Buyers Alliances
A buyers alliance aggregates demand signals and supports companies in identifying cost-competitive, certifiable decarbonisation solutions.
.jpg)
How it works:
A buyers alliance is a contractual arrangement where a group of buyers (often known as a buyers consortium, club or alliance) agrees to purchase a specified quantity of goods or services from a supplier or suppliers. These agreements are common in sectors such as energy, commodities and manufacturing, where long-term, large-scale purchasing agreements can be essential to the success of both buyers and suppliers. While buyers alliances currently focus on scope 3 emissions reductions, they can address scope 1 emissions as well.
There is strength in numbers. Collaborative procurement is one mechanism to catalyse the investment needed for nascent clean energy technologies and infrastructure deployment in heavy-emitting sectors, such as steel, aviation, road freight and maritime. In this sense, this market mechanism meets the core principles of an offtake agreement by providing a long-term demand commitment and revenue certainty for suppliers through bilaterally signed contracts. The buyers alliance aggregates demand signals and supports companies in identifying cost-competitive, certifiable decarbonisation solutions. A buyers alliance brings collective purchasing power, decreases risk from external shocks and provides overall improved bargaining power for buyers.
The public sector has used collaborative procurements with great success, notably the US government’s use of Government-wide Acquisition Contracts (GWAC) that allow the U.S. General Services Administration (GSA), the federal purchasing agency of the US government, to aggregate the purchasing demand of different US agencies to ensure they buy products at the lowest cost.
To allow for the sharing of confidential business information and protect against the concerns of pricing/volume monopolistic behaviour, buyers alliances can benefit from an intermediary, normally in the form of a non-profit institution or public procurement entity. Because buyer alliances can bring together potential competing buyers, companies consult with internal counsel on antitrust concerns before participating in any alliance.
Buyers alliances aggregate companies with decarbonisation ambition and a willingness to direct low-carbon investment deep in their value chain. These initiatives provide suppliers of zero- and low-carbon products with greater certainty about their revenue stream, as aggregated demand signals turn into bankable agreements.
Companies can address their scope 3 emissions while benefiting from the economies of scale achieved through such an alliance. These initiatives vary in what they offer to businesses – some allow businesses to buy the physical decarbonised product or offer environmental attribute certificates (EACs), others provide the option to buy one or the other.
Buyers alliances, as described in this toolkit, are those that specifically facilitate the joint procurement of products or services. These exist within a wider group of initiatives designed to create strong demand signals for low-emissions technologies. These demand signal programmes empower members toachieve green procurement commitments. This encourages corporate leaders to foster a culture of innovation and the deep integration of sustainability into the company’s overall purchasing decisions. Buyers alliances and other mechanisms outlined in the Toolkit can then build on this momentum to translate demand signals into bankable offtake agreements. Examples of these signals include:
• The First Movers Coalition translates member commitments from over 100 global corporations into the world’s leading, credible demand signal to accelerate the adoption of emerging climate technologies to decarbonise heavy-emitting sectors.
• SteelZero, hosted by the Climate Group in partnership with ResponsibleSteel, is a global initiative bringing together companies to accelerate the transition to a net-zero emissions steel industry. Its members make a public commitment to procure 50% of their steel by 2030 from producers on the pathway to net-zero emissions and to procure 100% net-zero steel by 2050.
• ConcreteZero is an initiative led by Climate Group in partnership with World GBC. Its members aim to send a strong demand signal to support investment and policy transition towards the sustainable production and purchase of concrete.
What sectors can leverage this mechanism?
Green Market Activation (GMA) Chemicals will build market-based tools to remove financial and structural barriers to decarbonisation and will facilitate demand aggregation and collective procurement for low-emission chemical products. For more information, visit Chemicals – Center for Green Market Activation (gmacenter.org).
Sustainable Aviation Buyers Alliance (SABA) continues to drive investment into high-quality sustainable aviation fuels (SAF) through collective procurement and the creation and maintenance of a credible, transparent and standardised sustainability framework, accounting guidance and registry. For more information, visit Sustainable Aviation Buyers Alliance (SABA) (flysaba.org).
Smart Freight Centre, specifically the Smart Freight Shippers Alliance, and ZEMBA aim to accelerate the commercial deployment of zero-emissions shipping services. For more information, visit Smart Freight Centre & Zero Emission Maritime Buyers Alliance (ZEMBA) Announces Successful Completion of Inaugural Collective Tender - The Aspen Institute - The Aspen Institute.
The Sustainable Steel Buyers Platform accelerates steel decarbonisation through collaborative procurement. The Platform launched its first request for proposals on behalf of the buyers group. This process is open to all iron or steel producers and their supply chain partners capable of delivering near-zero emissions steel to North America. For more information, visit Sustainable Steel Buyers Platform - RMI.
GMA is helping establish a working group of companies to design a book and claim framework for concrete. For more information, visit Cement & Concrete – Center for Green Market Activation (gmacenter.org).
What challenges does it solve?
Duration
For suppliers, it offers a stable, long-term customer base that justifies production investments. Buyers gain greater assurance of supply over a longer time horizon, which helps manage long-term needs.
Volume
Multiple buyers in the alliance can pool their purchasing volumes to commit to larger quantities. This benefits suppliers by ensuring consistent, large orders and allows buyers to meet demand without overcommitting individually. The collective volume secures better terms for buyers.
Price
By facilitating joint procurement, a buyers alliance can help identify a reference price for low- and zero-emissions products not yet widely available. For example, the sale and purchase of environmental attribute certificates helps create a reference price point for sustainable aviation fuel, in comparison to traditional jet fuel. Buyers alliances can use a neutral, non-competitive third party to negotiate flexible pricing mechanisms, such as price floors, ceilings or indexes tied to market conditions. These mechanisms allow both buyers and sellers to protect themselves from market volatility. The alliance's collective buying power enables stronger negotiations on price, ensuring that it is fair and often lower than individual buyers would get.
