three overarching

Mechanisms of ‘Leadership and Vision’, ‘Engagement’, and ‘Design and

Implementation’ (see Figure 9), associated with the five Factors that are conducive to

LCPP, and their 24 related Strategies, where:

• Management and Planning: Planning strategically; Leveraging institutional

influence; Involving decision-makers early; Supporting program champions;

Setting effective objectives; Framing the ‘why’; Harnessing policy and

regulation.

• Program design – Financial: Facilitating access to capital; Choosing best-fit

procurement approaches; Matching payback periods to long-term public

value objectives; Valuing and leveraging co-benefits; Facilitating whole-

system design outcomes.

• Program design – Skills and Knowledge: Simplifying procurement decision-

making; Sharing knowledge; Supporting internal skills; Outsourcing some

technical expertise.

• Engaging Departments: Aligning incentives; Building communities of

practice; Providing seed funding; Developing pilot projects.

• Engaging Supply Chains: Committing to program consistency; Streamlining

processes; Signalling future intentions; Influencing wider supply chains.

With regard to the structure of this chapter, in the following sections the research

focus is re-visited to first justify the focus on procurement within the context of the


public building sector (Section 8.1). Specific recommendations arising from the

research are then summarised (Sections 8.2 to 8.5) with regard to producing successful

low-carbon public procurement outcomes. Table 14 distils the suite of resultant

recommendations for transitioning to low-carbon public procurement practices.

Table 14: Recommendations for transitioning towards low-carbon public procurement

Research Question

Recommendation

RQ1 (Section 8.2)

1. Align public spending on government buildings as a priority for delivering greenhouse gas emission reductions and encourage innovation in low-carbon goods, services and works.

2. Consider the influence of procurement decisions on emissions throughout wider supply-chains.

RQ2 (Section 8.3)

3. Include specific reference to emissions and energy reduction within procurement guidelines, with processes that ensure these criteria influence procurement decision-making.

4. Encourage knowledge-sharing across jurisdictions and regions engaging elected officials, businesses, citizens, and other stakeholders to help streamline processes and build capacity within government and industry.

RQ3 (Section 8.4)

5. Use precedents of successful low-carbon public procurement practices to overcome perceived barriers that are currently limiting uptake.

6. Foster strong leadership and vision, ongoing carbon skills development, and strong collaboration between government, industry and academia.

RQ4 (Section 8.5)

7. Explore opportunities to implement the five success factors and their associated 24 strategies, considering the strong benefits of aligning multiple strategies and creating links between the strategies to develop successful LCPP initiatives.

8. Focus public procurement on delivering long-term public value, beyond short-term political and financial cycles.

The chapter concludes with a discussion of implications for action within

government, industry, and academia (Section 8.6). These potential activities could

further foster behaviour change across the three sectors towards transformed practices

within government agencies, construction industry and associated supply chains. The

effectiveness of future programs can be enhanced using this discussion to focus efforts

on meaningful and pragmatic steps forward.

8.1 JUSTIFICATION FOR THE RESEARCH FOCUS

Despite the increasing adoption of sustainable public procurement (SPP) and

green public procurement (GPP) practices by Australian governments research


suggests that greenhouse gas emissions from public buildings have typically continued

to increase. This suggests that despite these actions government purchasing patterns

are generally still contributing actively to further climate change. The significant and

urgent threat posed by climate change warrants a specific focus on emission mitigation

through government procurement to contribute to climate change mitigation

objectives.

The concept of low-carbon public procurement refers to the processes that a

public entity undertakes to obtain goods, services and works in order to fulfil an

identified organisational need whilst at the same time delivering climate change

mitigation objectives. Low-carbon public procurement is not an isolated phenomenon

but rather is a part of the broader processes that make up SPP and GPP, which are

themselves merely part of the group of processes that make up the concept of

procurement. While SPP and GPP have broader sustainability goals (often including

climate change as one of many considerations such as social and cultural outcomes)

low-carbon public procurement aims to bring focus specifically to the issue of

achieving greenhouse gas emission reductions. It is likely that without a strong focus

on carbon emissions within procurement many mitigation opportunities will be

overlooked or overshadowed by other competing sustainability issues.

LCPP is therefore a worthy area of focus given the importance of the climate

change issue and the predicted business-as-usual emissions increases. However, the

literature review revealed several issues in need of further attention. Firstly, there was

limited research generally on low-carbon public procurement and a lack of research

specifically relating to opportunities throughout the building sector. Secondly there is

limited existing research on barriers that may be contributing to this limited uptake of

low-carbon public procurement and a lack of research on opportunities for

implementation.

8.2 PUBLIC PROCUREMENT AS A MECHANISM FOR DECOUPLING EMISSIONS

RQ1: How can low-carbon procurement practices lead to improved carbon

and sustainability performance outcomes in public buildings?

There are numerous opportunities for reducing greenhouse gas emissions and

achieving low-carbon outcomes through procurement. Procurement decisions can be


used to influence emissions resulting from the various life-cycle stages of building

sector projects, equipment and goods, from initial design through to construction,

operation and even end-of-life options. Public procurement can thus act as a key

strategic decoupling mechanism, helping to delink development and human well-being

from negative environmental impacts such as the release of greenhouse gas emissions.

If public spending could be directed more strategically towards low-carbon

outcomes it could lead to significant reductions in greenhouse gas emissions and would

help encourage further innovation in low-carbon goods, services and works. The

significant collective purchasing power of public authorities worldwide amounts to

trillions of dollars annually and if this spending was aligned more closely to climate

change mitigation objectives it would reduce the impact of government activities.

A number of prominent authors and organisations have highlighted that the

building sector should be a focal point for implementing low-carbon public

procurement practices. However, the uptake of such practices to date has been

relatively minimal. This is reinforced by recent research in Australia showing that

significant potential remains for state and territory governments to improve energy and

carbon performance, particularly in key facilities such as hospitals and schools.

However, it is reasonable to assume that given the limited progress over the past

decade that without further guidance a business-as-usual approach is likely to continue,

resulting in limited progress over the coming years.

Public procurement choices influence the implementation of low-carbon

opportunities such as the choice of construction materials which can deliver emissions

reductions for new builds and refurbishments and opportunities to specify or

preference low-carbon equipment and activities during the construction process. There

is significant opportunity to consider life-cycle carbon emissions (from extraction of

raw materials to end-of-life) that can deliver improvements over business-as-usual

practices. During the operation phase of a building’s lifecycle procurement can also

be used to influence the selection of low-energy and low-carbon equipment and goods,

with the energy and carbon savings delivered by these choices able to contribute to

value-for-money outcomes when considering whole-of-life costs.

Procurement is likewise uniquely placed to influence wider supply-chain

emissions through practices such as preferencing contractors that demonstrate carbon


reduction outcomes in their general business activities, and even to go further and

influence subsequent suppliers in the same way, thereby encouraging emissions

reductions throughout the wider market and supply chain. There are varying levels of

uptake of the abovementioned practices, with some regions more progressed than

others and there does not yet appear to be widespread adoption of many of these

practices.

8.3 STATE GOVERNMENT EFFORTS ADDRESSING THE CARBON PERFORMANCE OF PUBLIC BUILDINGS

RQ2: How do Australian state government authorities currently address

the carbon performance of public buildings?

