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To incentivise or to tax, or both? How we can reduce carbon in our infrastructure schemes

September 23, 2021

By Simon Earl, Jon Heath and Daniel Hayes

Financial incentives for carbon reduction can drive innovation in infrastructure lifecycle

The full lifecycle of our infrastructure currently represents over half of the UK’s carbon footprint, and this proportion will increase as the energy sector decarbonises. We need to act now and make significant reductions in carbon use within our projects, whilst ensuring infrastructure remains resilient and as environmentally friendly as possible. As civil engineers, we know that our projects should be carried out with a low carbon future in mind – the whole life carbon repercussions of our infrastructure cannot be left for someone else to deal with later down the line.

The biggest opportunities to reduce embodied carbon are at the start of a project, where strategic decisions are first made. The key to maximising opportunities to reduce whole life carbon costs is to involve the appropriate stakeholders early in the design process, leading to incentivised carbon reduction throughout the procurement and delivery stages.

With new legislation such as the Transport Decarbonisation Plan and Highways England Net Zero plan coming into play, the messages are clear: we need to innovate to address the climate emergency. The key to this is empowering and incentivising key stakeholders from the concept of a scheme all the way through to delivery, operation and beyond.

Seizing opportunities early in a project life cycle

We should all agree that working together in collaboration generally results in better project outcomes, so achieving carbon reductions shouldn’t be any different. Therefore, civil engineers, contractors and their supply chain need to be front and centre for early decision making. Where key project participants are brought in later, we miss the opportunity to use crucial expertise on the design or build processes, and embed the cultural change required to meet government targets for net zero. With all project contributors involved in the initial discussions, carbon can be one of the competing project constraints that shape a scheme, rather than being retrospectively considered.

With all project contributors involved in the initial discussions, carbon can be one of the competing project constraints that shape a scheme, rather than being retrospectively considered.

Collaboration versus disconnection

In our experience we’ve found there is a disconnect between the collaboration encouraged by PAS 2080, and how our industry actually procures the work required. At the construction procurement stage of a project, we see financial and funding pressures, and a tightly defined programme kick in, and seem to lose the focus on carbon. Once construction works accelerate, it’s put on the ‘too difficult’ pile.

Whilst Early Contractor Involvement (ECI) is by no means a new concept, the focus historically is on buildability, price, programme, and quality considerations. By engaging contractors (and designers) early in the process, we can and should include a focus on carbon management and set out the measures to improve and incentivise further reductions at each stage of the process. 

By engaging contractors (and designers) early in the process, we can and should include a focus on carbon management and set out the measures to improve and incentivise further reductions at each stage.

The main barriers might seem obvious; it’s a matter of price and programme. We have clear guidelines on quality and price. However, the UK Government’s Procurement Policy Note (PPN 06/21) now takes account of carbon reduction plans in public procurement. The new Carbon Reduction Code for the Built Environment Issue 1.0 - June 2021 also places obligations on clients and designers in, amongst other things, carbon-oriented procurement.

It’s time for carbon and other considerations, including Social Value and whole life costs, to become the drivers in the procurement process.

Setting, and sticking to targets

Target setting when it comes to carbon reduction is embedded in PAS 2080. The process should start by convening a carbon workshop to brainstorm ideas from all parties, leading to an initial broad-brush calculation of the carbon impact of the scheme. This calculation can then be used to set targets for the various parties, but input from designers and contractors at the early stages of a project is vital to ensure the setting of realistic and achievable targets.

We need to set baseline and carbon reduction targets either at the start of a project, or more rigorously through the planning consenting process. And then we need to ensure we stick to them—this is where our regulators should play a role. There is greater accountability with everyone in the room, from civil engineers to project managers, quantity surveyors, architects, planners, and financiers.

Incentivisation through taxation?

Climate action is morally the right thing to do, but for it to become entrenched in our building programmes, we need to better incentivise clients, designers and contractors to think differently. In the 1990’s the landfill tax was introduced to incentivise the re-use of excavated materials by making those materials progressively more expensive to dispose of. It radically changed the earthworks industry to promote greater re-use. A similar action on carbon could have the same result. It would incentivise the use of low carbon techniques and products, but we’ve yet to come across a contractual mechanism that rewards the reduction of carbon or taxes carbon-heavy processes. 

A carbon tax would incentivise the use of low carbon techniques and products, but we’ve yet to come across a contractual mechanism that rewards the reduction of carbon or taxes carbon-heavy processes.

Every industry expects to be profitable – and if the construction industry provides financial incentives linked to controlling carbon and contribution to carbon savings, we will drive innovation in the sector. At the detailed design and construction stage, we often find ourselves at what’s become known as the ‘carbon cost tipping point’ when some innovative ideas are deemed too expensive, compared to the ‘normal way’. But we can drive these costs down as they become common practice across the industry. Until then, investment is needed to recognise that the carbon reduction is more important than short term capital cost savings.

Changing the narrative

How can we change the way we talk about building communities while helping to influence public perception? After all, we build communities for the people who live in them, so the creation of resilient long-lasting infrastructure should be the focus of our carbon reduction aims.

COP 26 is widely seen as our last chance to change the narrative and invest in change. Can we, as civil engineers, finally take the initiative to ensure that projects are noted and applauded for their climate change benefits, and not just because of time, budget or aesthetics? While an individual might not notice that a new road scheme has reduced its carbon footprint, the knock-on effect is huge, not least because we can’t be leaving it up to the next generation to fix. 

  • Simon Earl

    A chartered civil engineer and multi-disciplinary project manager, Simon has delivered projects in the residential, commercial, health, and education sectors as well as led highways and transportation frameworks.

    Contact Simon
  • Jon Heath

    Leading a team of engineers and technicians on civil engineering and infrastructure design, Jon is a civil engineer with over 20 years of experience on earthworks, utilities, drainage, and flood risk management.

    Contact Jon
  • Daniel Hayes

    An expert in infrastructure design, Daniel has worked on civil engineering projects for over 20 years. His work has included design and delivery on highways, utilities, drainage, and flood risk management.

    Contact Daniel
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