Transition of the procurement process to Paris-compatible buildings: consideration of environmental life cycle costing in tendering and awarding

Abstract

PurposeThe greenhouse gas (GHG) emissions caused by the construction industry account for an enormous share of total global CO2 emissions. The numerous construction activities therefore continue to reduce the remaining carbon budget. One lever for the reduction of these GHG emissions lies in the procurement process of buildings. For this reason, a process model was developed that takes embodied and operational emissions into account in the tendering and awarding phase of buildings.MethodsTo validate the developed theoretical framework, environmental life cycle costing (eLCC) was conducted on a single-family house case study, taking into account external cost caused by GHG emissions. Various shadow prices were defined for the calculation of external cost to identify changes in award decisions. We further investigated a results-based climate finance (RBCF) instrument, i.e., the GHG emission bonus/malus, to demonstrate an approach for calculating Paris-compatible cost (PCC) scenarios.ResultsWe show that an award decision based on life cycle costing (LCC) leads to a 12% reduction in GHG emissions. A further reduction in GHG emissions can be achieved by awarding contracts based on eLCC. However, the required shadow prices within the eLCC awards to influence the award decision are quite high. With the development of the LCA-based bonus/malus system, PCC scenarios can be determined at sufficient shadow prices, and further GHG emission reductions can be achieved.ConclusionsSince the implementation of LCA and LCC in the tendering and awarding process is currently not mandatory, in this context, the next step towards Paris-compatible buildings must first be taken by the awarding authorities as well as the policy-makers. However, the application of the LCA-based bonus/malus system and thus the awarding of contracts according to PCC scenarios show the enormous GHG emissions reduction potential and thus represent an innovative and sustainable framework for an adapted procurement process.