To date, low-carbon public procurement efforts in Australia have been largely

ad hoc, highly variable and champion-led. There are a small number of notable

departments that are demonstrating leadership through the adoption of targets and

action plans that are beginning to deliver carbon and energy efficiency outcomes. Also

within these leading jurisdictions there are positive sign of knowledge sharing

regarding strategies and models, particularly amongst the southern states, which will

help streamline processes and build capacity within the energy and carbon industry.

Across Australia many state government procurement guidelines now recognise

the potential of public procurement to facilitate sustainability objectives. In some

jurisdictions there are overt references within procurement guidelines and related

documents regarding the potential for procurement to impact greenhouse gas

emissions, with varying levels of commitment to the need for such considerations to

be included in procurement decision-making. Where references to emissions do exist

however there is often relatively weak wording and guidance around how to

operationalise such considerations. In other jurisdictions references to greenhouse gas

emissions and sustainability have been all but removed from procurement guidelines

at various stages over recent years.

There is an increasing focus on energy productivity within several Australian

state governments that appears to be receiving relative bipartisan political support, and

this is an avenue that should be further developed to align carbon and energy efficiency

outcomes and to communicate these benefits to the public, elected officials and other

stakeholders. There are also some good first steps towards LCPP evident in many


regions, such as requiring minimum star ratings for government-leased premises and

specifying minimum standards for new electrical appliances.

However, the survey results suggest there is limited effectiveness in the current

use of low carbon and energy efficiency criteria in public procurement. While it is

clear that energy efficiency criteria are relatively commonly used, low-carbon criteria

are seldom incorporated into the procurement of building-sector projects. Furthermore,

the results suggest that when energy efficiency and low-carbon criteria are actually

included in tenders they rarely have a significant impact on contract award decisions.

This suggests that such criteria are not being used effectively at present, and are likely

not resulting in emissions reductions to the extent that they could be.

Due to the strong link between energy consumption and greenhouse gas

emissions it can generally be assumed that energy efficiency improvements are likely

to result in reduction in greenhouse gas emissions. As energy efficiency is already

being incorporated into procurement to some degree, and is becoming an increasingly

important government priority, this is an area that should be focussed on in greater

detail by other state and territory governments wherever possible in order to accelerate

the uptake of low-carbon public procurement.

According to the United Nations Environment Programme there remains much

“untapped potential” for public procurement to play a role in mitigating climate

change (United Nations Environment Program, 2015). This statement also holds true

within the Australian context. However recently some leading governments and

organisations in Australia and internationally have begun trialling low-carbon

procurement practices and initiatives aimed at improving carbon outcomes. Whilst

these efforts have been limited to a relatively small number of leading actors they

provide valuable insight into strategies that can be used to increase the uptake of LCPP

more widely.

8.4 STATUS OF LOW-CARBON PUBLIC PROCUREMENT PRACTICES

RQ3: What is the status of public procurement practices for low-carbon

outcomes, including barriers to uptake and opportunities for

implementation?


A central aim of this thesis was to determine the current status of low-carbon

public procurement practices, including to understand barriers limiting uptake and to

explore opportunities for implementation. The research identified a number of

important barrier items limiting the uptake of low-carbon public procurement

practices, including factors such as a perceived lack of monitoring and decision-

making tools, availability of emissions data for goods/services/works, insufficient

carbon skills amongst procurement staff, access to life-cycle cost information for low-

carbon options, and other factors.

It is concluded that prior surveys and research examining sustainability barriers

with a ‘broad-brush’ approach of only a ‘category’ level focus may be getting an

inaccurate picture of challenges for sustainable procurement. There was some

variability in perceptions of cost as a barrier at the two different levels of enquiry in

the survey, with cost ranking the highest consideration in the initial high-level enquiry

but often being outranked by barriers concerning skills, information and tools upon

more thorough investigation. Whilst cost is undoubtedly an important barrier these

findings suggest that respondents could be conditioned to think of cost as the

preeminent barrier, having a tendency to rate it somewhat higher than it may actually

be. A second area of variability was with barriers related to ‘tools and guidance’, which

also emerged as significant barriers despite being initially rated as one of the least

significant barriers.

It is also concluded that it would be valuable to further develop and consolidate

tools and procurement methods that could help overcome perceived barriers and to

further develop carbon literacy skills amongst public procurement staff. Issues relating

to monitoring and reporting of carbon outcomes were a common concern for the

procurement staff surveyed and so present a perceived barrier to the uptake of LCPP.

Interestingly, there are actually a variety of tools and approaches that are readily

available and which can easily be incorporated into government procurement

processes, so it may be that procurement staff are simply unaware of the options

available to them. Nonetheless this still presents a barrier to low-carbon procurement,

since a perceived barrier still creates roadblocks to uptake if procurers believe

overcoming them would be too difficult or expensive. This speaks to a general lack of

skills and knowledge regarding carbon competencies.


Five success factors are distilled from the research, comprising: ‘management

and planning’, ‘engaging departments’, ‘engaging industry’, ‘financial’ and

‘skills/knowledge’. Within each success factor there are a variety of both ‘hard’

(technical) and ‘soft’ (non-technical) strategies. It was interesting to discover through

the course of this research that many existing and technologies and methods can be

used to address strategies within each of these factors; no great leaps of technological

change are necessary to deliver significant emissions reductions. However, without

institutional change many of the same barriers will continue to prove challenging.

Efforts herein will need to focus equally on cultural change and broadening

perspectives beyond short-term political and financial cycles to refocus public

procurement on delivering true long-term public value. This will require strong

leadership and vision, ongoing carbon skills development, and strong collaboration

and engagement between governments and industry.

8.5 LEARNING FROM SUCCESSFUL LCPP INITIATIVES

RQ4: What can be learned from successful examples of low-carbon public

procurement to help deliver low-carbon outcomes in public buildings?

A new conceptual ‘low-carbon public procurement practices’ (LCPPP) model

was developed to guide state government authorities towards successful low-carbon

procurement outcomes, comprising the five factors described above and their

associated strategies (see also Chapter 7). The model builds upon important earlier

work by authors such as Brammer and Walker (Brammer and Walker, 2011), who

present a model of the influences on sustainable procurement. Their model focuses

more generally on sustainable procurement (rather than LCPP specifically), exploring

how SPP translates into practice and argues that it arises “primarily because of

pressures on the organisation to undertake it”. This PhD expands upon that discussion

by exploring firstly what stops organisations from undertaking LCPP, despite these

pressures, and secondly what strategies have been successful in overcoming these

barriers.

The new LCPPP model presented here suggests an alternative structure and

provides additional insight into influences and success factors specifically for low-

carbon procurement at a detailed level. The model should be considered in association


with Table 13 which outlines the factors and strategies presented in the model. The

structure of the model also highlights the benefit of aligning multiple strategies and

creating strong links between the five factors to develop successful initiatives. Three

overarching program mechanisms of ‘Leadership and vision’, ‘Engagement’, and

‘Design and Implementation’ are presented that can be used to guide the establishment

of programs and distinguish potential reinforcing opportunities in program design.

‘Leadership and vision’ includes strategies such as facilitating program

champions, strategic planning, and setting effective objectives. These were identified

to have had a key impact on the success of the programs and individual projects within

them. Strategic planning helps determine a road-map for agencies to implement low-

carbon procurement across their buildings to meet any targets and objectives set by

programs. A key strategy for optimising programs to deliver significant energy and

carbon savings is to identify opportunities to closely align LCPP projects with future

planned capital expenditure. This requires more forward planning to identify

opportunities to coordinate and leverage capital expenditure to achieve optimal value-

for-money and carbon outcomes.

