A role for public procurement in system innovation: the transformation of the Greater Manchester (UK) waste system

Abstract

The transformation of socio-technical systems to more sustainable states is more policy induced than market driven. Reflecting this, the potential for governments to direct system transformation has been widely debated. However, this debate concentrates on supply side policies and under analyses the potential for public buyers to steer system innovation. This paper draws from ideas on system innovation, transition management and public procurement to explore how a major public buyer was able to do just this. The paper describes the transformation of the Greater Manchester (UK) waste system from a relatively simple landfill model to a highly complex, multi-technology solution of intensive recycling, composting and energy production. The paper draws three main conclusions: (1) it is possible to orchestrate system innovation through public procurement in certain circumstances; (2) this involves developing the required interdependencies between technologies, institutions and practices; (3) system transformation can be orchestrated from within the incumbent regime.

Keywords:

• innovation
• systems
• transitions
• public procurement
• sustainability

Acknowledgements

This work was funded through the Sustainable Consumption Institute and the UK Economic and Social Research Council (Grant R111539) with contributed support from the Department of Business Innovation and Skills, NESTA (National Endowment for Science, Technology and the Arts) and the Technology Strategy Board. The authors would like to acknowledge their generous support. Earlier versions of this draft benefitted from comments given by Professor(s) Andrew McMeekin and Frank Geels, as well as helpful comments from the anonymous reviewers. The usual caveats apply.

Notes

1. Although there are empirical examples of cases where demand management and demand side policies have played a role, for example the Swedish market transformation or the American energy management programmes, there is little academic literature on these types of intervention. We discuss procurement in a holistic sense comprising the whole cycle from identification of needs, through to the end of a services contract or the end of the useful life of an asset (ODPM 2003).

2. Note that many public bodies are organised for public service delivery and do not engage in policy making.

3. See Uyarra and Gee (2013) for a discussion of the importance of locality on system transformations.

4. Directive 99/31/EC on the landfill of waste.

5. The Landfill Allowances Trading Scheme (LATS) was created by the 2003 Waste and Emissions Trading Act. LATs provide a market mechanism for waste disposal authorities (WDAs) to trade in their allocated landfill allowance.

6. WDAs are single purpose authorities, similar to those in charge of local services such as transport, the police or fire services. They are made up of elected members representing the constituent councils and financed from a levy on member authorities.

7. Versions of the waste hierarchy have been used since the 1970s, and the UK waste hierarchy is very similar to Lansink's Ladder (Loorbach 2010). The waste hierarchy was eventually incorporated into European legislation in the Waste Framework Directive of 2008.

8. EfW involves the generation of electricity from the burning of waste. CHP plants are more efficient than EfW plants as the resulting heat energy is harnessed.

9. Public Finance Initiatives became the preferred financial mechanism of the British Government for funding waste projects, partly because of the major capital investments required in waste, but also reflecting broader political decisions on public financing.

10. The use of the negotiated procedure in complex procurement projects has been superseded by the competitive dialogue procedure (Arrowsmith and Treumer 2012). This procedure does not allow lengthy negotiations post- award. The impact on complex projects is likely to be a longer procurement process and significantly higher costs for both the buyer and client (MPA 2010).