Climate Criteria in Municipal Public Procurement Law Framework in Finland

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CLIMATE CRITERIA

IN MUNICIPAL PUBLIC PROCUREMENT LAW FRAMEWORK IN FINLAND

University of Eastern Finland Law School

Environment and Climate Change Law

Sanna Lehtinen (282744)

Supervisor: Prof. Harro van Asselt and Seita Romppanen

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Abstract

UNIVERSITY OF EASTERN FINLAND Faculty

Social Sciences and Business Studies

Unit

Law School

Author

Sanna Lehtinen

Name of the Thesis

Climate Criteria in Municipal Public Procurement Law Framework in Finland

Major

Environmental and Climate Change Law

Description

Master’s thesis

Date

30.10.2019

Pages

XXXVII + 81

Abstract

The Paris Agreement was the first to recognize the role of non-state actors, including cities, as part of climate regime. It also concluded that national pledges are not enough to keep global warming under 2 degrees. The cities´ role in mitigating and adapting to climate change is important since over half of the world´s population lives in cities and cities are responsible for 75 % of the green house gases which are released into the atmosphere. Cities can promote sustainable solutions and transform societies for ecological businesses. Public procurement can be used as a tool to promote environmental and climate friendly measures. Public procurement legislation in the EU and in Finland enables the use of climate criteria. However, only half of the municipalities take any environmental criteria into consideration in their public procurement processes.

In Finland the state authorities need to consider climate aspects when purchasing public goods, services or works. However, the Finnish public authorities of municipalities are not directly under the scope of Climate Law (609/2015) due to the Finnish dualist legal system and the autonomous status and self-governance of local municipalities. According to the teleological interpretation of law, the legal system should be coherent and the law interpreted equally at all administrative levels in Finland.

In addition to specific substantive laws, administrative legislation combined with environmental principles limit the discretion of public authorities.

Multifaceted governance instruments are in use, however, but since climate criteria is not obligatory, it depends on the local authorities ambitiousness whether they consider the most climate-friendly criteria in the public procurement prosesses. Finding the most climate-friendly solution and the best available climate criteria is difficult to define: technical skills aside, choosing the right kind of public procurement method is just as important.

The research concludes that stricter legal framework would expedite a transformation towards a greener society. This includes the reregulation of public procurement law to incorporate obligatory climate criteria consideration for those procurements having a direct impact on the climate and environment. Secondly, more exactly regulated substantive laws based on scientific research and increasing awareness and transparency between the markets, scientists, local public administratives and citizens in order to find the best available solutions.

Key words

climate criteria, climate law, public procurement law, municipality, environment law, governance, city collaborations

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CONTENTS

CONTENTS ... III REFERENCES ... V ABBREVATIONS ... XXXVI

1 INTRODUCTION ... 1

1.1 Background and problem definition... 1

1.2 Research objectives and questions ... 9

1.3 Methodology and limitations ... 10

1.4 The outline of the thesis ... 13

2 CLIMATE CHANGE, MUNICIPAL AUTHORITIES AND PUBLIC PROCUREMENT ... 15

2.1 Introduction ... 15

2.2 Role of city-level climate action ... 15

2.3 Public procurement and climate change ... 19

2.3.1 What is public procurement? ... 19

2.3.2 City-level action and public procurement in Finland ... 22

2.4 Summary ... 23

3 THE LEGAL FRAMEWORK OF GREEN PUBLIC PROCUREMENT ... 25

3.2 International level ... 27

3.2.1 International Climate Change Law ... 27

3.2.2 International Trade Law ... 30

3.3 EU level ... 31

3.3.1 General EU law on public procurement ... 31

3.3.2 EU law on sustainable public procurement ... 34

3.4 National level ... 41

3.5 Summary ... 45

4 ASSESSING EXISTING ROOM FOR CLIMATE-FRIENDLY PUBLIC PROCUREMENT IN FINLAND ... 47

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IV

4.2 Obligations for municipal authorities ... 48

4.3 How can municipal authorities address climate change through public procurement? ... 52

4.4 Scope for future action ... 60

4.5 Summary ... 62

5 STRENGTHENING CLIMATE-FRIENDLY PROCUREMENT IN FINLAND ... 64

5.2 Actions by the national government ... 64

5.3 City collaborations ... 67

5.4 Summary ... 72

6 CONCLUSIONS AND DISCUSSION ... 73

6.1 Conclusions ... 73

6.2 Discussion ... 75

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TED – Tenders Electronic Daily: Supplement to the Official Journal of EU [https://ted.europa.eu/TED/main/HomePage.do] (24 March 2019)