This is also a key strategy to assist departments to facilitate deep retrofits, where

multiple building systems can be upgraded with a whole system design perspective,

potentially delivering larger efficiency improvements, carbon savings and long-term

value for money than more piecemeal approaches that consider only single building

systems. However, in order to effectively implement such approaches it will require

leadership to engage departments and decision-makers, linking innovative program

design with emerging strategies to overcome existing financial and skills barriers.

Typically, individual government agencies do not have any direct financial

incentive to invest in low-carbon or energy efficient purchases. Government financial

arrangements often mean that departments that invest in energy efficiency may not see

the financial benefit, especially if there is no mechanism for allocating the savings

back to the department who initially invested in the energy efficiency measure. Since

low-carbon and energy efficiency procurement sometimes have larger upfront costs

this presents a significant barrier in situations where other more immediate spending

commitments often take priority, despite the fact that these upgrades often repay

themselves over relatively few years.


Access to capital is one of the most critical success factors evident in the two

case studies, so addressing this is of key importance, yet what is needed concurrently

is cultural and institutional change reinforced by sustainability skills and knowledge

development so that the various stakeholders may come to appreciate how LCPP can

contribute to operational savings and public value. If this cultural change can be

facilitated then sustainability programs can become more resilient to changing political

cycles.

Energy efficiency is currently a politically desirable objective with relative

bipartisan support, so ‘Leadership and vision’ approaches should capitalise on

opportunities to align carbon and energy efficiency goals wherever possible and to

communicate the mutual benefits to decision-makers, elected officials and the general

public in order to help catalyse support for LCPP. Likewise, key strategic opportunities

should be leveraged to align LCPP with wider political and organisational wherever

practicable, for example aligning LCPP programs with the United Nations’

Sustainable Development Goals.

There are also tried and tested procurement approaches such as energy

performance contracting (EPC) which are designed specifically to overcome financial

barriers, and these should be considered in future programs. In Australia EPCs are still

a somewhat unfamiliar concept for many agencies, so program design will need to link

strategies strongly with support and skills development to help procurement staff

understand and engage with these models. It will be important to build from the

success of existing programs such as Victoria’s Greener Government Buildings

Program to apply key lessons learned and share strategies for success. Likewise there

are emerging finance methods such as green bonds that show promise to overcome

some financial barriers and these will benefit from pilot projects to further develop

their potential in public procurement.

‘Design and implementation’ relates to key program focus areas and procedures

that overcome important cost and skills/knowledge barriers such as those discussed

above. The literature review revealed that these barrier categories were frequently cited

as significant barriers to more sustainable public procurement in general. Survey

results confirmed that these barrier categories are also prevalent for low-carbon public

procurement. The survey results also highlight that the barriers preventing LCPP


uptake are variable, and this suggests that solutions must respond to this variability

and be somewhat tailored. There is likely no ‘cookie-cutter’ approach to overcoming

barriers: what works in one region may not be ideal in another. However, it is highly

likely that what will be required in all cases will be multiple strategies to facilitate

skills and knowledge development and overcome financial barriers, and to create

strong linkages between these strategies and those in the other two program

mechanisms.

Many of the barriers limiting the uptake of LCPP occur at a departmental or

agency level. Results from the survey stage of the research show that these barriers are

many and varied. In some cases these barriers are real and significant, as is the case

with access to finance where it is often the case that even projects that provide a

positive return on investment may be delayed for many years due to competition for

limited departmental resources, where core business necessarily takes precedence. In

such cases it would help to better align incentives for departments so that some of the

financial benefit flowed back to the department in order to finance further upgrades or

to supplement budgets. Strategies to engage departments should have strong links to

‘skills/knowledge’ strategies in order to improve low-carbon knowledge and

competencies. There is a role to play for leadership and visioning mechanisms to foster

the necessary innovation and cultural change to overcome these issues.

As a program mechanism, ‘Engagement’ refers to creating program structures

that fully involve the two key stakeholders involved in the day-to-day

operationalisation of low-carbon public procurement; namely government

departments and the suppliers that provide goods, services and works to them. These

factors and strategies go beyond actions such as simply mandating participation of

government agencies or stipulating the use of particular guidelines, and so forth.

Rather, the intention is to incentivise lasting commitment and collaboration. The focus

on engagement as a key program mechanism is reinforced by stakeholder theory which

posits that relationships between stakeholders are not dyadic but instead involve

multiple stakeholder networks, and that the building of these relationships is of high

importance to achieving change of procurement and supply chain practices.

Industry has a key role to play in the transitions needed to move towards a low-

carbon building sector, and it is important that supply chains are fully engaged in

contributing to low-carbon objectives wherever possible. There is also an onus on


government to make the process of engagement as uncomplicated as possible so that

efforts are not wasted on program inefficiencies. As such, several of the ‘supply chain’

elements are focussed on ensuring consistency and streamlining engagement processes

for suppliers. This reinforces the need for a dual focus on both ‘hard’ and ‘soft’

approaches in order to overcome the various multifaceted barriers limiting LCPP

uptake.

The Engagement strategies presented in this thesis were found to positively

influence program success and if strong interlinkages can be fostered between the

various factors and strategies (as is intended through the structure of the LCPPP

model) it will contribute to alliance building etc. to overcome challenges.

8.6 IMPLICATIONS OF THE RESEARCH FOR ACADEMIA, GOVERNMENT AND INDUSTRY

In a governance environment where low-carbon criteria are not being used

effectively at present, this research has important implications for academia,

government and industry as society begins to accelerate the transition towards low-

carbon and energy efficient practices and operations. A significant contribution of the

research is the identification and validation of key barriers currently limiting the uptake

of low-carbon public procurement in the building sector within an Australian context.

This will be of value to governments developing procurement initiatives, guidelines

and strategies since it highlights significant common challenges limiting the ability to

incorporate low-carbon considerations into procurement.

This research has also elicited a new model for low-carbon public procurement

through the lens of Decoupling theory, building upon earlier conceptual models for

sustainable procurement, providing a scaffolded suite of five ‘factors’ and 24

‘strategies’ that can be used to foster low-carbon procurement program success. This

provides immediate value to government departments as they design low-carbon

procurement initiatives and programs, providing guidance on potential high-value

program strategies and characteristics.

This research also brings increased attention to the various co-benefits of LCPP

when it is explicitly discussed and valued in procurement decision-making.

Procurement is uniquely placed to influence positive outcomes for emissions


mitigation objectives, carbon risk exposure and long-term public value. The potential

co-benefits of LCPP are many and varied. They include benefits such as improvement

in credit ratings due to improved asset quality and reduced asset risk, aligning

procurement practices more closely with higher-level government policies on climate

change mitigation, reduced future energy expenditure and contributing to real long-

term value-for-money by reducing the impact of government facilities on future

climate change. These co-benefits can be significant and can contribute to the business

case and help to further engage departments in LCPP. It is recommended that these

factors be explicitly evaluated and communicated to both the public and elected

officials.

This research has important implications for industry, particularly regarding

insights into important barriers limiting the use of low-carbon procurement by state

governments. Industry is uniquely placed to deliver or contribute to low-carbon and

energy-efficiency outcomes in government buildings. Indeed, many of the skills,

knowledge and expertise possessed by industry will be of value to governments. This

research helps to highlight important deficiencies in government capacity to deliver

such outcomes. This is an area where the private sector can provide value and build

partnerships with governments to help deliver the low-carbon outcomes needed by

society. This research draws attention to the importance of this relationship between

government and industry that will be necessary to transition the building sector to low-

carbon operations.

