The UK, as recommended by the Committee on Climate Change, became the first major economy to pass a net zero emissions law with the target to bring all greenhouse gas emissions to net zero by 2050.
The Construction industry has responded to the drive for net zero with developers making net-zero a key consideration and target in their tender processes, and some leading contractors have begun ranking their subcontractors in terms of their green credentials.
Although sustainability issues and net zero targets can be addressed in the scope or services of construction contracts, there has been an increasing appetite to standardise terms and conditions to support day to day sustainability of operations and working systems; encourage collaboration between parties and clearly identify the strategy and targets.
What is X29?
NEC has sought to address such issues and has developed standard terms relating to climate change to be incorporated into its contracts with the introduction of X29, a new Secondary Option drafted for use with the NEC4 suite of contracts.
NEC has stated, "The new Option will be used to support, incentivise and tangibly demonstrate carbon reduction initiatives on future builds across the sector."
What does X29 do?
Where parties choose to apply X29, the Climate Change clause, this assists the parties in identifying and setting their carbon emission targets.
NEC says the development of X29 was a result of the desire to:
- 'Signposting to the issues to be covered in the Scope/raising its profile
- Incentivising performance against climate change targets
- Adding to existing processes or creating new processes that support the reduction of the impact of the works, service and supply on climate change.'
X29 clause incorporates a number of provisions including:
- Climate Change Requirements – these will be included in the Scope as set by the Client, or in collaboration with the Contractor. Failure to comply with the requirements shall be a Defect;
- Climate Change Plan – this will set out the strategy for implementing and achieving the Climate Change Requirements and Performance Targets;
- Collaboration – NEC encourages collaboration and X29 is no exception, the Contractor is obligated to collaborate with any parties engaged in or assisting with achieving Climate Change Requirements;
- Performance Table – whilst not mandatory, NEC encourages the use of a performance table setting out targets relating to net zero and sustainability with positive or negative financial incentives. Failure to achieve targets within the Performance Table shall not be a defect;
- Disclosure – a provision has been specifically included to allow parties to share and disclose information relating to climate change as both contractors and clients are under increasing pressure to highlight and publish their green or sustainability credentials.
A guide has been published by NEC, which details how X29 should be implemented.
It important to note that X29 is a Secondary Option and therefore must actively be chosen by parties to be included in their contracts. X29 allows the parties to collaborate and include climate change provisions that can be flexible and adapted to fit a wide range of projects.
NEC is the first of the standard form contracts to tackle the issue of climate change in construction projects, how long will it be before JCT, FIDIC and other such standard forms will be updated to address climate change issues.
DWF will be running a course for the Institution of Civil Engineers, which covers NEC4 Contract Management, starting in October 2022.