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XXXIV

Climate KIC EIT: The challenges and potential of circular procurements in

public construction projects. Produced as part of the EIT Climate-KIC Circular Cities project. Climate KIC EIT

[https://www.climate-kic.org/wp-content/uploads/2019/06/Procurements-in-Public- Construction-v2.pdf] (13 August 2019)

Ministry of Economic Affairs and Empolyment of Finland: EN: Responsibilities:

Competition and Consumers Public procurement: Publication of Contracts and Thresholds: EU and national Thresholds: 14.9.2019;

[https://tem.fi/en/eu-and-national-thresholds] (20 September 2019) Towards low-carbon building. Ministry of Environment 2017.

[file:///C:/Users/Sanna%20Lehtinen/Downloads/YM_fakta_Kohti_vahahiilista_210 x297Lowress%20(2).pdf] (24 March 2019)

Työ- ja elinkeinoministeriö: Vastuualueet: Kilpailu- ja kuluttajat: Julkiset hankinnat:

Hankintojen ilmoittaminen ja kynnysarvot: EU- ja kansalliset kynnysarvot.

[https://tem.fi/julkiset-hankinnat] (23 September 2019)

UCLG: United Cities and Local Governments: UCLG in Action: Advocacy and Partnerships:

Climate Change 2018.

[https://www.uclg.org/en/issues/climate-change] (23 September 2019) UNDP and climate change 2016.

[http://www.undp.org/content/dam/undp/library/Climate%20and%20Disaster%20R esilience/Climate%20Change-final-for%20WEB.pdf] (13 December 2018)

UNDP and climate change: Scaling Up Climate Action to Achieve the Sustainable Development Goals 2016.

[http://www.undp.org/content/dam/undp/library/Climate%20and%20Disaster%20R esilience/Climate%20Change-final-for%20WEB.pdf] (13 August 2019)

UNEP: Emissions Gap Report 2018, United Nations Environment Programme (UNEP) November 2018.

[http://wedocs.unep.org/bitstream/handle/20.500.11822/26895/EGR2018_FullRepo rt_EN.pdf] (23 September 2019)

UNEP: Towards a Green Economy: Pathways to Sustainable Development and Poverty Eradication, 2011

[www.unep.org/greeneconomy] (9 September 2019)

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XXXV

United Nations: Department of Economic and Social Affairs: News: 68% of the world population projected to live in urban areas by 2050, says UN

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Valtioneuvosto

Valtioneuvoston periaatepäätös kestävien ympäristö- ja energiaratkaisujen (Cleantech -ratkaisut) edistämisestä julkisissa hankinnoissa. 13.6.2013.

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Valtioneuvosto

Valtioneuvoston periaatepäätös julkisten elintarvike- ja ruokapalveluhankintojen arviointiperusteista (ympäristömyönteiset viljelytavat, elintarviketurvallisuutta ja eläinten hyvinvointia edistävät tuotanto-olosuhteet) Valtioneuvoston periaatepäätös Liite 2 29.6.2016.

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(23 September 2019)

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XXII ABBREVATIONS

Art/Arts Article/Articles CCA Climate Change Act

CCP Cities for Climate Protection CDM Clean Development Mechanism COP The Conference of Parties DOPs Domestic Offset Programs

EC European Commission

ECJ European Court of Justice EEA European Economic Area e.g. for example

EMAS Eco-Management and Audit Scheme

EU European Union

ESD Effort Sharing Decision ESR Effort Sharing Regulation et al. and others

ETS Emission Trading Scheme

FAO Food and Agriculture Organization FISU Finnish Sustainable Communities GHG Greenhouse gas