This will provide value to the private sector when considering capacity building

and skills development that will need to be developed in order to get access to the

significant emerging markets that could be facilitated by future LCPP initiatives. It

provides guidance on important program strategies and characteristics linked to

improved program outcomes. The identification of the factors conducive to program

success and the development of the new LCPP model providing a starting point for

considering the development and implementation of future LCPP programs and a

context for discussing existing program improvement opportunities. These have

important implications for how industry will adapt to a low-carbon market and

continue to provide services and expertise to the government sector.

Finally, this thesis provides important contributions to the academic research

community by bringing further understanding regarding specific challenges faced by


government departments as they implement low-carbon considerations into

procurement process. Key barrier categories and barrier items were distilled from the

literature review and validated through the survey of procurement staff involved in

building-sector procurement for state government entities. This research collected

baseline information about the current use of energy efficient and low-carbon criteria.

This provides a valuable snapshot of challenges for this emerging research area that

can be built upon over time with subsequent research. Potential future enquiry could

focus on exploring these questions from other theoretical lenses. It would also be

useful to explore where these theories disagree with the empirical findings, as a

pathway for further building the theoretical discourse on this topic.

With additional research, many of the findings in this dissertation could

potentially be extended to the local and federal government sectors since many barriers

faced by state government departments would likely hold true for other levels of

government and different jurisdictions. It could thus help to provide valuable insight

into important program strategies and characteristics that could be adopted by local or

federal government entities to help influence the uptake of LCPP more widely. Future

research into additional case studies will be useful in checking for additional

opportunities for LCCP not present in the initiatives explored through this dissertation.

Finally, research into LCPP at the local and federal government levels could also

reveal distinct challenges and strategies for their specific contexts.

References 245

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17

Appendices

Appendix A: Bibliometric analysis results

The literature search produced sixty papers relevant to low-carbon public procurement

that were subsequently reviewed to inform this study. Findings are presented in two

parts. First, basic descriptive analysis information is presented, including years of

publication, sectors of focus, the nation/region of focus, and the main research

approach used by the papers in the sample. This serves to illustrate the development

and current state of the low-carbon public procurement research. It is useful for

identifying gaps in research and areas in need of more attention. Following this, a

thematic analysis is presented, which aims to summarise some of the key concepts

emerging from the literature. The focus of the thematic analysis in this case was to

examine the barriers and drivers to low-carbon public procurement that are discussed

within the literature sample.

The number of papers on public procurement and carbon/energy issues have been

rising steadily over the past decade (see Figure 10) suggesting that low-carbon public

procurement as a research area is developing. However, there are still very few papers

that focus centrally on low-carbon issues. Many of the papers mention carbon,

greenhouse gas emissions or energy efficiency only as secondary issues to other

environmental or social procurement issues. This is somewhat surprising given the

importance of the climate change issue and the potential for the use of public

procurement as a mechanism to reduce emissions. This highlights the urgent need for

more research on low-carbon public procurement.

Of the sixty papers relevant to public procurement and carbon or energy efficiency

issues, 32 per cent focused on some aspect of the built environment sector, 13 per cent

focused on the transport sector, and seven per cent on technology procurement.

Interestingly, almost one-third of the papers analysed were nonspecific about a sector

of focus. This lack of specificity may be due to the fact that the LCPP research area is

still currently relatively undeveloped. It is likely that as the field develops, papers will

focus more specifically on sectors of interest.

264 Appendices

Figure 10: Number of published peer reviewed papers on public procurement and

carbon or energy efficiency issues.1

The majority of the literature is focused on the European context; with Sweden and the

United Kingdom being the most frequently cited nations of focus for the papers in the

sample, comprising 20 per cent and 15 per cent of papers respectively. Similarly to the

analysis of the ‘sectors of focus’ (presented above), the majority of papers were also

geographically nonspecific; with 28 per cent of the papers discussing procurement

broadly without focusing on a single nation or region. Again, this may be due to the

relatively early stage of development of the low-carbon public procurement research

area.

The research approach employed by the sixty papers in the sample focuses heavily on

case studies (37 per cent); literature reviews or papers that rely on secondary data (18

per cent); and mixed method studies (27 per cent). Referring to the epistemological

classification system used by Hoejmose and Adrien-Kirby (2012) (see Table 15

below), the 60 papers reviewed in this study were largely dominated by prescriptive

papers (comprised of 28 per cent normative; 35 per cent instrumental), followed by

descriptive papers (20 per cent). The bibliometric analysis also revealed that the

majority of this peer-reviewed literature is published primarily within journals

dedicated to energy policy or sustainability.

1 Papers published in 2015 have been excluded from this figure due to incomplete yearly data at the time of analysis

1 1 12

1 1 1 1 1 1

32

34

3

8 8

11

3

0

2

4

6

8

10

12

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

2014

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Table 15: Summary of bibliometric analysis

266 Appendices

Author Year Sector of focus Nation Method Epistemolo Alvarez and Rubio (2015) Services Spain Case study Instrumenta

Annunziata et al. (2014) Built environment Italy Mixed Exploratory Anthonissen et al. (2015) Built environment Belgium Case Study Instrumenta

Arvidsson and Stage (2012) Waste

Sweden Case study Instrumenta Blissett (1978) Nonspecific USA Mixed Descriptive

Bolton (2008) Nonspecific Sth. Africa Lit review/2nd data Normative Borg et al. (2006) Built environment Multi Qualitative Normative Boza-Kiss et al. (2013) Built environment Multi Mixed Conceptual Carlsson-Kanyama et al. (2013) Nonspecific Sweden Case study Exploratory Correia et al. (2013) Nonspecific Multi Lit review/2nd data Descriptive Dandridge et al. (1994) Built environment Multi Case study Descriptive de Leonardis (2011) Nonspecific Multi Lit review/2nd data Normative de Melo et al. (2013) Built environment Brazil Mixed Instrumenta

Duane et al. (2012) Health UK Case study Instrumenta Faith-Ell (2005) Transport Sweden Mixed Instrumenta Gee and Uyarra (2013) Waste

UK Case study Instrumenta

Hamza and Greenwood (2009) Built environment UK Qualitative Exploratory Ho et al. (2010) Nonspecific Multi Case study Normative Hochschorner and Finnveden (2006) Defence Sweden Mixed Instrumenta

Jianya (2011) Nonspecific China Lit review/2nd data Normative Jones (2011) Multi Multi Case study Descriptive Killip (2013) Built environment UK Theoretical Instrumenta

Krause (2012) Power USA Mixed Instrumenta Kunzlik (2013) Nonspecific Multi Theoretical Conceptual

Larsen and Hertwich (2011) Transport Norway Case study Instrumenta Larsen et al. (2012) Nonspecific Norway Lit review/2nd data Normative

Lidestam et al. (2013) Transport Sweden Case study Instrumenta Lidestam et al. (2014) Transport Sweden Mixed Instrumenta Liu and Cui (2015) Built environment USA Mixed Instrumenta Lund et al. (2007) Technology

Multi Case study Instrumenta

Lundberg and Marklund (2011) Nonspecific Multi Lit review/2nd data Normative Manojlović et al. (2011) Transport Serbia Case study Instrumenta

