Green goods: Strategies for decarbonising government purchasing in Australia



Australia is committed to cutting emissions by 43% below 2005 levels by 2030. As a wealthy nation, and one of the world’s major suppliers of emissions intensive products, we must lead in supporting long-term environmental sustainability.

It is imperative that the government has a significant hand in driving decarbonisation and energy transition for a greener future. With Australian public sector procurement accounting for over 17% of GDP, this is a key area to drive meaningful action on emissions reduction.

Green goods: Strategies for decarbonising government purchasing in Australia is a report from the Centre for Policy Development’s Sustainable Economy Program, authored by Toby Phillips, Mara Hammerle and Dennis Venning.

The report recommends immediate short-term actions governments can take in the next 12-18 months to reduce emissions linked to government purchasing, as well as long-term structural reforms that use the size and power of the public service to help Australia reach net zero.

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Green goods: Strategies for decarbonising government purchasing lays out a practical pathway for governments to work together on greening the goods and services they buy. 

How significant is the role of government purchasing in decarbonising the economy?

Major. In Australia public sector procurement accounts for over 17% of GDP. Government purchasing provides a massive economic lever, and governments have a significant leadership role to play in not only helping Australia get to net zero, but also supporting innovation and developing new industries.

What is the problem with existing rules around green procurement?

Right now a range of disconnected green procurement strategies and policies exist across varying levels of government, causing confusion among procurement managers and suppliers alike. In addition governments are asked to balance a dozen competing goals, without an explicit or quantified framework for doing so. 

Additionally, our current system is not good at factoring in the long-term costs of goods and services. In many cases, governments are incentivised to choose options with the lowest upfront costs, rather than taking into account the costs over the lifecycle of the product or project. 

Certain green materials can be more expensive upfront but cheaper to run or use over the course of their life. For example, energy-efficient buildings may cost more to build but have lower costs overall because they use less energy. The report suggests ways to factor in the true costs of goods and services, making it simpler for procurement managers to assess projects.

What does the report recommend?

In the short term, governments can set green procurement targets that include Scope 3 emissions, and start measuring baseline procurement emissions. The report also suggests collaborating closely with industries to understand what can be achieved, and encouraging innovation by suppliers. 

In the longer term, it says governments should factor in the long-term costs of emissions-intensive materials to ensure they are prioritising environmentally-friendly options. They can also use their buying power as part of a comprehensive policy mix to help scale up net zero industries like green hydrogen and green steel.

Lastly, it proposes establishing a national working group or space for collaboration, that would ensure a harmonised and effective approach to green procurement, including robust measurement and training of both procurement staff and suppliers. 

Industry and government roundtable confirms ambition for procurement reform

CPD held an online Greening Public Procurement roundtable on 16 May, which convened leaders from state and federal government departments of Treasury, planning and finance, representatives from the infrastructure industry, and suppliers of raw materials. The roundtable discussion focused on findings from CPD’s Green Goods report, the need for an ambitious government program on green public procurement, and the value of intergovernmental collaboration.

The roundtable confirmed that governments are increasingly taking ambitious steps towards greening their procurement and have a big appetite for procurement reform. However, roundtable participants highlighted that changes are difficult to implement, and it is important to think about the system of procurement as a whole, from conceptualisation of the project to implementation. Value therefore lies in identifying ways to operationalise green procurement, including building capacity on the ground to juggle multiple ESG elements including environmental aspects. Future steps by governments should include harmonising elements of procurement frameworks, to ensure consistent signals can be sent to industry, and establishing a workstream either under Heads of Treasuries or another inter-ministerial group to provide a high-level mandate and enable intergovernmental collaboration.

Green goods in the media

Concrete production contributes 7% of global CO2 emissions, which is not far behind steel. But unlike steel, efforts to decarbonise concrete have been plagued by challenges, both technical and perceptional.
A new CPD report advocates for unified state and federal procurement policies to hasten Australia’s net-zero transition and support the development of emerging green industries such as green steel and green hydrogen.
A new report from CPD recommends a series of changes to state and federal procurement policies to support the growth of emerging green industries like green steel and green hydrogen.
A new CPD report recommends strategic changes to state and federal procurement policies to accelerate Australia's net zero transition and support the growth of budding green industries like green steel and green hydrogen.

About the authors