With the built environment being the largest source of climate emissions (42%) after surface transport and with a net zero emissions target of 2050, it is clear that decarbonisation of PFI assets will become a main focus in this sector for a number of years to come. The current PFI portfolio numbers over 700 projects operating across the UK, making decarbonising PFI projects a major part in achieving this target.
On 5 July, the Infrastructure and Projects Authority (IPA) published a Handbook comprising the recommendations of its working group on tackling ongoing decarbonisation concerns in the context of operational PFI projects. The working group engaged key public and private sector PFI stakeholders including FM Contractors with the aim of developing a standardised approach to decarbonisation. We have set out a summary of the recommendations below.
Whilst PFI projects often attract criticism for their inflexible nature and onerous contractual / consenting procedures, parties should look for ways to use existing maintenance, replacement and lifecycle mechanisms to implement some of these changes. Capital cost may be an issue but many of the “easy wins” mentioned below should, in the long run, result in significant savings. Taking advantage of these opportunities now, ahead of contract expiry and handback, will allow contracting authorities to future-proof their assets with support from the private sector.
The Handbook comprises of three parts (an Executive Summary, Part One - Developing a Decarbonisation Plan, and Part Two - Delivering a Net Zero Change)
Decarbonisation Plan 5 principles
Part One introduces five principles of good practice to help stakeholders develop an effective decarbonisation plan:
Data first: The initial focus for contract authorities should be on gathering all necessary data about the energy consumption and carbon emissions of the project in order to establish a baseline and evaluate the complexity of the challenge. This will further help firm up the specific targets needed to achieve net zero.
Know your contract: As terms differ from project to project, contracting authorities need to have a clear understanding of the underlying risks and the specifics around energy management within their project agreements. This will allow for an easier evaluation and implementation of decarbonisation measures. Responsibility for energy use and allocation of energy consumption and tariff risks is treated differently on different projects and some measures may have minimal contract implications whilst others may involve complex change processes.
Engage stakeholders: Emphasis is placed on the continuous collaboration between public and private sector partners as well as the support of wider stakeholders. Establishment of Net Zero working groups with active participation of all stakeholders on a project are recommended. This will be invaluable in combining project management expertise with technical knowledge and experience in delivering decarbonisation measures.
Prioritise: The differences in the size, nature and age of the asset and its future needs, the age and efficiency of existing plant and equipment and the cycle of planned repair and replacement of installed equipment mean that there is no one-size-fits-all approach and decarbonisation options should be tailored accordingly. The guidance, however, recommends that initial areas of focus should be on the more straightforward steps such as reducing emissions from onsite fossil fuel use and purchased energy consumed directly on site and in turn reducing energy bills. Some handy case studies are included in the guidance showing some easy wins.
Make a plan: Having short-, medium- and long-term plans focusing on decarbonisation targets will make it easier to plan the implementation of the most appropriate measures to align with the project scheduled lifecycle, maintenance or hand back events.
Sources of emissions
The IPA further identifies the benefits of a staged approach of decarbonising PFI projects, focusing on three main sources of operational emissions:
- Scope 1: direct emissions generated from sources owned and controlled by authorities.
- Scope 2: indirect emissions generated from purchased electricity, steam, heating or cooling.
- Scope 3: indirect emissions generated by the public sector’s supply chain.
The recommendation is to focus on reducing scope 1 and 2 emissions in the first instance due to the complexities in reducing the indirect emissions generated by the public sector’s supply chain.
Way forward- delivering Net Zero change
Reducing operational carbon in PFI projects can take many different forms, such as replacing existing lighting, optimisation of air conditioning through intelligent technical solutions or the installation of solar photovoltaic panels or wind turbines. Part 2 of the Handbook focuses on how to progress shortlisted decarbonisation interventions which require a contract change and sets out a staged approach with recommended activities and checklists at each stage.
The implementation of such changes may require a variety of different contractual approaches depending on the age, change process and risk profile of the contract. The issue of this guidance is a positive step in an area which has lacked a clear strategy in PFI projects to date and will help in steering authorities to reduce the carbon footprint in such assets.
Article co-authored by Lili Chaneva, Associate at CMS
Social Media cookies collect information about you sharing information from our website via social media tools, or analytics to understand your browsing between social media tools or our Social Media campaigns and our own websites. We do this to optimise the mix of channels to provide you with our content. Details concerning the tools in use are in our Privacy Notice.