Mayo et al. (1995) Built environment USA Case study Descriptive Melissen and Reinders (2012) Nonspecific Netherlands Qualitative Normative Messagie et al. (2015) Transport Belgium Mixed Instrumenta

Mills et al. (1991) Nonspecific Multi Lit review/2nd data Normative Nash (2009) Technology

Multi Case study Descriptive

O’Brien and Hope (2010) Built environment UK Qualitative Conceptual Olerup (2001) Technology

Sweden Qualitative Normative

Otsuki (2011) Food Brazil Case study Normative Parikka-Alhola and Nissinen (2012) Transport Sweden Case study Descriptive Preuss (2007) Nonspecific UK Qualitative Normative Rietbergen and Blok (2013) Nonspecific Netherlands Case study Instrumenta

Rwelamila et al. (2000) Built environment Multi Case study Normative Simcoe and Toffel (2014)

Built environment USA Mixed Exploratory

Sousa et al. (2012) Nonspecific Portugal Mixed Instrumenta Sterner (2002) Built environment Sweden Qualitative Descriptive

Stevens (2010) Nonspecific Multi Lit review/2nd data Normative Stillesjö (1993) Built environment Sweden Case study Descriptive Swisher (1994) Technology

Sweden Mixed Normative

Tambach (2012) Built environment Netherlands Case study Exploratory Tarantini et al. (2011) Built environment Multi Case study Instrumenta

Taylor (2009) Offsets USA Lit review/2nd data Descriptive

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van Asselt (2006) Nonspecific Multi Qualitative Descriptive van Rijnsoever (2013) Transport Netherlands Mixed Exploratory Varnäs et al. (2009) Built environment Sweden Mixed Descriptive Walker et al. (2008) Multi UK Qualitative Exploratory White et al. (2008) Nonspecific UK Lit review/2nd data Normative Zhang and Assuncao (2004) Nonspecific Multi Lit review/2nd data Normative Zhou et al. (2013) Built environment UK Mixed Instrumenta

268 Appendices

Appendix B: Uptake of sustainable procurement in Australian state

governments

In Australia, state and territory governments (hereafter referred to simply as

‘state governments’ for the sake of brevity) have responsibility for managing and

executing their own sustainable procurement strategies. Many state government

procurement guidelines recognise the potential of public procurement to facilitate

sustainability objectives, and variable levels sustainable public procurement practices

have been adopted by the various state and territory governments to dat. However,

uptake of low-carbon public procurement practices specifically is still quite ad-hoc

with only minimal or no focus on carbon issues by many governments. The following

section provides examples of current LCPP practices within Australian state and

territory governments, helping to answer RQ2 ‘How do Australian state government

authorities currently address the carbon performance of public buildings?’

New South Wales

According to the Office of Environment and Heritage, New South Wales spends

in excess of $500 million annually on energy, water and waste – three key areas with

significant greenhouse emission impacts (Office of Environment and Heritage (NSW),

2014b). Collectively NSW State government facilities and infrastructure have

electricity requirements of over 1,800 GWh annually. This represents a significant

greenhouse gas contribution to the state and national carbon budgets.

The NSW Government Resource Efficiency Policy (GREP) aims to reduce

government expenditure and improve resource efficiency by focusing on energy, water

and waste (Office of Environment and Heritage (NSW), 2014b). Agencies are required

to publish annual reports outlining their performance against the policy. It sets several

targets for energy efficiency, water efficiency and waste reduction. These include, for

example, mandatory targets for energy efficiency projects at government facilities,

minimum NABERS Ratings for certain facilities, minimum appliance and purchasing

green electricity. The NSW Government estimates that the measures set out in the

Resource Efficiency Policy will deliver energy savings of $27.5 million annually.

The GREP commits NWS government agencies to a number of targets that will

reduce energy and carbon emissions. Examples include Target E1: “Undertake energy

efficiency projects at sites representing 90% of their billed energy use by the end of

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2023–24, with an interim target of 55% for Health and 40% for other clusters by the

end of 2017–18”, with all facilities owned or leased by government agencies captured

under the target; and Target E2: “Large owned and leased office buildings will achieve

and maintain a NABERS Energy rating of at least 4.5 stars by June 2017” (Office of

Environment and Heritage (NSW), 2014b). These targets represent a significant move

towards improving the performance of government facilities. Furthermore, guidance

is provided on implementation, data collection, monitoring and reporting, which

should assist agencies in determining how to operationalise the targets.

The 2013 NSW Energy Efficiency Action Plan states that the NSW Government

will “take a leadership role in adopting energy efficient technology”. Whilst none of

the strategies outlined in the Action Plan make reference to greenhouse gas emissions,

it is very likely that the Action Plan will have an impact on greenhouse gas mitigation

due to the strong link between energy and emissions. The Action Plan commits the

NSW government to the following key actions that have relevance for LCPP (Office

of Environment and Heritage (NSW), 2013):

• “Drive savings by key government agencies through a Government Resource

Efficiency Policy”

• “Support agencies with a specialist team to help identify and implement projects”

• “Establish a pre-qualified tender panel to streamline procurement”

• “Improve the accessibility of finance for government energy efficiency projects”

• “Increase energy efficient office leases taken up by government”; and

• “Make government energy usage and energy efficiency data accessible.”

The superseded NSW State Government Sustainability Policy 2008 contained

‘Action Strategies’ which set out responsibilities, actions and reporting requirements

in five key sectors, including office buildings and health and educational facilities

(Government of New South Wales, 2008) – all three sectors are important focus points

for significant carbon reductions. The Office Building Action Strategy recognises the

importance of space cooling, ventilation and lighting as key areas of focus to reduce

greenhouse gas emissions. It set out a number of key actions for Government office

premises, including 1) ratings for Government offices; 2) sustainability toolkits for

270 Appendices

government office tenancies; 3) requirements for Green Lease Schedules for new or

negotiated leases; 4) fit out briefs for tenants; and 5) financing requirements. Agencies

were required to report to the State Department of Environment and Climate Change.

The M2008-28 Ministerial Memorandum set targets and strategies for embedding

sustainability considerations in NSW Government procurement practices, and forms

an important element of the Government’s carbon neutral commitment.

The recent NSW Procurement Policy Framework 2015 discusses sustainable

procurement and references the Australian and New Zealand Government Framework

for Sustainable Procurement and the APCC Sustainable Procurement Practice Note

and Guides. Its stated mandatory requirement for sustainable procurement is to

“ensure value for money - apply the Statement on Value for Money M2014-08 NSW

Government Resource Efficiency Policy” (NSW Procurement Board, 2015). It does

not specify how sustainability issues must be valued and there is no mention of climate

change, carbon or greenhouse gas emissions.

Victoria

The Victorian Government’s procurement actions are guided by their

Governance Policy in addition to a number of guides and templates, several of which

have relevance to low-carbon and sustainable procurement. A key tenet of the

government’s procurement policy is to achieve value for money. Recognising the

importance of non-price factors in achieving public value, the Victorian Government

defines value for money as involving a “balanced judgement of financial and non-

financial factors. Typical factors include fitness for purpose, quality, whole of life

costs, risk, environmental and sustainability issues, as well as price” (Victorian

Government Purchasing Board, 2016). Theoretically at least, sustainability should

inform procurement decision making through its influence on value for money.

