Every euro counts: the forgotten power of public procurement in climate policy. By Jeannette Bain, Deputy Director of Public Policy at ECODES

Jeannette Bain

Deputy Director of Public Policies at ECODES

Introducing environmental, social, and economic criteria into the awarding of public contracts incentivizes industrial resilience, social cohesion, and the ecological transition. With the reform of the Public Procurement Directive, Europe has a historic opportunity to invest in the future.

The summer of 2025 is offering us images that should remain etched in the memory of policymakers: devastating fires in the Mediterranean, record-breaking heat waves across Europe, prolonged droughts threatening the agricultural sector, and increasingly frequent extreme weather events. These are not isolated episodes, but the most visible manifestation of the climate crisis. An emergency that no longer allows for excuses or delays, and demands structural changes in the way we produce, consume, and manage resources.

In this context, it is striking that an instrument as powerful as state procurement continues to occupy a secondary place in political debate, except when it comes to references to corruption. Procurement is not a technical issue for administrative law specialists: it is one of the main economic levers of modern democracies. It represents nearly 15% of the European Union's GDP and, in the case of Spain, reached 11.55% of GDP and almost a quarter of public spending in 2023. We are talking about a volume of resources capable of shifting entire sectors toward more sustainable production models.

However, we continue to waste this potential today. According to data from the European Commission, more than half of public contracts in the EU are awarded solely on the basis of the lowest price. This practice, which may have made sense in times when immediate savings were the priority, has become an obstacle to innovation, industrial resilience, and the ecological transition. Cheap becomes expensive when the environmental, social, and economic costs throughout the life cycle of a product, service, or project are not taken into account.

A reform in progress

The European Union has taken this reality into account. After ten years of implementing the current framework, the Commission launched the process of reviewing the Public Procurement Directives at the end of 2024. On July 7, the European Parliament's Committee on the Internal Market and Consumer Protection approved the draft report on this reform, with significant amendments, and the final vote in the European Parliament plenary session is scheduled for September 8, one of the first milestones in a process that will set the course for procurement in Europe for the next decade.

The dilemma is clear: either we remain trapped in the current logic, or we take a qualitative leap so that public procurement becomes a driver of climate, industrial, and social policy. The debate is not merely technical but about the future. Because public procurement has the capacity to shape markets: it can reduce emissions from the public sector itself, generate early demand for clean technologies, incentivize industrial resilience, benefit SMEs, and support local job creation.

The Clean Industrial Deal has already placed procurement at the heart of European industrial policy, recognizing that it is one of the few levers capable of creating leading markets in clean and sustainable technologies. The Political Guidelines of the next Commission (2024-2029) also emphasized this idea. This is not an ideological whim: it is the recognition that, without intelligent use of this tool, Europe risks falling behind in the global race toward a decarbonized economy.

What needs to change

To fully realize its potential, the revised Directive should shift its focus from lowest cost to the best value for money, integrating environmental, social, and economic criteria; introduce clear and harmonized standards that avoid fragmentation and legal uncertainty for both buyers and businesses, especially SMEs; strengthen the public sector's capacity to drive decisions capable of supporting sustainable and long-lasting infrastructure, goods, and services, foster innovation, and incentivize clean industries without increasing public spending.

It's not about reinventing the wheel, but rather updating the regulatory framework to support those committed to sustainability and innovation. Today, an administration that decides to incorporate social or environmental criteria runs the risk of challenges or incurring greater bureaucratic complexity. That must change: sustainability should be the rule, simple, natural, and incentivized.

The debate is not abstract

According to data from the European Commission, awarding public contracts based exclusively on price—and not on quality—remains the norm in many cases. Overall, more than half of contracts in the EU are awarded based on the lowest price, which reduces the potential of procurement as a strategic tool. The figures also show stark disparities between countries: in some Member States, up to 93% of contracts are awarded solely on the basis of price, while in others, this proportion barely reaches 8%. In this context, Spain is among the best-performing countries, with only 21% of contracts awarded based on price. This is no small fact: in 2023, our country managed more than 196,000 public contracts, for a value exceeding €107 billion, which demonstrates the magnitude and importance of public procurement.

According to data from the European Commission itself , awarding contracts based solely on price, rather than quality, is still the rule in many cases, and overall, more than half of contracts have been awarded on the basis of the lowest price .

Spain is in one of the best positions in this scenario, with only 21% of contracts awarded based on the lowest price. This is no small feat, given that our country managed more than 196,000 contracts in 2023, for a value exceeding €107 billion.

European reform must be an opportunity for a strategic shift: it's not about spending more, but spending better. More energy-efficient infrastructure, higher-quality food in schools and hospitals, and service contracts that promote labor inclusion. All of this generates added value and savings in the medium term. The opposite—rewarding only the cheapest—leads to cost overruns, inefficiencies, and, worse still, continuing to fuel production models incompatible with the current situation, the consequences of which we have seen firsthand.

A political decision

The September 8 vote is no small matter. Europe faces a fundamental and future-oriented political choice: do we want every euro invested with public funds to be a catalyst for a strong industry, decarbonization, innovation, and social cohesion, or do we accept that it remains a mere administrative formality?

Public procurement can be a lever for the ecological transition or a hindrance that prevents progress at the pace required by the climate emergency. One of the major decisions is now in Europe, but its consequences will directly affect the daily lives of millions of people.

At a time when pressure on the planet is reaching unsustainable levels, solemn declarations and promises of climate neutrality by 2050 are not enough. Action is needed here and now, and public procurement—with its enormous economic and industrial potential—is one of the most powerful instruments for doing so. Ignoring it would be a historic mistake.

Jeannette Bain is Deputy Director of Public Policy at ECODES.

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