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Report | 2023

Low-Carbon Procurement Accelerates Net-Zero Transition

An Overview of Heavy Industry’s Case in China

By Kaidi GuoWei LiYujun XueRong Yan
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Enabling procurement and promoting a market for low-carbon industrial materials is an important demand-side measure to accelerate the decarbonization of heavy industry. The green premium of low-carbon industrial materials can be shared along the value chain, and a robust demand-side market can reduce transition costs through economies of scale.

In this report, we first summarize Chinese and global practices in public and private low-carbon procurement, and then propose a framework of key elements for low-carbon procurement: (1) scope definition; (2) a carbon accounting and certification system; (3) carbon criteria for products, services, and/or suppliers; (4) incentives for low-carbon products and services; and (5) implementation, monitoring, and evaluation.

The report identifies five priority value chains for low-carbon procurement related to four major industrial materials in China — steel-automotive, steel-construction, cement-construction, aluminum-automotive, and plastics-consumer goods. Finally, the report suggests future opportunities and actions needed for China’s low-carbon procurement development.