How Rotterdam and Buenos Aires use procurement to contribute to the global clean energy transition
You’ve heard the slogans: Time for Nature. Time for Transition. Cities around the world are taking action to regenerate biodiversity and to tackle the climate crisis. However, there has been a lack of focus on activating public procurement as a key tool.
And yet procurement makes up a significant proportion of global expenditure. According to the United Nations Office for Project Services (UNOPS), an average of 15 percent of global gross domestic product (GDP) is spent through public procurement systems each year, amounting to over $10 trillion worldwide.
ICLEI’s Global Lead City Network (GLCN) on Sustainable Procurement is a group of 14 cities that act as ambassadors of sustainable and innovation procurement as a mechanism to address global challenges such as biodiversity loss or the reduction of greenhouse gas emissions.
Looking at the energy sector, the transition to renewable energy and energy efficiency can, in combination, provide over 90% of the necessary energy-related CO2 emission reductions to meet the decarbonisation and climate mitigation goals set out in the Paris Agreement (IRENA, 2018). Yet, global investment in renewables and energy efficiency declined by 3% in 2017 with a risk that it will slow further (IEA, 2018). However, cities can leverage public procurement locally to contribute towards the global energy transition by .including criteria and specifications in tenders that leverage production and consumption of local renewable energy, energy savings and efficiency gains.
The city of Rotterdam, the Netherlands, member of GLCN, is a major consumer of resources and electricity – 80 GWh annually for all kinds of functions such as electricity used in offices and educational housing, but also for pumping stations and public lighting. Rotterdam saw the opportunity to use procurement as a lever to lower their share to less than 20% of the national CO2 emissions.
The municipality has committed to only purchase electricity generated by solar panels and wind turbines located in Rotterdam or on Dutch soil. The recent long-term contract that began this year specifies the requirement to deliver 100% renewable energy from new wind and solar plants by 2030.
The suppliers have guaranteed to deliver 100% from new renewable energy system capacity already from 2022, half of which will be generated in Rotterdam. The supplier must prove the origin of the energy with Guarantees of Origin (GVO).
In addition to the delivery of renewable electricity, Rotterdam wanted the supplier to develop activities to support the local sustainability program. Points were therefore awarded during tender evaluation for activities which would accelerate the energy transition in the municipality through public involvement, empowerment of local energy projects and business development.
As the city looks to grow renewable energy investments in Rotterdam, this tender is an excellent example of the efficacy that can result from an ambitious sustainable procurement policy.
“The new energy contract will accelerate Rotterdam’s clean energy transition and strengthen the city’s leadership to act on commitments made and inspire others to follow suit. We believe in making the switch to local renewables through public procurement with the involvement of citizens and industry,” said Vice Mayor Arno Bonte.
Procurement can also be used as a tool to improve energy efficiency. In 2015, the Government of the Autonomous City of Buenos Aires, Argentina, set itself the target to replace 100% public lighting with LEDs.
In June 2019, Buenos Aires achieved this commitment – making it the first capital of Latin America to do so. The 100% LED target was one of the public commitments the city made as part of the “2020 Action Plan”. The action plan outlines how the city would leverage their public spend to advance energy efficiency and also incentivize citizens to switch to LEDs in their private homes as well.
The commitment resulted in the replacement of all lighting in public spaces including lighting systems under viaducts, under motorways, underpasses and bridges, lights in green spaces and squares as well as public buildings and monuments. The transition to LED lights was enabled by leveraging public procurement processes that included environmental criteria such as energy efficiency standards in tenders. The procurement project was carried out by the General Directorate of Public Lighting of the Government of the City of Buenos Aires.
Switching to LEDs resulted in energy savings of more than 50%, which created a savings of 85,000 MW per year (the equivalent of energy used by 25,000 households per year) and consequent savings of 34,000 tons of CO2 per year.
The two examples, from Rotterdam and Buenos Aires, showcase how crucial cities are to the global energy transition, as they have the power to leverage their existing public spend to finance more efficient, renewable energy solutions tailored to the local context.
Explore more procurement commitments and achievements of Rotterdam, Buenos Aires and other GLCN cities in the energy sector. And explore more how to leverage procurement in other sectors, such as construction, transport or food.