Every year, €2 trillion flows from public coffers to private companies to buy services and build infrastructure. That’s 14% of the EU’s GDP. What if all that money went to the greenest providers? If Europe is serious about its clean industrial revival, it must harness public procurement and make green criteria binding.
Alberto Vela and Jai Krishna report
Financed by the public, built by the private. From hospitals to railways, countless infrastructures across Europe carry this invisible signature. The system behind these purchases is called public procurement: a mechanism governed by EU rules and gaining new political momentum.
The power of public spending
Public procurement is happening, every day, in every town and city in Europe – and that is already a huge advantage. Unlike new funding streams or policy frameworks, which require complex political negotiations, this is money already being spent through well-established administrative procedures.
Behind the technical rules and administrative procedures lies a highly strategic lever: one that can finance the green transition while boosting industrial innovation and competitiveness. Sounds familiar? This is precisely the delicate balance the European Commission is trying to strike in this mandate.
A recent report by Carbone 4 shows that if purchases across sectors like construction, transport, and catering met green criteria, Europe could cut procurement-related emissions in these sectors by up to 30%, and redirect €86 billion annually towards green solutions – creating the equivalent of 384,000 green jobs.
In the construction sector alone, where public procurement accounts for over a quarter of emissions, green rules could turbocharge the decarbonisation of key materials like steel and cement, which account 36% and 50% of the sector’s emissions, respectively.
A win-win for citizens and companies
Contrary to the deregulatory trend gaining traction in Brussels, many businesses are actually calling for clearer –not weaker– rules. Uncertainty is the last thing markets and investors need during a time of rapid transformation and fierce global competition.
Green public procurement can help anticipate and manage these changes. That is why the demand for robust green procurement rules resonates widely in Brussels, from policymakers to major industry players. Recently, more than 30 stakeholders –including steel and cement manufacturers, construction firms, and NGOs– launched a coalition called Buy Better to Build Better, calling for mandatory green criteria in public tenders.
An innovation booster
Some industrial laggards in the transition, like ArcelorMittal, claim that the demand for green steel is not sufficient to justify a shift from coal-fired furnaces to renewable-based production. However, ambitious green procurement rules could change that, offering long-term market certainty to sectors like steel.
When it comes to infrastructure, from railways to bridges, the state is one of the biggest steel buyers. If it demands green steel, the market will follow.
Robust rules would reward innovation and give an edge to European companies already investing in clean technologies, while discouraging those stuck in delaying tactics. In carbon-intensive sectors like steel and cement, where only a few frontrunners are transitioning to low-carbon and recycled production methods, clear green criteria in public tenders can make all the difference in creating a lead market.
Public procurement can be the carrot that drives industrial transformation – especially in areas where other EU tools, like the carbon market, have fallen short.
A sustainable European production chain
‘Strategic autonomy’ is the buzzword of the moment in Brussels – and green public procurement is one of the best tools we have to make it real.
By prioritising circular materials like recycled steel or low-carbon concrete, the EU can cut its dependency on critical raw materials while strengthening domestic supply chains and improving the end of life treatment of materials. Countries like the Netherlands, Sweden, Norway, Finland, France and Switzerland are already using circular procurement to reduce their reliance on critical materials. It works.
So why is not this already happening?
Despite years of good intentions, green public procurement has not taken off in the EU.
The current EU directive ‘encourages’ authorities to consider environmental criteria when purchasing, but does not ‘require’ them to do so. In the absence of mandatory criteria, many authorities simply go for the cheapest bid, even if it means paying a higher environmental price later.
Legal and technical barriers also stand in the way. While the 2014 directive encourages green ambition, it restricts it too – by requiring that environmental criteria be directly linked to the product or service procured. This has increased litigation fears and even reduced the use of ecolabels for products with greener production methods.
Promising methods – like life-cycle carbon footprint or environmental product declarations – are still too complex, fragmented, and unstandardised across member states. Only the EU can fix this. If we want public procurement to foster industrial decarbonisation and strategic autonomy, we need to remove these barriers and set clear, common EU standards.
Critically, we don’t even know how green public procurement is today. There is no reliable EU-wide data. Without proper monitoring and reporting, we are flying blind – and taxpayers have no way of knowing whether their money is working for or against their health and planet.
And what about the price tag? Some fear that green procurement would be too expensive, but evidence indicates the opposite. Many studies have shown that green public procurement only increases project costs by 1–5%, even under conservative assumptions. These costs are then quickly recovered through lower operational and maintenance expenses, making green choices the more cost-effective option in the long run.
Time to act
With the EU preparing to revise its public procurement rules, now is the time to flip the logic of public spending.
This means making green criteria mandatory in high-impact sectors. It means giving local authorities the training, tools, and legal clarity they need. And it means tracking progress to keep improving.
The EU must stop treating green public procurement as a “nice to have”, and recognise it for what it really is: a strategic lever for a just, green, and future-proof European economy.
More in our policy briefing.
