Climate change clause: The new NEC X29 secondary option
The associated guidance produced by the NEC provides a detailed background to the project as well as a thorough description of how each sub-clause is intended to be used.
The consultation period ended on 13 May 2022.
The clause follow the introduction of 'Climate Change Requirements' into the scope of a project's contract, that provide objectives for levels of recycling, use of renewable power on-site or electric vehicles, reducing waste generation, designing out waste, and designs that reduce carbon emissions. A failure to meet the Climate Change Requirements is expressed to constitute a defect which the contractor will be required to correct. Detailed targets in respect of these objectives may be specified in a performance table to benchmark the contractor's performance, and the parties can agree positive and negative financial incentives in relation to them being met, or not, as appropriate.
The clause is split into the following headline areas:
- collaboration with partnering bodies to achieve the Climate Change Requirements;
- early warning of a threat to such requirements not being met;
- a requirement for a climate change plan to be drafted and agreed at the outset of the project and adhered to throughout;
- mechanics regarding the operation of the performance table. This includes both ongoing target monitoring and compensation for not reaching such targets; and
- incorporating a mechanism for proposals for climate/environmental related changes to the works to be put forward to the contractor(s).
The NEC hopes that adoption of the standard clause will result in 'tangible sustainability and net-zero commitments between clients and suppliers'. It is encouraging to see instrumental bodies tackling climate change head on in the industry and providing developers with teeth to contractually enforce commitments. It is awaited whether the clause will be amended substantially as a result of the consultation, and whether there will be widespread uptake of the clause throughout the construction market once it is finalised.