In our recent article we discussed the increased adoption of building methods such as Passivhaus in the construction industry, all with the aim of lowering carbon emissions.

Following this, NEC have recently taken the first step to contractually address this issue within its standard form ECC contract, assisting the industry to lower (or even eliminate) carbon emissions by publishing a consultative optional sustainability clause known as "X29" which is intended for use where parties specifically select it to apply.

Clause X29 has been drafted to provide flexibility to Contractors and Clients alike, acknowledging that no one project is the same and recognising that varying approaches are required to reach net zero and sustainability targets. Parties are encouraged to take a collaborative approach to setting and achieving carbon emission targets.

To date, the X29 Option Clause has only been drafted for the NEC4 ECC contracts. It is, however, anticipated that similar forms of carbon incentivised drafting will be adopted throughout the full suite of NEC contracts in due course. We have summarised below some of the key X29 provisions that are being proposed: -

  1. Climate Change Requirements: requirements can be placed on the Contractor by the Client which will be included within the Scope (note the requirements may be requested by the Contractor or they can be developed between the Client and Contractor). As examples, these requirements might include the use of renewable energy on site or designs that reduce carbon emissions etc. 
  2. Climate Change Execution Plan: the introduction of a climate execution strategy for achieving some Climate Change Requirements and Performance Targets (as defined within the proposed drafting). The form and content of the Plan should be set out in the Climate Change Requirements.
  3. Early Warnings: early warnings must be notified for events that might impact the achievement of any Climate Change Requirements.
  4. Performance Table: parties may agree to set targets relative to climate change, net zero, sustainable development etc. within a proposed table (note that if X29 is to be adopted the Performance Table is not mandatory).
  5. Disclosure: a specific clause has been included to allow for the disclosure of climate change information to Others. This has been introduced to acknowledge that Clients and Contractors are increasingly required to report and publicise their climate change credentials.

There is a Guidance Note which has been published which sets out in greater detail how NEC envisages the provisions to work in practice. There is no doubt that this optional standard drafting is a step in the right direction for the construction industry. It will, however, at the outset of projects, require an alignment of climate change intentions and targets by the Contractor and the Client to ensure that the parties are working towards a mutual and hopefully tangible goal. It will certainly be interesting to hear the response to the Consultation and the industry's current attitude to formalising climate change drafting.

Responses to the Consultation must be submitted Friday 13th May, you can express your views here.

Contributors

Anna Reilly

Senior Solicitor

Jane McMonagle

Partner & Head of Transactional Construction, Infrastructure and Projects