A formal ‘Carbon Budget’ alongside the traditional Financial Budget for construction projects to incentivise industry participants to reduce GHG Emissions through use of more sustainable materials.Skip to clause
Why use this?
Developers and contractors will often procure materials that are the most cost-effective rather than those that are beneficial to the environment or have longevity for the development.
The construction industry uses standard form contracts (JCT, NEC, FIDIC, Australian standards etc.). It is common for these contracts to be amended by a schedule of amendments and there are commonly accepted ‘market standards’ for how these are amended.
Clauses can be inserted into these schedules of amendments to compel parties to resource materials sustainably. The most recent update of JCT was 2016 and a new one is due around 2021.
How it promotes a net zero future
The encouragement of sustainable sourcing and procurement of materials would significantly contribute to reducing the impact of the construction industry on the environment.
A key driver of bringing about this change is shifting attitudes in the construction industry to ensure that this becomes the market standard. The impact would be amplified if this could be incorporated within the industry standard form contracts.
Disclaimer - please read
The clauses on this website (and published in our Climate Contract Playbook) have been prepared in good faith on a pro bono basis and are free to download and use. The clauses have been drafted and edited by a variety of lawyers and, as such, the approaches to drafting may not conform to any particular drafting norms. We acknowledge this as a consequence of the collaborative drafting process.
The clauses on this website (and published in our Climate Contract Playbook) are provided on an ‘as is’ basis and without any representation or warranty as to accuracy or that the clauses will achieve the relevant climate goal or any other outcome.
This website (and the Climate Contract Playbook) does not comprise, constitute or provide personal, specific or individual recommendations or advice of any kind, and does not contain legal or financial advice. The clauses are precedents for legal professionals to use, amend and negotiate using their professional skill and judgement and at their own risk.
While care has been taken in the drafting of these clauses, neither The Chancery Lane Project nor any of its contributors owe a duty of care to any party in relation to their preparation and do not accept any liability for any errors or omissions, nor for any loss incurred by any person relying on or using these clauses or any other person. Users should use their own professional judgement in the application of these clauses to any particular circumstance or jurisdiction or seek independent legal advice.
At present, all the clauses are based on the laws of England and Wales. We encourage the conversion of these precedent clauses for use in other jurisdictions.
Carbon Budget means the aggregate of [value] tonnes of Carbon Dioxide Equivalent of Greenhouse Gas emissions permitted for the construction of the Works as set out in Appendix [X].
Carbon Offsetting means the purchase of a quantity of carbon credits equal to the amount of the Residual Emissions from the Works that has been verified in accordance with [insert name of voluntary standard].
Carbon Dioxide Equivalent (CO2e or CO2eq) means a unit of measurement that is used to standardise the climate effects of various Greenhouse Gases.
Greenhouse Gases (“GHG” or “GHGs”) means the natural and anthropogenic gases which trap thermal radiation in the earth’s atmosphere and as specified in Annex A to the Kyoto Protocol to the United Nations Framework Convention on Climate Change (UNFCCC) or otherwise specified by the UNFCCC, and which currently include: carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), sulphur hexafluoride (SF6), and nitrogen trifluoride (NF3).
Greenhouse Gas Emissions (“GHG Emissions”) means emissions of Greenhouse Gases over a specified area and period of time, each expressed as a total in units of carbon dioxide equivalent (CO2e) [and calculated in accordance with the GHG Protocol Corporate Accounting and Reporting Standard or such other equivalent and generally recognised greenhouse gas emission calculation methodology].
Prohibited Materials means any material, substance, product, process, technique or combination of the same which, by its nature or application:
- contravenes any British Standard or EU equivalent;
- contravenes the recommendations of the British Council for Offices’ publication Good Practice in the Selection of Construction Materials (2011) (as may be amended or updated from time to time);
- would unnecessarily increase the total GHG Emissions of the Works because their embodied GHG Emissions cannot be reduced by Carbon Offsetting; or there is an alternative material or good which meets the standards of the Contract with fewer embodied GHG Emissions; or
- is generally considered to be deleterious or harmful to the environment within the building design professions.*
* [Drafting note: While this definition is not used in this clause, the term it is used in the JCT D&B Contract and should be amended accordingly so other contractual provisions support this clause.]
Residual Emissions means the Greenhouse Gas Emissions that are emitted after all reasonable efforts have been made to reduce emissions.
Additional Clauses for use with JCT Design & Build Contract 2016
Climate Impact of Materials
2.1A.1 The Contractor shall provide to the Employer as soon as possible, but in any event within ten (10) days of such a request being made, all information that the Employer reasonably requests regarding the climate impacts, including the total embodied GHG Emissions, of the supply and use of materials and goods which are selected or used in carrying out the Works.
2.1A.2 The Contractor confirms that the total embodied GHG Emissions in the materials and goods used to construct the Works and GHG Emissions emitted in the construction of the Works shall not exceed the Carbon Budget.
2.1A.3 In selecting materials and goods for use in the Works, the Contractor shall:
.1 prior to the commencement of the Works, provide a list of the intended manufacturers and suppliers to the Employer’s Agent along with the climate impacts of the transportation of the same to the Site as against the Carbon Budget;
.2 liaise with the Employer’s Agent with regards to the list of intended manufacturers and suppliers and shall have due regard to the representations of the Employer’s Agent with regards to the same;
.3 [use best endeavours to ensure that the materials and goods are sourced from manufacturers and suppliers located as close to the Site as reasonably practicable;]
.4 update the Employer’s Agent, on a monthly basis, with the actual climate impacts of the transportation of the materials and goods to the Site to date by reference to the levels set out in the list and the projected impact of the same for the remainder of the Works assessed against the Carbon Budget.
2.1A.4 If the Carbon Budget of the Works (excluding Changes issued in accordance with clause 3.9.1) is exceeded due to a breach by the Contractor of its obligations under this [Clause: Climate Impact of Materials], then liquidated damages at the rate of £[X] per tonne of Carbon Dioxide Equivalent of Greenhouse Gas over and above the Carbon Budget, shall be due and payable from the Contractor to the Employer. To avoid doubt, liquidated damages payable under this [Clause 4] represent the reasonable commercial concerns of the Employer and its costs of [offsetting the excess GHG Emissions/remedying an equivalent breach of the development funding agreement].
2.1A.1 The Contractor is required to carry out the Works so that the Carbon Budget is not exceeded.
2.1A.2 The Contractor is required to provide monthly management information on its ongoing compliance with [Clause 1] to enable the Employer to assess the progress of the Works towards meeting the Carbon Budget and provide input to the Contractor on further progress;
2.1A.3 If the Carbon Budget of the Works (excluding Changes issued in accordance with clause 3.9.1) is exceeded due to a breach by the Contractor of its obligations under this [Clause 3], then liquidated damages at the rate of £[X] per tonne of Carbon Dioxide Equivalent of Greenhouse Gas over and above the Carbon Budget, shall be due and payable from the Contractor to the Employer. To avoid doubt, liquidated damages payable under this [Clause 3] represent the reasonable commercial concerns of the Employer and its costs of [offsetting the excess GHG Emissions/remedying an equivalent breach of the development funding agreement].