Infrastructure Victoria’s Key Principles and Recommendations to Reduce Carbon Emissions

The Victorian Government has committed to achieving net zero greenhouse gas emissions by 2050, as legislated in the Climate Change Act 2017 and outlined in Victoria’s Climate Change Strategy. The State’s climate change strategy includes interim targets to reduce emissions by 28-33% below 2005 levels by 2025 and by 45-50% below 2005 levels by 2030.

On 29 February 2024, aligning with the Victorian Government’s commitment to achieving net zero emissions, Infrastructure Victoria provided its
advice to the Victorian Government to reduce emissions across public infrastructure projects. The advice to Government was based on its findings in the report issued in September 2023 entitled “Opportunities to reduce greenhouse emissions of infrastructure“. Infrastructure Victoria provided 3 overarching principles and 10 recommendations to Government to limit emissions in the business case and for each stage of procurement on all Victorian Government infrastructure projects.

Infrastructure Victoria recommends that Government apply the following 3 overarching principles to infrastructure decarbonisation in Victoria:

• the reduction of new-build solutions: prioritising non-build or low build solutions by utilising existing infrastructure or modifying infrastructure to align with changing demands before considering new-build infrastructure;
• aligning decarbonisation approach with other jurisdictions: aligning approaches with other Australian governments and industry best practices so that Victoria can foster a culture of shared knowledge and experience, ensuring the transition to a low-carbon future is more effective; and
• providing clear commitments and expectations: clarifying the scale and pace of infrastructure emissions reduction to give confidence to industry to propose or take up options to reduce carbon in the significant pipeline of infrastructure projects underway.

Infrastructure Victoria proposes that Government implement the following 10 recommendations to reduce greenhouse emissions (carbon) in public infrastructure:

1. developing a comprehensive approach: establishing a consistent framework for measuring and managing emissions, drawing inspiration from established standards such as PAS 2080:2023 or ICMS3, but aligned with Victoria’s specific needs;
2. developing decarbonisation capability and tools: adopting proven carbon measurement approaches used in New South Wales, coupled with widespread training across the Victorian Government to enhance awareness and competence in emission reduction strategies;
3. using a target consistent approach to valuing carbon: initially, setting a carbon value of at least $123 per tonne, with subsequent updates to align with Victoria’s emissions reduction targets, ensuring a uniform and evidence-based approach;
4. updating business case guidelines: revising business case guidelines and templates to integrate emissions reduction considerations, promoting alignment with Victoria’s decarbonisation targets;
5. valuing carbon in CBA: incorporating carbon measurement into infrastructure cost benefit analyses (CBA) as part of the project feasibility/business case and thereby making decisions which proactively reduce emissions;
6. updating procurement frameworks: revising procurement frameworks and guidance to embed carbon reduction in tenders and actively promoting carbon reduction practices through the selection of contractors that readily adopt these practices;
7. updating standard form contracts: integrating carbon reporting, abatement and requirements into standard form contracts which promote sustainable infrastructure development;
8. establishing carbon management prequalification requirements: setting up prequalification requirements for government contracts, and thereby ensuring suppliers align with Victoria’s emissions reduction goals;
9. supporting industry to find low emissions solutions: facilitating testing of alternative materials and promoting the adoption of performance-based standards to encourage the development and adoption of low emission building materials and practices; and
10. updating assurance processes: updating assurance processes by including considerations for carbon emissions, enhancing accountability and transparency in infrastructure investment decision making.

These principles and recommendations are likely to be adopted by the Victorian Government, at least in part, and potentially wholly, as Government strives to reach net zero by 2050. We recommend that all players within the infrastructure sector begin to turn their minds to the implications this will have contractually, commercially and operationally.

Given our construction and infrastructure team’s passion for driving sustainability initiatives in the infrastructure sector, we welcome this release of Infrastructure Victoria’s key principles and recommendations. As an example, we are presently working with a legal committee of Infrastructure Net Zero to settle model contractual clauses to drive this reduction of embodied carbon on infrastructure projects. We would be delighted to assist you to develop a proactive strategy to prepare for these changes or to implement similar initiatives on your projects.

This article was written by Marko Misko, Partner, Julie Charles, Special Counsel, and Taulant Javori, Associate.