Life Cycle Costing Implementation in Green Public Procurement: A Case Study from the Greek Public Sector

Abstract

Green Public Procurement (GPP) is an essential strategy for achieving goals related to public environmental policy, including sustainable production and consumption, streamlined use of resources and mitigation of climate change. The European Union has adopted policies towards “greening” public procurement for member states in order to promote environmental sustainability. Life Cycle Costing (LCC) is a method that measures the financial impact of an investment over the life cycle of a product. The current EU Procurement Directives (2014) are designed to position LCC centrally to sustainable sourcing. Although the literature identifies the links between the environmental dimension through GPP and the economic dimension through the use of LCC, the interaction between them in the context of public procurement has not been adequately captured. The aim of this paper is to evaluate the results of the LCC tools implementation in the context of GPP in Greece and study the economic impact of green procurement in public organizations. The urgent need of reducing energy consumption in the public sector due to the continuing energy crisis and climate change is an additional incentive to evaluate this impact. LCC tools developed by the EU were used, fed with data from public procurement contracts carried out in the Greek public sector. The results show that the adoption of environmental criteria requires market research, planning and coordination to make it cost-effective, especially under the legislative mandate of GPP in Greece by 2022.