The ‘Guide to Environmental Impact in Procurement’ document lists

‘greenhouse emissions’ as a key environmental impact area and states that these

impacts ‘should’ be considered during market analysis stage of the procurement

process (Victorian Government Purchasing Board, 2016). The guidelines provide

some suggestions on how to evaluate the environmental risk and suggest that any

minimum environmental performance standards required by government policy

should be considered. However, the use of language such as ‘should’ (as opposed to

‘must’) reduces the impact of these guidelines. There is no requirement that any of

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these steps must be performed or what weighting greenhouse gas emissions impacts

should be given when making procurement decisions.

However, despite the procurement guidelines lacking any binding requirements

to factor carbon or sustainability considerations into procurement decision-making, the

Victorian Government has been undertaking some ambitious efficiency improvements

to government buildings through a procurement initiative called the Greener

Government Buildings (GGB) program. It is an initiative of the Department of

Treasury and Finance (DTF) within the Victorian State Government in Australia and

was initially established in 2009 with the objectives of “reducing the energy use of

Victorian Government buildings and infrastructure as a means of cutting

Government’s operating costs and greenhouse gas emissions” (Department of

Treasury and Finance, 2013). It was estimated that the program would result in a 25

per cent reduction in government’s emissions over ten years (Department of Treasury

and Finance, 2013).

The program has been successful in upgrading the energy performance of

government facilities and achieving significant greenhouse gas emission reductions.

As of 2013 the program had successfully committed 20.48 per cent of total government

portfolio emissions to GGB projects and reduced average GHG emissions by 42.8 per

cent (Department of Treasury and Finance, 2013); well above the initial estimate. The

program was also awarded the Premier’s Sustainability Award in 2011.

The program uses energy performance contracts (EPC) as a procurement method

to reduce government emissions. EPCs are a mechanism to achieve energy efficiency

outcomes by engaging a specialist contractor/s to deliver an energy efficiency project

and guarantee key outcomes such as financial savings and energy/carbon reductions.

An EPC involves engaging an energy services company (ESCO) to identify,

implement and verify energy efficiency opportunities in a single building or across a

building portfolio (Government of Victoria, 2015). The program is a standout example

of low-carbon public procurement in practice and is discussed in further detail in

Chapter 5 and 6: Case Studies.

South Australia

272 Appendices

The South Australian State Government is showing many early but positive signs

of incorporating low-carbon procurement practices into its policies and practices. The

Procurement Policy Framework states that sustainable procurement is a ‘Government

requirement’, meaning that certain actions are mandated during departmental

procurements (State Procurement Boad (SA), 2015). It lays out a number of

sustainability factors in a list of ‘factors to consider when assessing value for money’,

in addition to whole-life-costs, risk, efficiency, and other government priorities (State

Procurement Boad (SA), 2015).

To assist with achieving these priorities the Sustainable Procurement Guidelines

mandate that “public authorities must undertake a sustainability impact assessment

for all procurements valued at or above $AU 4.4 million and significant procurements

below $AU 4.4 million (as determined by the public authority) during the acquisition

planning phase” (State Procurement Boad (SA), 2015). Other authors have noted that

sustainability impact assessment is becoming increasingly important in governmental

policy design (Böhringer and Löschel, 2006) so mandating its inclusion in larger

purchases is an important step in improving the environmental performance of

government procurement. For smaller procurements (between $550,000 and $4.4

million) there are no requirements, but public authorities are ‘encouraged’ to consider

sustainability principles. To what degree this encouragement results in the full

consideration of sustainability in these procurements is uncertain.

The Sustainable Procurement Guidelines list example questions to help

departments distinguish some sustainability impacts that could result from their

procurement. For example, they list questions such as “Are there any significant

climate change or greenhouse gas emission impacts associated with the

procurement?” and “Does the procurement utilise a high level of energy, resources or

water?” (State Procurement Board (SA), 2015). These are critical questions to ask in

order to operationalise low-carbon procurement, so having them explicitly stated in

the Guidelines is a constructive start. None of these questions are mandatory however,

they are simply suggestions.

The South Australian Government’s Procurement Policy Framework states that

“achieving value for money involves determining the extent to which the proposed

solutions will deliver the optimum combination of whole-of-life cost and quality (non-

cost) factors” (State Procurement Boad (SA), 2015). It is important here that they

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identify lifecycle costs and quality impacts, since these are often aspects that low-

carbon and energy efficient procurements can make significant contributions towards.

The Framework also acknowledges that “a key principle of value for money is that

‘lowest price’ does not always represent the best outcome when evaluating alternative

offers” (State Procurement Boad (SA), 2015). This is also a common but important

inclusion, since low-carbon procurement may sometimes entail higher upfront costs in

order to contribute to better public outcomes, such as the contribution to climate

change mitigation.

South Australia’s Climate Change Strategy 2015-2050 is another key document

guiding the decarbonising of the government’s operations (Department of

Environment Water & Natural Resources (SA), 2015). The document highlights the

role of procurement as a key mechanism to achieve climate change mitigation, stating

that “procurement and approvals processes are important low-cost policy levers that

the government can use to help drive the transition to a net zero emissions economy”.

It outlines several important strategies the government will consider such as

decarbonising the government’s energy supply and fleet vehicles, adopting carbon

accounting mechanisms and supporting the development of energy storage

technologies that can facilitate greater uptake of renewables. These are promising signs

that, if implemented, will demonstrate commitment and show innovation that will help

to respond to calls from industry and research leaders for government to support low-

carbon market growth (Department of Environment Water & Natural Resources (SA),

2015).

Queensland

The Queensland Government Procurement Guidance document provides a

working definition of sustainable procurement as “a process whereby organisations

meet their needs for goods, services and capital projects, in a way that achieves value

for money on a whole life basis in terms of generating benefits not only to the

organisation, but also to society, the economy and the natural environment.”

(Department of Housing and Public Works, 2014a). Like similar definitions for

sustainable procurement by other government entities and organisations it references

key concepts such as value for money, whole-of-life benefits, and triple-bottom-line

considerations. This aligns with key procurement objectives such as creating public

274 Appendices

value and remains flexible enough to potentially be applied to a range of sustainability

impacts including energy use, greenhouse gas emissions and climate change.

There is no specific guidance on low-carbon procurement practices and no

specific targets for greenhouse gas emissions. The procurement guidance document

provides examples of appropriate outcomes and benefits to consider within the realm

of sustainable procurement, although they are careful to point out these are ‘examples

only’ and not required considerations. Examples of considerations relevant to LCPP

include “Improved air quality by reducing or eliminating emissions to air (e.g.

greenhouse gases, such as carbon dioxide, and other pollutants)”; “Reduced energy

emitted (e.g. heat, radiation, vibration, noise)”; and “Reduced waste and by-products

(e.g. recycling and waste prevention)” (Department of Housing and Public Works,

2014a). These create scope for applying and operationalising low-carbon public

procurement practices.

Additionally, the Queensland Government developed sustainable procurement

product guides for common product categories such as ICT products, furniture, print

services, and business machines such as multifunctional devices, photocopiers, and

printers. These sorts of purchases can affect the energy and carbon performance of

buildings since they consume energy directly and also emit head which can impact

other building systems such as HVAC. The guides provide advice on key sustainability

issues and ideas for agencies to implement, and include suggested criteria for inclusion

in procurement processes such as ‘minimum performance criteria’ and ‘best practice

performance criteria’. Minimum performance criteria often contain strong wording

such as the term ‘must’. For example, for business machines, minimum performance

criteria are that “all offered products must meet the latest Energy Star standards for

energy performance” (Department of Housing and Public Works, 2014b).

