Set a Carbon Budget for Construction Projects
This clause inserts a formal ‘carbon budget’ alongside the traditional financial budget for construction projects.
What this clause does
Sets a carbon budget for materials used in and for construction projects and reduces greenhouse gas (GHG) emissions by incentivising parties to adopt more sustainable practices and materials.
Clauses
Additional clauses*
* [Drafting note: The clauses below have been prepared for inclusion in an Australian Standard design and construct or construct only contract (for example, AS 4300-1995 or AS 2124-1992). Capitalized terms which are defined in the Australian Standards appear in [parentheses] where first appearing below. If these clauses are not being used in an Australian Standard contract, the drafter will need to modify or replace these terms.]
Carbon Budget for Materials
2.1A.1 The Contractor must use best endeavors to ensure that the Embodied GHG Emissions in the materials used to construct and/or which are incorporated into the Works do not exceed the Carbon Budget.
2.1A.2 Without limiting clause 2.1A.1, in selecting materials for use in the Works, the Contractor must:
(a) not, without approval of the [Principal OR [Principal's Representative]] (which may with granted or withheld in its absolute discretion), select any Prohibited Materials for use or incorporating into the Works or for the purpose of carrying out the work under the Contract;
(b) prior to the commencement of the Works, submit a list of the intended manufacturers and suppliers to the [Principal OR Principal's Representative], together with a summary of the Climate Impacts of the relevant materials against the Carbon Budget (as applicable). In preparing the list of intended manufacturers and suppliers, the Contractor must take into account (without limitation) the following considerations:
(i) the Climate Impacts of the materials;
(ii) source of supply of and transport for the materials (and whether the materials could be sourced closer to the (Site));
(iii) innovation;
(iv) whether the materials are reclaimed or recycled;
(v) durability of the materials; and
(vi) if applicable, electrification of appliances;
(c) liaise with the [Principal OR Principal's Representative] with regards to the list of intended manufacturers and suppliers. The [Principal OR Principal's Representative] may provide comments on the list and the Contractor must have due regard to comments provided by the [Principal OR Principal's Representative] and update the list of intended manufacturers and suppliers to address these comments; and
(d) [without limiting the Contractor's obligations in clause [●]]*, use best endeavors to ensure that the materials are sourced from manufacturers and suppliers located as close to the Site as reasonably practicable.
* [Drafting note: If applicable, this clause should cross-refer to relevant provisions of the Contract which relate to procurement of materials. For example, in Victoria, the Local Jobs First Policy obligations for construction and supply contracts which are subject to the Ministerial Directions for Public Construction Procurement.]
2.1A.3 The Contractor must:
(a) obtain, keep and maintain accurate and complete records of the Climate Impacts relating to the manufacture, procurement, transport and use of materials that are selected, used or incorporated into the Works);
(b) provide those records and any other information relating to the Climate Impacts of the goods or materials relating to the Works to the [Principal OR Principal's Representative] as soon as possible, but in any event within [insert relevant time period – for example, 10 (ten) days] of such a request being made, including reuse, demountability, recycling and sustainable sourcing of materials which are selected or used in carrying out the Works; and
(c) provide the [Principal OR Principal's Representative] with a report,* on a monthly basis, with the actual Climate Impacts of the materials, by reference to the levels set out in the list of intended manufacturers and suppliers and the projected impact of the same for the remainder of the Works assessed against the Carbon Budget.
* [Drafting note: This report may be included in a monthly report or update that the Contractor is already required to provide under the Contract. Alternatively, users may also wish to impose an obligation on the Contractor to report on the Climate Impacts and tracking against the Carbon Budget at relevant project meetings.]
Definitions
Additional definitions*
[Drafting note: The definitions below have been prepared for inclusion in an Australian Standard design and construct or construct only contract (for example, AS 4300-1995 or AS 2124-1992). Capitalized terms which are defined in the Australian Standards appear in [parentheses] where first appearing below. If these clauses are not being used in an Australian Standard contract, the drafter will need to modify or replace these terms.]
Carbon Budget means [●] tonnes of GHG Emissions.*
* [Drafting note: Users may wish to consider breaking down the Carbon Budget into sub-limits for different materials (for example, for timber, transport, steel and so on). This may be set out in an Annexure or Appendix to the relevant contract.]
Carbon Offsetting* means, for the purpose of the [work under the Contract], the purchase of a quantity of carbon credits through [insert reference to accredited scheme] equal to the amount of the Residual Emissions from the procurement of materials which have been independently verified.**
* [Drafting note: Users may consider setting a maximum cap on carbon credits which may be purchased. If so, this definition should be updated accordingly. This definition only contemplates purchasing carbon credits (as separate from other forms of recognised carbon offsetting).]
** [Drafting note: Users should be aware that purchasing carbon credits may require projects to be registered with an accredited scheme.]
Carbon Dioxide Equivalent (CO2eq) means a unit of measurement calculated in accordance with the Measurement Determination that is used to standardise the climate effects of various GHGs.
Climate Impacts means:
(a) Embodied GHG Emissions;
(b) the GHG intensity, being the total GHG Emissions released in energy consumption for production and overhead, including energy use, waste, water use and discharge, chemical use and biodiversity degradation on site during construction of the Works; and
(c) sustainability of materials, including lifecycle, source, demountability and environmental impact.*
* [Drafting note: Inserting a definition of ‘Climate Impacts’ (being what the contractor is required to report to the principal on) will assist the parties in:
- understanding and being able to fulfill their obligations (from the contractor's perspective); and
- setting expectations and achieving the aim that they set out to achieve (from the principal's perspective).
Users should consider and adapt this definition for the relevant project or contract. If applicable, and if an independent climate consultant has been engaged, the 'Climate Impacts' could be considered in the independent climate consultant's report as relevant considerations in determining the carbon budget.]
Embodied GHG Emissions means the GHG Emissions which have already been released into the atmosphere before the Works have been completed, through the extraction, manufacture, transportation, production and delivery of the materials for and used in the Works.
Greenhouse Gasses (GHGs) means the gaseous constituents of the atmosphere, from both natural and anthropogenic sources, which contribute to the greenhouse effect, as detailed in the IPCC Glossary.
Greenhouse Gas Emissions (GHG Emissions) means emissions of GHGs over a specified area and period of time, each expressed as a total in units of CO2e and calculated in accordance with the Measurement Determination.
Measurement Determination means the methods, criteria and measurement standards for calculating Emissions in the Greenhouse Gas Protocol Corporate Accounting and Reporting Standard and Corporate Value Chain (Scope 3) Standard (as amended, updated or replaced from time to time).
NCC means the National Construction Code as enacted by the relevant state and territory legislation and amended, updated or replaced from time to time.
Prohibited Materials means any material, substance or product of the same which, by its nature or application:
(a) contravenes the NCC or other Australian standard or equivalent which applies to the use of materials in projects similar in nature to the Works;
(b) would unnecessarily increase the total GHG Emissions of the Works because the Embodied GHG Emissions cannot be reduced by Carbon Offsetting;
(c) there is an alternative material, substance or product which meets the standards of the Contract with fewer Embodied GHG Emissions and reduces the Climate Impact;
(d) is sourced from native forests; or
(e) is generally considered to be deleterious or harmful to the environment within the building, design and construction industry or is inconsistent with accepted industry practices.
Residual Emissions means the GHG Emissions that are emitted after all reasonable efforts have been made to reduce emissions.*
* [Drafting note: If an independent climate consultant is engaged for this project, the Residual Emissions may be determined by the independent climate consultant.]
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