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Published 27 julio 2023
The vast majority of PFI contracts were signed between the mid-90s and the mid-2010s, all long before 'net zero' targets were set by the UK Government. However, with retrofit decarbonisation of public buildings currently high up on the Government's agenda, and public sector organisations tasked with reducing their carbon footprint, the focus is on how operational PFI projects can achieve net zero during their remaining years.
On 5th July, the Infrastructure and Projects Authority (IPA) published its 'Decarbonisation of Operational PFI Projects' handbook (the "Handbook"), which sets out recommended good practice for how contracting authorities should work with their private sector project partners to plan and deliver decarbonisation interventions on their operational PFI projects.
The Handbook - produced by the IPA with input from its 'Net Zero Working Group' whose members include investors, MSA providers and FM contractors - proposes that a standardised approach to decarbonisation is adopted. It is intended to operate alongside the existing PFI contractual framework irrespective of which version of SOPC it is based on.
For operational PFI facilities the focus should be on reducing 'operational carbon' – on the basis that decisions affecting the 'whole life carbon' of the asset that relate to design and construction have already been taken – and in particular it is recommended that interventions focus initially on:
There is a two-staged approach to delivering decarbonisation interventions recommended in the Handbook:
Five principles are recommended in the Handbook to prepare and implement an effective decarbonisation plan. These are:
The Handbook adopts a five-staged approach to the contract change process, providing recommended checklists, considerations and actions for each of the five stages:
In our view as well as the project agreement change process a particular area for early consideration – but one which is not majored on in the Handbook, and is often overlooked in practice – should be the contractual framework for delivering the design & build solution for the decarbonisation works. In particular, which party is appointing the D&B contractor and the professional team, when and on what terms – and is there proposed to be a novation of any of those appointments further down the line and if so how is that to be achieved?
It will take pragmatism and collaboration to successfully achieve net zero in operational PFI projects, but the Handbook is a welcome first step on the road to achieving a unified approach to decarbonisation of operational PFI schemes.
DAC Beachcroft’s Infrastructure & Projects lawyers advise a range of contracting authorities, SPVs, FM contractors, and investors, on operational PFI projects. We are currently advising clients on decarbonisation activities on operational PFI and NHS LIFT schemes.
If you require advice on decarbonising your operational PFI scheme, please contact our PFI experts Alison Martin and Ioan Davies.
+44 (0)117 918 2318
+44 (0)113 251 4861
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