Public infrastructure owners can and should drive the green industrial transition

Nordic governments are at the forefront of decarbonising the cement and steel industries. Some of the most innovative low-carbon plants are located in the region, and this is thanks to heavy investment in the green transition. Yet, if the goal is to secure tomorrow’s regional competitiveness while delivering on national and EU-level climate targets, we need a significant boost in demand. As the Industrial Accelerator Act will soon be unveiled, the Nordic countries are well-positioned to show the rest of the EU what ambitious industrial decarbonisation can deliver.

Green industrial policy in a nutshell

It is now evident that a coherent green industrial policy calls for both supply/push and demand/pull measures. The reasoning is straightforward: industrial decarbonisation will remain costly until the supply of low-carbon products reaches sufficient scale, and it won’t do so until there is sufficient demand. This is especially true for the steel and cement industries, which make up almost 10% of EU emissions. Technical solutions are available, and if scaled, could cost-efficiently deliver EU climate goals. Yet, this requires massive initial investment on the supplier side. 

Nordic countries are already doing this, positioning themselves as frontrunners of low-carbon cement and steel, with some of the most innovative plants located in the region. But what’s the point in scaling if there’s the market for low-carbon products is too weak? 

To make decarbonisation profitable, a pool of large off-takers must be willing to pay the initial premium that comes with producing low-carbon materials. 

One way to break the supplier-buyer deadlock is for the public sector to step in as an early purchaser of low-carbon materials. Government agencies are large consumers of cement and steel products and can leverage their purchasing power by embedding green criteria in their tenders, kick-starting markets for low-carbon products. 

As documented in a recent report there are multiple examples of how the Nordic infrastructure owners are advancing this – the Swedish Transport Administration has defined steps to limit life-cycle emissions and achieve climate neutrality by 2040; the Danish Road Directorate is enhancing socioeconomic cost-benefit analysis to address embedded carbon; the Norwegian Public Road Administrationhas set targets and defined steps to introduce low-carbon materials as well as to convert fully to zero-emission machinery after 2027; the Finnish Transport Infrastructure Agency has developed a low-carbon assessment method for infrastructure construction and the Finnish Environmental Institute has designed an open-access national building and construction emissions database; and the Icelandic Road and Coastal Administration conducts carbon assessments at all phases of project implementation and is working to identify construction projects suitable for piloting zero-emission construction sites.

Low-carbon materials need sizeable lead markets

While the Nordics have demonstrated leadership in strategically harnessing green public procurement, a key element is lacking in the equation: scale. Nordic governments must continue leading industrial decarbonisation, but their markets alone are too small to induce the economies of scale necessary to lower costs. 

Meanwhile, the potential for EU-wide public demand for clean construction products is substantial. True, broadly speaking, the EU construction sector has grown slowly recently. However, civil engineering construction, and transport infrastructure in particular, remains strong, with an estimated growth of 5.3% in 2025. This growing demand presents a strategic opportunity to accelerate the industrial transition through the public procurement of low-carbon materials.

The true costs of low-carbon infrastructure

Some might argue that using low-carbon products would increase rail costs. This argument, however, overlooks the climate costs embedded in infrastructure projects. If we continue using grey steel and cement, then other sectors will have to reduce their emissions more to meet European climate targets. This also has a cost, which should be factored into decision-making. 

Furthermore, we must not forget that climate inaction also has a price, and European taxpayers are already paying for it. This, at least, is the sobering finding of a recent study. This past year, extreme weather events caused damage worth €43 billion. And these costs will rise to €126 billion by 2029 as the secondary effects of these shocks materialise.

Sustainable procurement will not make national treasuries bankrupt either. While it is undeniable that producing sustainable materials is expensive, building a low-carbon bridge could add only 1% to the project's overall cost. At the same time, we will have cut emissions by over 50%. The value for money hard to ignore. 

Binding and EU-wide Green Public Procurement is the goal

Turning the EU public authorities' focus towards low-carbon infrastructure is crucial. While for newly constructed buildings, the Energy Performance of Buildings Directive already establishes whole-life carbon requirements, there is no comparable measure for infrastructure. This gross policy gap means that without rules requiring authorities to prioritise green products, public money will continue flowing into carbon-intensive industries.

This is why we call on Nordic countries to push for ambitious EU-wide policies and public procurement rules that effectively unlock the emissions-reduction potential of infrastructure projects. This is critical to driving down green premiums and ensuring that the Nordics don’t bear disproportionate costs for going green.

We suggest two essential steps forward:

Make the 'most economically advantageous tender’ (MEAT) principle the rule and not a good-to-have. This principle was introduced in the EU Public Procurement Directive (PPD) to allow for environmental and social conditionalities in tenders. Yet, its uptake has been discouraging, with 55% of procurement procedures using the lowest price as the sole award criterion for public contracts. That’s why we encourage Nordic countries to push for the inclusion of a mandatory MEAT principle in the upcoming revision of the PPD.

Ensure that the Industrial (Decarbonisation) Accelerator Act, the Competitiveness Fund, and other relevant policies and upcoming measures incentivise low-carbon production. The revision of the PPD, planned for 2026, is likely to take some time. Meanwhile, other policy instruments coming under the Clean Industrial Deal should be crafted to effectively deliver on the EU’s decarbonisation and climate goals. 

The Nordic countries have been leaders in climate action, showing what is achievable with strong political will and innovative industry. What comes next is securing an EU-wide binding commitment to industrial decarbonisation, leading markets for low-carbon products, and green public procurement. This is essential to preserve and scale up the progress made so far.

The piece is co-signed by the Nordic Council of Ministers Secretariat, Bellona Europa, Bellona, CONCITO, Just Shift, and Green Transition Denmark.

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