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Private investment alone will be insufficient to drive carbon dioxide removal (hashtag#CDR) to 10Gt+/year by 2050. Governments will have to step in!
🛠️ I previously covered some of the main policy tools at our disposal: feed-in tariffs, tax credits, and contracts for difference. Today, I want to cover the last policy tool in this series: #publicprocurement.
The scope and scale of public procurement make it one of the most effective policy mechanisms available to get us to where we need to be. So here’s what you need to know:
💚 Unlike traditional procurement strategies that prioritise cost above all, low-carbon public procurement policies prioritise the environmental impacts of purchases, ensuring agencies adopt tenders that support decarbonization efforts.
💪 Accounting for approximately 13% of GDP in OECD countries, public procurement by governments and state-owned enterprises represents a significant lever for advancing green technologies and practices.
Public procurement comes in two distinct forms:
💸 Buying Credits: Direct investment in CDR credits to fund carbon dioxide removal from the atmosphere.
💸 Buying Products: Procurement of goods and services with minimal or negative carbon footprints, such as carbon-storing construction materials.
When it comes to procurement, the U.S. is clearly leading the way:
🇺🇸 The U.S. Department of Energy (DOE) is pioneering public procurement of CDR with its $35 million CDR Purchase Pilot Prize. The first winners will be announced shortly.
🇺🇸 Congress just (re)introduced the most ambitious and tech-agnostic CDR public procurement bill to date: The Carbon Dioxide Removal Leadership Act (hashtag#CDRLA) which would see over $10 billion go towards the procurement of 40Mt of durable CDR.
🏛️ Public procurement is the future. Alongside compliance markets, it presents - by far - the biggest lever we have in scaling CDR. The U.S. is providing the first examples of what this can look like both in policy and in practice. Now we need to get other governments, especially in Europe, to follow suit.
❓ What do you think? Do you agree with the promise of public procurement? How can we get it off the ground in more countries?
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