Delivery terms
A buyers alliance can negotiate better logistics and delivery terms by pooling demand. It can accomplish this by staggering delivery schedules, negotiating centralised delivery infrastructure or ensuring priority access. The collective nature of the alliance also makes it easier to work out contingency plans for delivery disruptions.
Technical definition
The establishment of standards, regulations and certification systems is paramount. These alliances can support the development of definitions and standards for high-integrity value chain interventions by working together to bring standardised specifications established at the outset of tenders. This is challenging if a sector experiences a fracturing of different programmes with varying objectives.
Enabling infrastructure
Collective demand and procurement could lead project developers to feel more confident investing in new infrastructure or improvements in existing infrastructure. The delivery of enabling infrastructure is still critical to the effectiveness of buyers alliances.
Regulatory uncertainty
Certain kinds of buyers alliances are typically prevented from any direct advocacy but can provide regulators with policy-related guidance and support education and alignment across members.
Trust
A buyers alliance fosters greater trust because it's built on shared goals and distributed risks. Alliances often formalise governance structures, communication protocols and mechanisms to resolve disputes, which helps foster transparency. The collective oversight of contract terms and delivery performance can reinforce trust, creating an environment where both buyers and sellers feel more secure.
C-Suite and board buy-in
An alliance can make a more compelling case to the C-suite and the board by showcasing the collective strength, reduced risk and negotiated benefits (such as lower prices and secured supply). The alliance's stability and long-term strategic benefits are easier to justify at the executive level than smaller isolated contracts. In addition, risk-sharing across the alliance and potentially lower capital outlay for infrastructure or upfront costs can appeal to executives seeking to minimise risk and maximise value.
Procurement capability
Buyers can leverage the procurement capabilities and expertise of other, potentially larger, more experienced members. The collective power of the alliance allows it to bring negotiators, lawyers and industry experts to structure the best possible agreements. This professional support ensures that smaller or less experienced buyers receive favourable terms and minimise other procurement risks.
Mechanism challenges
Buyers alliances require a high level of consensus building and cooperation among parties. Reaching alignment between multiple stakeholders, balancing potential competing priorities and diverse commitment objectives may present hurdles to forming an effective alliance. For example, aligning buyers with agreed standards or specifications can be a time-consuming process. A key issue is the perception that buyers alliances give rise to collusion and anti-competitive behaviour. There are ways to meaningfully engage with these alliances while adhering to antitrust laws.
Case Studies: SABA
The Sustainable Aviation Buyers Alliance (SABA), developed by RMI, EDF, and Neoteric Energy and Climate, demonstrates how joint procurement processes can send a larger demand signal for sustainable aviation fuels (SAF) to accelerate the investment and adoption of this pre-commercial product. SABA provides a credible, transparent, and standardised system for aviation customers to support SAF, including a public-facing registry. The Center for Green Market Activation (GMA) serves as the secretariat of SABA.
Since its founding, SABA has driven $200M towards SAF certificates over 5 years; and the initiative now boasts over 30 corporate air transport members. SABA drives the uptake of SAF through collective action that supports demonstration and early development SAF suppliers. These often represent scale-ups with technical readiness levels (TLR) between 4 to –7 with system prototype demonstration in an operational environment, but not yet a complete and qualified system. Such projects benefit greatly from guaranteed offtake.
The alliance pools demand from companies committed to decarbonizing their aviation activities, allowing them to negotiate SAF purchases and ensure long-term supply contracts with fuel producers.
Key players in SABA include United Airlines, JetBlue, and Boeing, as well as large companies with significant air travel needs, including Microsoft, Meta, AstraZeneca, BCG, Autodesk, Amazon, Deloitte, and JPMorgan Chase. Fuel producers that have benefitted from SABA and that form the supply side of the alliance include Neste, World Energy, and Fulcrum BioEnergy. The initiative is also supported by government regulators and environmental NGOs that ensure transparency, standard-setting, and verification of emissions reductions.
As with any buyer’s alliance, the objective is to aggregate demand – in SABA’s case by bringing together airlines and large corporate buyers. As a result, SABA creates a large, stable market demand for SAF, making it easier for fuel producers to justify investment in production capacity. Currently, SAF makes up less than 0.5% of global jet fuel supplies and is sold at a premium. i SABA enables long-term offtake agreements, with alliance members negotiating contracts with SAF producers for 5-10 years. This provides price certainty and volume guarantees for both the producers and buyers. This model also provides greater price stabilisation by locking in large volumes through long-term offtake agreements. This is meant to reduce the price differential over time by creating economies of scale.
Additionally, agreements reached through SABA assist with supply chain development. The guaranteed demand created by the alliance incentivises producers to invest in SAF production facilities, which are capital-intensive. This helps scale up SAF production, making it more widely available and affordable in the long run.
The collective demand pooling that is brought about from SABA members helps guarantee supply, mitigates risk, and allows for buyers to negotiate favourable terms. By creating collective demand, SABA is sending signals to the market that SAF is a viable and scalable alternative to fossil-based aviation fuel, encouraging further innovation and investment in the space. This has led to the purchase of SAF certificates for nearly 50 million gallons of SAF – representing roughly 500,000 tons of CO2 (’3,000 fully loaded flights from New York to London’, according to SABA).ii Despite its early stage, SABA provides an example of how a buyers alliance can work in the broader low-carbon commodities space. By pooling demand and negotiating long-term offtake agreements, the alliance helps reduce the cost premium of SAF, supports the development of supply chains, and contributes to reductions in aviation emissions. This collaborative approach is crucial to advancing the decarbonisation of other hard-to-abate sectors.