GDP Gross Domestic Product

GPA WTO Plurilateral Agreement on Government Procurement GPP Green Public Procurement

ibid. same source as the previous citation ICLEI Local Governments for Sustainability i.e. that is

INDL Intended Nationally Determined Contributions IPCC Intergovernmental Panel on Climate Change IPP Integrated Product Policy

IT Information Technology LCC Life-cycle costing LUKE Luonnonvarakeskus

m meter

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XXXVII MEAT Most economically advantageous tender

MS Member state

NAZCA The Nonstate Actor Zone for Climate Action NDC Nationally Determined Contributions

OJ Official Journal of European Union para/s paragraph/paragraphs

PIC Prior Informed Consent

SEUT Sopimus Euroopan unionin toiminnasta SMS Small-to-medium size companies

TFEU The Treaty on Functioning of the European Union TEC Treaty of the European Community

TED Tenders Electronic Daily

UCLG United Cities and Local Governments UN The United Nations

UNDP United Nations Development Programme UNEP United Nations Environment Programme

UNFCCC The United Nations Framework Convention on Climate Change VTT Teknologian tutkimuskeskus

WTO World Trade Organization

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1 1 INTRODUCTION

1.1 Background and problem definition

“Cities can act, while states only talk” Michael Bloomberg¹ has stated about the role of cities combating the climate change.² Climate change is seen as the most wicked³ environmental,⁴ ethical⁵ and economic⁶ problem the human race has ever faced. The Intergovern- mental Panel on Climate Change (IPCC)⁷ has concluded, that the influence of humans on the climate system is clear and the emissions of greenhouse gases (GHG) are at the highest level in history.⁸ Without changes, emission of GHGs will cause further warming and long- lasting impacts to the whole climate system.⁹

The main international treaty on fighting climate change, the United Nations Framework Convention on Climate Change (UNFCCC), was agreed upon 1992.¹⁰ However, the first global legally binding climate agreement was made by the UNFCCC parties in Paris in the year 2015 in Conference of the Parties (COP) 21¹¹ Decision 1/CP 21 Adaptation of the Paris Agreement (COP Decision 1/CP 21).¹² The EU¹³ is one of the signatories of the Paris Agree- ment. Countries committed to keep the increase in global temperature below 2 degrees.¹⁴ National pledges were made for diminishing and limiting carbon emissions. Due to Article (Art.) 4 paragraph (para.) 2 of the Paris Agreement, each participant country is obliged to

1 The chairman of UN Special Envoy on Cities and Climate Change.

2 Lin 2018, p. 106.

3 The wicked problem in environmental research was launched by Rittel and Webber 1973.

4 Art. 11 of the Treaty on Functioning of the European Union (TFEU). OJ 26.10.2012 C 326, p. 47–390.

5 Grosso Climate Change 2007; Gardiner Environmental Values 2006.

6 Weitzman The Review of Economics and Statistics 2009.

7 The IPCC is an organization, which produces internationally coordinated scientific information related to climate change and also realistic response strategies. IPCC Chair Vision Paper 2017.

8 IPCC AR6 Chair Vision Paper 2017, p. 7.

9 IPCC AR5 Climate Change Synthesis Report 2014, p. V.

10 The United Nations Framework Convention on Climate Change, (adopted on 9^th of May in Rio de Janeiro, entered into force on 21^st of March 1994). 1771 UNTS 107.

11 The UNFCCC: Paris Agreement to the United Nations Framework Convention on Climate Change adopted at COP21 in Paris, France, on the 2^nd December 2015, (adopted 22^nd April 2016, entered into force the 4^{th of} November 2016). FCCC/CP/2015/10/Add.1 (The Paris Agreement)

12 It will be implemented by 2020. Before the year 2020, the UNFCCC: Kyoto Protocol to the United Nations Framework Convention on Climate Change (adopted at COP 3 in Kyoto Japan, on the 11^th of December 1997, entered into force the 16^th of February 2005). 2303 UNTS 148 (the Kyoto Protocol), is the only legally binding instrument to cut greenhouse gas emissions covering, however, only 12 % of the total emissions.

13 That is all its member states.

14 Art. 2.1a of the Paris Agreement.