Sustainable Public Procurement: Towards a lowâcarbon economy

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6 Sustainable Public Procurement: Towards a low carbon economy procured, level of decentralization in the procurement process etc., which facilitate or restrict an easy adoption of energy efficiency within the procurement process. (See chapter III for details). The study also studied the existing and possible influence of certain ongoing public processes with respect to transparency, sustainability, small scale industry promotion. Like other external factors, such processes can have both a positive as well negative implications for internalising energy efficiency in the public procurement process. There are several challenges to internalising energy efficiency within the procurement process of public sector companies. In terms of regulatory impediment, multiplicity of institutions with roles not clearly defined in terms of their regulatory authority results in overlapping functions and jurisdictions. Different rules and guidelines are not always in harmony with each other. For instance, the stringent guidelines issued by the Central Vigilance Commission (CVC) have had a negative impact on the managers in terms of curtailing their operational freedom to deviate from the guidelines or explore the flexibility provided within the General Finance Rules (GFR) to go for “best value for money” and opt for energy efficient goods. In the absence of a tracking service for nature and scale of procurement, a harmonized policy formulation in incorporating energy in public procurement becomes difficult. Besides audit, compliance with other government directives such as preferences and reservations may cause an impediment to a successful implementation of energy efficiency within the procurement process. Capacity of suppliers to provide energy efficient options in viable costs is also crucial as it requires a large amount of financial as well as technical capacity. Market based instruments have an important role to play in creating a market for energy efficient products and thus adopting sustainability criteria like energy efficiency within the procurement process. Instruments such as the energy star rating by Bureau of Energy efficiency (BEE) emerged as a good option to explore in this regard. Since often procurer, beneficiary and the supplier are all different agents, it poses serious challenges to the promotion and financing of energy efficiency. An emerging trend in public procurement has been with respect to outsourcing of procurement. While experience in other countries may show outsourcing as a more sustainable option, in the Indian context, it could lead to obstacles in ensuring that energy efficiency or any environmental criterion is adopted within the procurement process. (See Chapter III) T E R I Report No. 2007GL01
7 Sustainable Public Procurement: Towards a low carbon economy As much as suppliers capacity, procurers capacity is also a challenge to incorporating energy efficiency measures within the procurement process. Concerns with respect to capacity and resources required in determining which product is more energy efficient than the others while making procurement decisions were raised by stakeholders. It was suggested that enabling tools, for example, in the form of ratings, calculators, codes, guiding documents, can help the procurers meet this capacity deficit. It must be mentioned here that the issue of capacity as a barrier to SPP varied from industry to industry and was normally less of a problem in sectors which have a large energy component and a big turnover such as oil and heavy electrical. Therefore, any analysis with respect to the scope and feasibility of internalising energy efficiency within procurement will have to take into account nature of the industry, nature and quantum of products to be procured, institutional culture and internal company specific policies. The study highlights the fact that there are not adequate incentives or guidance for the companies to adopt energy efficiency measures in procurement, in fact there are many disincentives for the same (See Chapter III and IV). In this regard, adopting a system of life time costs analysis can become a part of the policy system so as to provide a push to SPP. A favourable regulatory environment that promotes energy efficient practices provides the imperative, though in itself this may not be sufficient, (See Table 3.1) for the adoption of energy efficiency measures within the public procurement process. Any policy intervention to this effect will thus have to be at multiple levels and need to target specific (at least in the initial phase) sectors depending on their preparedness in adopting energy efficiency measures within their procurement processes. Agencies like the BEE have their role defined in terms of providing for a enabling and supportive regulatory environment through measures like the adoption and marketing of sector wise good practices in procurement, providing for guidelines and templates for the calculation of energy efficiency between comparative products. Hence, it is of great importance that BEE plays a catalyst in enabling harmonization and policy convergence across sectors and regulatory levels to enable energy efficiency as a measure within the public procurement process. T E R I Report No. 2007GL01
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