RC106 MayJune2023 - Magazine - Page 34
THE GREEN CONTRACT
The importance of addressing net-zero targets in P3 contracts
by Dominic Leadsom
T COP26, the Canadian Federal Government pledged
to target a net-zero economy by 2050, including a
commitment to the enhanced Paris Agreement target to reduce Green House Gas (GHG) emissions by
40-45 per cent from 2005 levels by 2030.
Infrastructure must be an important part of this
strategy with a UN global report finding infrastructure
accounts for 79 per cent of all greenhouse gas emissions
and 88 per cent of all adaptation costs. In Canada, the construction industry accounts for approximately 39 per cent
of total GHG emissions annually.
According to the Canadian Council for Public Private
Partnerships, there are currently 291 active P3 projects
across Canada, with 39 of these in the pre-construction
phase, 29 under construction, and 223 in operation. Some
existing—and many future P3 projects—will face upgraded government targets before the end of their contracts,
resulting in the need to review some design, construction,
and operational considerations.
A decade ago, sustainability and carbon emissions were
a topic, but emissions were seldom incorporated into the
contract language or technical requirements. Since then,
technology, carbon capture, and other emissions reduction
techniques have evolved to a point where there are several
examples of the private partner needing to embed GHG
emission targets in project performance requirements.
Dominic Leadsom is a
director, North America
at Tuner & Townsend.
Existing P3 contracts
While P3 contracts vary in nature, they do contain
mechanisms that address future change, including legal,
regulatory, innovation, or client-driven change. Existing
P3 contracts will need to use these change mechanisms to
adopt improvements in GHG emission targets as part of
the performance specifications during construction and/
Feedback from the industry suggests the impact on
annual operations and maintenance (O&M) and the life
cycle replacement costs is negligible, due to the need to
comply with GHG emission targets. The impact is seen in
the design and construction costs associated with making
these changes and will need to be accounted for within the
adopted change mechanism.
The next generation of P3 projects
The next wave of P3 projects will need to consider implications for Canada’s emissions and net-zero targets.
This includes upfront research to establish targets that
can feasibly be met, not just within the technical requirements, but also in relation to energy usage, greenhouse gas
emissions and the practical requirements of the vertical or
INFRASTRUCTURE AND CONSTRUCTION ACCOUNT FOR
“It is possible to meet the government’s future reduction in
GHG emission targets within the construct of future P3 contracts
when appropriate planning and controls are adopted.”
RENEW CANADA – MAY/JUNE 2023
OF ALL ADAPTATION COSTS