The State as an intelligent buyer: the climate solution that is hardly discussed

Think about it like this. The federal government, states and municipalities, together, spend the equivalent of 16% of the country's GDP on public purchases – contracts, services, equipment, food, medicines, infrastructure... This is more than the average for rich OECD countries. There is an absurd volume of money circulating every year, with the State at the forefront as the buyer.

The question put on the table by two studies (1) from the University of London (UCL) that supported this analysis is: what if Brazil used this purchasing power in an intelligent way, aligned with the objectives of the ecological transition?

The examples of the PNAE and the Covid vaccine

The good news is that Brazil is not starting from scratch. There are two concrete cases that show that strategic public purchasing works and that it should be much better known to the population.

The first is the National School Food Program, PNAE. Since 2009, the program has determined that at least 30% of the resources allocated to school meals are allocated to local family farmers. In 2022, this represented R$1.6 billion allocated directly to small producers. Today, the program serves around 40 million students and serves as a guaranteed market for family farming across the country. The State did not wait for the market to resolve: it created the market.

The second is the Health Economic-Industrial Complex, the CEIS. When the Oswaldo Cruz Foundation (Fiocruz) partnered with AstraZeneca to produce the vaccine against Covid-19, this was only possible because the State used its purchasing capacity to demand technology transfer and national production. Result: in August 2021, 74.8% of Covid vaccines used in Brazil were already produced in the country. In one of the biggest health crises in history, this helped Brazil build sovereignty in its own immunization.

These backstories rarely appear in public debate. They are almost never presented as examples of the State functioning well, as success stories of intelligent industrial policy. But they should.

The role of public procurement in ecological transformation

A UCL study on the Ecological Transformation Plan (PTE), prepared by researchers from the Ministry of Finance itself, shows that Brazil has built, in recent years, a very sophisticated green industrial policy architecture: the New Brazil Industry (NIB), the regulated carbon market, the Brazilian Sustainable Taxonomy (TSB), the Bioeconomy Plan, the Circular Economy Plan. These are instruments that, together, point in a clear direction and already generate results. Economic models project that the PTE could generate up to $70 billion in additional GDP growth by 2030 and create 2 million jobs in green sectors.

But another study by the institution, on strategic public purchasing, points to the existence of a central tool that is still underused in this equation: the purchasing power of the State as an inducer of green markets.

The logic is simple. The government is the biggest buyer in the country. If it starts purchasing electric buses instead of diesel buses, for example, within the “Caminho da Escola” program, it will create a market for the national electric vehicle industry. If he prioritizes green fertilizers in support and credit programs for the agricultural sector, he will signal to the private sector where to invest. If he demands, in the infrastructure contracts of the New Growth Acceleration Program, the New PAC, whose budget reaches R$1.3 trillion by 2026, that companies use low-carbon steel or recycled materials, he will begin to form a production chain for these inputs in Brazil.

It's not regulation, it's not a subsidy. It is simply the State using its consumer power to pull the market in the direction that interests the country.

Today, according to UCL, around 72% of federal purchases are still made using the lowest price criterion. This is understandable, given the long history of corruption that has created a culture of extreme caution among public servants. But it is worth questioning this logic, adding other elements.

Think about how you make purchasing decisions yourself when you have some leeway. It's difficult to choose just for the price. It considers the durability of the product, trust in the brand, the impact on health and, sometimes, even where it came from and who produced it. When you buy food, you may prefer something local or organic. When choosing a service provider, you take into account reputation and quality, not just the lowest budget. This ability to consider multiple factors, and not just the immediate cost, is what allows you to make choices that make more sense in the long term.

The State can and should reason in the same way. A purchase that seems more expensive in the short term can generate much more value when considering the whole: the jobs created, the technology developed, the production chain formed, the carbon emissions avoided, the dependence on imports reduced. An electric bus has a higher initial cost, but consumes less fuel, emits fewer pollutants and can be manufactured in Brazil. A green fertilizer may have a higher price, but it reduces dependence on imported inputs and protects the soil. Today's cheapest purchase could be tomorrow's most expensive choice.

Legal support available

Brazil already has a legal framework to go beyond the lowest price. The New Bidding Law of 2021 allows for sustainability criteria, product life cycle and innovation. The Startups Law opened space for pre-commercial innovation purchases, in which the State co-develops technology with companies, instead of just acquiring what already exists on the market. The Decree of the Pact for Transform