implementing standards for sustainable infrastructure: the role of procurement
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Implementing standards for sustainable infrastructure: the role of procurement
Alison Hoare, Senior research fellow, Energy, Environment and Resources, Chatham House
Productivity, Jobs, Wellbeing: Making Infrastructure Deliver. OECD, 20 March 2017, Paris
Chatham House | The Royal Institute of International Affairs 2
Infrastructure & deforestation
Source: Hosonuma et al. (2012) An assessment of deforestation and forest degradation drivers in developing countries. Environmental Research Letters 7
10% of deforestation in tropics/subtropics driven by infrastructure (2000-10)
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Infrastructure as an agent of change
Infrastructure & supply chains
• 50% raw materials & 80% mineral raw materials used by construction sector
• Major source of contracts & business opportunities
Source: Schouten & Bachmann, 2017. Roads to Peace? DIIS & UNOPS
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Sustainable procurement
Source: KfW (2014) Toolbox. Sustainable procurement
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Sustainable procurement to promote best practice
Source: KfW (2014) Toolbox. Sustainable Procurement
Lifecycle assessments from tenders for a road construction project, Finland
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Sustainable procurement to promote best practice
Motorway reconstruction, A6 Almere, Netherlands
• Tenders assessed on price & quality, including sustainability
• Sustainability assessed with:
• CO2e performance ladder – rates companies on basis of energy savings, efficient use of materials & use of renewable energy;
• DuboCalc – based on life-cycle analysis of the sustainability of materials used in a contract
• Results of tender process
• Design that reduced the need for transport • Lower material consumption, through design and use of recycled
materials • 50% reduction in forecast CO2 emissions
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China’s Belt & Road Initiative: promoting best practice
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China’s Belt & Road Initiative: promoting best practice
‘The Belt and Road Initiative aims to promote the connectivity of Asian, European and African continents and their adjacent seas, establish and strengthen partnerships among the countries along the Belt and Road, set up all-dimensional, multi-tiered and composite connectivity networks, and realize diversified, independent, balanced and sustainable development in these countries.’
Source: China’s National Development & Reform Commission, March 2015
To enhance the “greenness” of China’s outward investment, domestic financial institutions and the multilateral development banks in which China is participating should be supported and encouraged to strengthen their environmental risk management and develop green supply chain management (inter alia) in implementing OBOR and other overseas projects.
Source: Guidelines for establishing the green financial system. August 2016
Special Project Vehicle (SPV)
Government (as procuring
authority)
Contractors
Debt investors
• Banks & others
Other sponsors
• Banks, private equity funds, SW funds, insurance companies, pensions
Government (as sponsor)
Aid, public sector support • MDBs, aid
agencies
Investors (corporate finance) • Banks, ECAs
• Viability gap funding
• Capacity building
• Loans • Grants
Equity
Loans
Loans, equity, guarantees…
Subsidies, grants, guarantees…
Project agreement
Contracts
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How banks can promote sustainable procurement
Investment criteria
Environmental policies
Procurement policies
Capacity building
Sustainable procurement
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Recent developments & best practice
Procurement policies: New policies encouraging / clarifying the use of sustainable procurement by borrowers
Environmental policies: Linkages between safeguards / environmental policies & procurement policies made more explicit
Investment criteria: Strengthening of targets for green investments & integration of stronger environmental criteria in economic assessments
Capacity building: Increasing resources for project development and capacity building
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Opportunities & challenges
The opportunities • Dynamic policy space • New technologies & approaches for sustainable construction &
procurement The challenges • Limited expertise within public institutions • Absence of tools or criteria to assess sustainability • Limited market capacity • Limited data on best practices
Chatham House | The Royal Institute of International Affairs 13
Goal 9: Build resilient
infrastructure, promote inclusive and sustainable industrialization and foster innovation
‘Ramping up investment in sustainable infrastructure is the growth story of the future… it can spur innovation, creativity and efficiency of energy, mobility and logistics. It can help to lay the foundation for sustainable industrialisation.’ Source: The 2016 New Climate Economy Report. The Sustainable Infrastructure Imperative. Financing for Better Growth and Development.
Thank you
Chatham House | The Royal Institute of International Affairs
alhoare@chathamhouse.org
www.chathamhouse.org
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