Business in Canada as in the rest of the world is changing. In 2004, China became its second largest trading partner, after the United States and a wider range of developing countries, both in the Far East, South East Asia and other regions, are all producing more goods than they used to. As time goes on and the world economy becomes more globalized, it is probable that Canada will purchase more goods and services from overseas developing countries than it did in the past.
As industrialised countries purchase more goods from developing nations, an enormous opportunity presents itself. Not only can the development of those economies be encouraged, but as industrialised markets demand energy efficient products the capacity of developing countries to manufacture these products will increase leading to those products and their benefits becoming more available in developing countries. This of course complements work being done in these countries themselves to create a more sustainable economy.
Raising the profile of energy efficiency
Canada’s new Policy on Green Procurement will be implemented by the spring of this year. The policy is aimed at contributing to environmental objectives such as reducing greenhouse gas emissions, reducing waste and supporting reuse and recycling, improving energy and water efficiency, reducing toxic and hazardous chemicals and substances, and supporting a healthier environment for all Canadians. “The federal government is one of the largest single buyers in the country, with an ability to influence markets,” remarks John Cockburn, Senior Chief of Equipment Standards and Labelling of Canada’s Office of Energy Efficiency, referring to its CDN$13 billion procurement budget.
Having an effective policy involves more than merely issuing a directive. Canada’s experience has indicated that to be effective a procurement policy requires an ongoing commitment
“Each government department will have to ensure that procurement officials are properly trained so that energy efficiency requirements, such as ENERGY STAR specifications, are included in tendering documents, for the purchase of energy-using equipment,” explains Cockburn.
As a result of this new policy on green procurement, it is probable that organisations the world over will have to supply more energy efficient products to Canada and consider energy efficiency performance in greater detail, perhaps for the first time. That development will also be true of any company producing goods in any developing country, as well as other OECD countries selling to Canada and of course domestic producers.
EnergyStar Performance
The introduction of the ENERGY STAR specifications and other energy efficiency requirements into procurement practices will have a major effect on the government’s energy efficiency performance as well as on suppliers and employees. The ENERGY STAR international symbol identifies some of the most energy-efficient products on the market.
An array of tools have been developed to help procurement officials in identifying and buying the most energy-efficient products in the marketplace. Examples of these include an ENERGY STAR Simple Savings Calculator and Purchasing Toolkit. These tools allow users to make comparisons between ENERGY STAR qualified products and non-ENERGY STAR qualified products, computing annual cost, life-cycle and payback period based on the initial cost of the product, and utility bill savings coming directly from the lower energy use. They also display the reduction in carbon dioxide (CO2) emissions.
“The ultimate goal is to have procurement officials in government and organizations incorporate ENERGY STAR and other high energy efficiency specifications in the purchasing decisions for all of their energy-using products, complementing Canada’s recently enacted Green Procurement policy,” says Cockburn.
Energising the Buyers
Even within Canada itself though, convincing decision makers of the virtue of energy efficiency has not been an easy task. It has taken five years of negotiation and co-operation between all government departments to reach an agreement. Public Works and Government Services Canada, Natural Resources Canada and Environment Canada are the co-signatories/key departments in terms of the implementation of this Policy.
Buying new energy-using equipment with higher energy performance may cost more upfront, too, so that the payback period is longer, and that is something some managers will be opposed to. “You have to get everybody together from the accountants to the buyers and get them to understand the long term opportunity costs and benefits,” suggests Cockburn.
The experiences learned from influencing purchasing behaviours at home will be shared with governments of emerging and developing countries via international partnerships such as the Renewable Energy and Energy Efficiency Partnership (REEEP), which the Canadian government joined in March of last year. “Partnerships like REEEP allow the Canadian green procurement example to be replicated elsewhere around the world. REEEP could promote and support the adoption of the adoption of high efficiency performance criteria such as Energy Star into other countries, to the benefit of all.” says Cockburn.
Success Rates
Government procurement programs have been shown to be successful in cultivating new markets, and they are widespread in both Western-style economies and developing countries such as the Caribbean and China. In Germany and Austria, major efforts by the government to improve energy efficiency procurement and processes have made a difference.
“It has been the proactiveness of public building administrators that has made the provision of energy efficiency services there a success that has come from the bottom up,” remarks Sylvia Rezessy, one of the REEEP’s energy efficiency strategists, referring in this case to the enthusiasm of a team of middle-ranking civil servants.
John Cockburn puts it another way: “Whether in developing or mature economies, mobilising energy efficiency is easier to achieve through government purchasing. That’s because you are dealing with an identifiable set of decision makers in each country. Also, the government sets an ‘example.’ There are two outcomes, he suggests. The first is the establishment of a significant market for those products by stimulating it. The second is the encouragement of awareness in the market generally.
A third outcome, perhaps, is to help put energy efficiency higher up the agenda in developing countries with double-digit growth figures, both through purchasing from them and by proving to their governments that it can be done.
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Elisabeth Jeffries is REEEP’s lead writer and authors many articles for national publications on energy matters. REEEP is a worldwide partnership that structures policy initiatives for clean energy markets and facilitates financing for sustainable energy projects. www.reeep.org
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