An example of other considerations taken from the guide for business machines

in the section covering transportation (Department of Housing and Public Works,

2014b) is as follows. The advice given is that transportation of business machines

causes significant carbon emissions, and the advice for agencies is to “procure

business machines from suppliers that can demonstrate initiatives to reduce the

environmental impacts associated from transportation and distribution of the

product”. The minimum performance criteria advice states that “offerors are required

to demonstrate the steps that have been taken to minimise the impacts associated with

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transportation and distribution of the offered products. This could include improved

delivery/logistics efficiency, initiatives to reduce fuel consumption or the use of

ethanol-blended fuels in delivery fleet” (Department of Housing and Public Works,

2014b). Additional guidance is given on how to award scores for environmental

impact, for example grams of CO2, and how to use a scoring system to support more

sustainable procurement options (Department of Housing and Public Works, 2014a).

This sort of guidance is integral in assisting agencies to adopt low-carbon procurement

practices.

A 2015 review of Queensland government procurement stated that the “value of

procurement is (currently) not clear and demonstrated, and its contribution towards

economic, environmental and social objectives is not optimised or visible”. The report

recommends moving towards “a broader definition of the value of continuous

improvement procurement practice in government that reflects achieving a more

balanced set of economic, environmental, social and longer term financial

improvements” (Department of Housing and Public Works, 2015). The review also

recommended “that value for money be more clearly defined to take into account

economic, environmental and social factors”. These statements suggest that more

awareness and communication of the public value that could be delivered through

carbon and energy reductions may be needed to help facilitate greater uptake of LCPP.

In the past the Queensland Government has implemented low-carbon

procurement practices, for example investing $8 million for energy efficiency retrofits

in existing Government-owned facilities during 2009-10 (Ma et al., 2012). Another

notable initiative was the creation of a ‘Carbon Management Unit’ within the State’s

public health department ‘Queensland Health’. The Unit was tasked with reducing

energy demand, improving energy efficiency and implementing behaviour change

across the department’s facilities

The Queensland Procurement Policy was recently revised through their

‘Procurement Transformation Program’ intended to secure improved value for money

outcomes from government spending. The revised policy removes a number of specific

requirements related to the integration of sustainability into the procurement of goods,

services, and construction, and focuses on reducing ‘prescriptive requirements’

(Department of Housing and Public Works, 2013).

276 Appendices

Western Australia

Western Australia’s ‘Sustainable Procurement Practice Guidelines’ provide

guidance on how to integrate sustainability into purchasing decisions for goods and

services, but not capital works. The 2014 guidelines mentions carbon emissions once

when it states that an example of ‘an environmental issue which might be considered’

would be “improved air quality by reducing or eliminating emissions to air (e.g.

greenhouse gases, such as carbon dioxide, and other pollutants)” (Department of

Finance (WA), 2014). Again, the language used appears to be deliberately non-

binding. Interestingly, the previous 2011 iteration of the Sustainable Procurement

Practice Guidelines went much further by stating the following:

“The respondents able to demonstrate a consistent track record of measuring

and reducing their impact in this area, can be scored higher than those that are only

able to indicate what steps they have taken to reduce their emissions, without actually

measuring them over time or comparing them to industry benchmarks. Nevertheless,

such respondents would score higher than those that provide an industry generic

response and focus on what they intend doing to reduce their emissions in the future.”

(Department of Finance (WA), 2011)

In the 2014 update to the guidelines the above text was removed from the

document. It does not provide any reasoning regarding the decision to remove

guidance about scoring highly those respondents with demonstrated carbon emission

abatement experience.

Tasmania

The Tasmanian Government Climate Change and Environmental Policy outlines

mandatory instructions for procurement of building and construction projects. The

policy states that agencies “must ensure that climate change considerations are taken

into account in the planning, design, specifications, construction, operation and

ongoing maintenance of all relevant major building and construction/roads and

bridges projects” (Department of Treasury and Finance (TAS), 2009). Further, it states

that agencies must the develop evaluation criteria that gives “consideration of their

commitment to and capacity to deliver effective climate change outcomes” and must

give consideration to goods that are energy efficient and which contribute to the

reduction of greenhouse gasses. Agencies are also required to include an evaluation of

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the climate change impact of all major goods and services procurements. This is

stronger language than that used in most other state and territory procurement policies.

Northern Territory

The Northern Territory Procurement Directions list ‘Environmental Protection’

as one of five Procurement Principles underpinning the Governments procurement

framework. They aim to “minimise the risk of… consuming a disproportionate amount

of energy, water, fuel and non-renewable resources during manufacture, use or

disposal of Supplies” (Department of Business (NT), 2015). Energy and fuel efficiency

are also listed as environmental requirements which may be weighted and scored as

‘scope specific’ criteria if they are considered ‘relevant to the nature of the supplies’.

This is fairly similar to the approach taken by many other state and territory

governments, wherein sustainability impacts are deemed acceptable for inclusion

where they are relevant to the goods/services being procured.

Associated tools for sustainable and low-carbon buildings in Australia

There are numerous challenges limiting the uptake of low-carbon buildings,

however a number of tools and guidelines are available that can help facilitate uptake.

Many of these tools are freely available in the public domain, whilst others are

proprietary. They invariably require skills and expertise to implement effectively, yet

many of these tools can be incorporated into procurement processes or used in the

development of specifications for tenders to operationalise low-carbon public

procurement in practice. Key tools and guidelines for this research topic are

summarised below.

National Construction Code

The National Construction Code (NCC) is an important policy mechanism

through which building sector emissions can be influenced (Australian Sustainable

Built Environment Council, 2016b). It influences building energy performance by

specifying certain minimum standards during initial design and construction and also

applies to buildings undergoing major refurbishments. Requirements exist for many

building systems that can impact energy performance, such as building fabric, HVAC,

and lighting. States and Territories adopt and enforce the NCC through the building

approvals process, and some states have unique performance requirements which can

278 Appendices

require higher energy performance (Australian Sustainable Built Environment

Council, 2016a). The NCC will be updated in 2019, with preceding technical

workshops to raise the standards for many energy efficiency provisions in the code.

Regulations such as the NCC can influence energy efficiency and emissions in

both new construction and existing buildings, so they are important elements in

improving carbon performance of the sector. However, by nature they act to set

minimum acceptable standards and are somewhat slow-acting and conservative in their

approach, so additional voluntary tools typically emerge to help the sector achieve

more ambitious outcomes. This research does not focus on building codes and

regulations since these are mandatory.

Green Star

Green Star is a voluntary sustainability rating system developed by the Green

Building Council of Australia. There are a number of Green Star tools that can be used

for various classes of buildings across the building sector, such as office buildings,

retail, industrial, educational facilities, and residential buildings. The tools can also be

used for various types of projects, from new-builds and retrofits of entire buildings, to

refurbishments of individual tenancies. The tools also cover various stages of the

project life cycle, including design, construction and operation. In each case, a

specialised tool is used for the particular project, and ‘credits’ are achieved for

incorporating sustainable characteristics. The tool provides independent third-party

verification that certain technologies and processes have been incorporated into the

design and construction of buildings. Each project is then awarded a rating from 4-Star

(Australian best practice) up to 6-Star (world leadership).

