Enforcing Climate Goals: Sanctioning Public Procurements Excluding Climate Initiatives

Abstract

This thesis focuses on achieving climate goals set through both global and national regulations. The perspective is of the authorities, also considering them as the party obligated to achieve these goals, and as the public entity responsible for a significant portion of climate impacts. Therefore, the thesis aims to explore new opportunities to achieve these goals. The focus here is particularly on the construction industry, which has a significant climate impact and relies heavily on materials with a high carbon footprint. The interesting area here is procurement law, as it is through regulations that the parties are connected. The thesis argues that by imposing an economic sanction on the public sector to prioritize climate initiatives, it is more likely that climate considerations will be integrated into more aspects of their work. This thesis is supported by the idea that the public sector is not pressured by non-stringent consequences such as economic factors, which is analyzed through both national and global climate regulations. These regulations do not include any consequences for failing to meet climate goals. Therefore, the interesting regulations for the thesis are primarily the European Climate Law, the Paris Agreement, the Danish Climate Law, the Public Procurement Act, and regulations for the construction industry. These regulations will shed light on the climate goals Denmark is obligated to achieve, their set timeframes, and the enforcement mechanisms. Additionally, the thesis is supported by economic analyses of the cost’s climate considerations may entail in procurement and behavioral analysis of the party's profile. This leads to discussions on whether proportional measures can be introduced in legislation and analyzing the preferences of the public sector regarding different sanction options. Based on these analyses, the thesis explores whether the argument can be accepted or rejected, based on whether the economic consequences of sanctions would lead the public contracting authority to choose to include climate initiatives in public tenders. The thesis concludes that there are currently no sanction options related to climate, neither in climate regulation nor in the Public Procurement Act. Through economic analysis, it is concluded that the decision-making profile of the public contracting authority is strongly influenced by the introduction of an economic sanction, with the integrated analysis concluding that the party will opt for climate initiatives in procurement if the economic burden of not doing so outweighs the cost of including climate considerations. This ultimately means that the public contracting authority will opt for climate initiatives in tenders if the economic burden is significant enough.