On average, certified buildings have delivered greenhouse gas emissions

reductions and lower electricity usage compared with average Australian buildings.

The GBCA estimates that, on average, Green Star rated buildings reduce carbon

emissions by approximately 60 per cent compared with average Australian building,

and result in 45 per cent emissions reductions compared with minimum building

standards (Green Building Council of Australia, 2013). The 1,000 Green Star certified

projects assessed by the GBCA up to 2015 are estimated to have resulted in the

mitigation of 625,000 tonnes of greenhouse gas emissions per annum compared with

existing building stock (Green Building Council of Australia, 2015). Some research

suggests that the cost benefit of using such voluntary certification schemes delivers

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good value for money (Green Building Council of Australia, 2006), whilst other

research suggests that performance may not be as high as expected (Van der Heijden,

2015).

Governments are typically closely involved in development and implementation

of such tools for a variety of reasons, such as the expectation of future legislative costs

and/or political resistance to more stringent standards (Van der Heijden, 2014). State

Governments are able to use the Green Star tools in tendering processes by specifying

a certain performance level must be achieved by a new construction or refurbishment

project. In the past a number of State Governments across Australia have used the

Green Star tool in their procurements, both ‘officially’ and ‘unofficially’. Examples of

‘unofficial’ ways to use it are where a government agency uses the Green Star tool as

a way to guide the design or procurement of a new building or tenancy, but does not

seek or achieve Green Star certification. This may be done to save costs, however it is

likely this could result in lower performance than a building that achieves certification,

since third-party verification provides rigour to the assessment of design intents.

However, a Green Star rated building does not necessarily result in reduced

carbon emissions, since points can be achieved in many credits that are unrelated to

greenhouse gas emissions, and there is no requirement that rated buildings achieve any

particular CO2 emission target. Some of the sustainability categories are relevant to

low-carbon buildings, whilst other categories are focussed on other aspects of

sustainability such as indoor environment quality and have minimal or no impact on

carbon performance.

Voluntary tools such as Green Star are important tools that are helping to

improve the carbon performance of the building sector, however there are numerous

barriers to the increased use of such tools. Examples include the high cost of attaining

a certification for a project, which is typically in the range of $12,500 - $40,000 for

new builds, major refurbishments or fitouts (Green Building Council of Australia,

2016). This cost is necessary to undertake the third-party verification and collect data

on as-built construction etc. and helps to improve the likelihood that these buildings

will function as intended, however the additional cost often presents a barrier to

uptake, particularly when upfront cost is a primary factor influencing decision making.

280 Appendices

Other issues regarding the use of such sustainability tools to mitigate further

climate change are firstly that the actual performance of certified buildings is often

much poorer than expected (Van der Heijden, 2015). Secondly, the uptake is still

drastically short of what is needed in order to respond to the sustainability challenges

(Van der Heijden, 2015). Therefore, further measures are needed in addition to these

tools in order to respond to the climate change dilemma.

NABERS - National Australian Built Environment Rating System

The National Australian Built Environment Rating System (NABERS) is a

rating system designed to measure and report the sustainability performance of

buildings (Office of Environment and Heritage (NSW), 2013). Energy Audit

guidelines allow the overall energy consumption of a site to be evaluated and

compared with other similar buildings in Australia that have undertaken a NABERS

Energy rating. Twelve months of energy use data is required to provide sufficient data

for analysis of energy use patterns and seasonal variations. Data is also required to

allow calculation of the area and volume that is air-conditioned to allow determination

of energy use intensity for comparison with other buildings.

The Commercial Building Disclosure scheme is a related program managed by

the federal Australian Department of Industry. From November 2010 onwards it has

legislated that all commercial office spaces over 2,000 m2 that are sold or advertised

for rent must display a valid Building Energy Efficiency Certificate (BEEC) (Office

of Environment and Heritage (NSW), 2014a). The BEEC relies on the NABERS

Rating System to evaluate the performance of the building or tenancy. By legislating

that the energy efficiency performance of a tenancy is publicly advertised the scheme

creates awareness and demand for more energy efficient buildings. In particular it

helps incentive property owners of buildings with very poor energy efficiency to

improve their performance (ClimateWorks Australia, 2013). Since the introduction of

the scheme there has also been an increase in voluntary use of the NABERS program

by building owners who aren’t required by law to display a BEEC, but do so to add

incentive to attract prospective tenants (ClimateWorks Australia, 2013). Finally,

initiatives such as the Clean Building Managed Investment Trust legislation provides

tax incentives for building projects that use tools such as NABERS and Green Star.

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282 Appendices

Appendix C: Desktop case study matrix

Potential LCPP Case Study initiatives Location YearsSkills/

knowledgeTools/

GuidelinesTime Cost Risk

Management/Organisation

issues

Policy/ Regulation

Supply chain issues

GPP2020 - Green Public Procurement 2020 European Union 2014-current GPP2020 Catalan Oncology Building EPC Spain GPP2020 Netherlands low-carbon Freeway, canal lock Netherlands

EGB/GGB - Efficient Government Buildings VIC, Australia 2009-Current LCVPPP - Low Carbon Vehicle Public Procurement Program United Kingdom 2012-current ?P4CR - Procurement for Carbon Reduction United Kingdom Direct Action - Australian Federal Government Australia (Fed) Green Leases Program VIC, Australia EEGO - Energy Efficiency in Government Operations Australia (Fed) ?

Green Lease Schedule (part of EEGO) Australia (Fed) ?TLF - New South Wales Treasury Loan Fund NSW, Australia 1998-?; 2015 GEMS - Qld Government Energy Management Strategy QLD, Australia 2003-2004 CAC - Clear About Carbon (UK) United Kingdom PROMISE - Procurement in Municipalities for Integrative Solutions on Energy

Austria, Bulgaria, Poland, UK 2002 - 2003

YORbuild (2008) + YORbuild 2 (Starting Nov2015) Yorkshire, UK 2008

Barrier categories addressed

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Appendix D: Interview protocol

Part 1 – Interviewee Background:

1. Please outline your background, roles and responsibilities on the project.

Part 2 – Project background:

2. To date, what carbon-related outcomes were achieved on the project?

3. What other key outcomes have been achieved in this project?

4. What low-carbon criteria/objectives were included in project procurement

processes?

5. What key factors facilitated the inclusion of carbon and energy-efficiency

criteria/objectives in the procurement of the project?

6. What factors were significant in influencing your department’s decision to

participate in the program?

Part 3 – Key barriers:

7. Prior to the program, what had limited the inclusion of carbon and energy-

efficiency criteria/objectives in the procurement of building-sector projects by

your department/agency?

a. (Skills/knowledge barriers; Tools/guidelines barriers; Time barriers;

Cost barriers; Risk barriers; Management/organisational barriers;

Regulatory/policy barriers; Supply chain barriers)

Part 4 – Key success factors:

8. How has involvement in the program helped to overcome the key barriers you

identified in Q6?

9. Do you have any insight into why this program has been successful, where

other initiatives have failed?

10. Are any aspects of the program still presenting barriers to uptake?

11. Do you have any insights into how the program could be further enhanced to

improve the capacity of public procurement to achieve low-carbon and

energy-efficiency outcomes?

284 Appendices

12. Do you have any key lessons learned regarding this project/program?

End of interview:

− Ask to follow-up interview in several weeks if necessary to clarify responses

− Thank interviewee for their time.