Legal Q&A – Construction and infrastructure
Chris Dickson, Partner, CMS Cameron McKenna Nabarro Olswang
What to look out for in 2023
THIS article provides a brief overview of the headline issues relevant to the construction and infrastructure sector coming up in 2023. Like preceding years, 2022 to a large extent proved to be a turbulent year both on a national and an international scale. Against this backdrop, 2023 will be an important year, particularly for climate action, with various changes impacting the sector this year and beyond.
Environmental issues
Infrastructure in the UK is responsible for more than 50% of carbon emissions in the UK. Climate change and the continued push towards net zero will continue to significantly influence the infrastructure sector throughout 2023.
Carbon Emissions (Buildings) Bill
The bill was introduced to parliament in June 2022 and, if passed, will require the whole-life carbon emissions of buildings in England and Wales to be reported. The bill also promises to set a limit on embodied carbon emissions during the construction of buildings. This will be seen as a key factor in reducing the carbon impact of construction and would be a UK first for the regulation of embodied carbon in the construction industry.
Greenwashing
We are likely to see enhanced scrutiny of environmental credentials. While the fashion industry has to date largely been the focus of previous greenwashing claims, the Competition and Markets Authority (CMA) has highlighted that misleading and unsubstantiated green credentials will be targeted in more sectors including travel and transport. As this focus widens, organisations will need to be conscious of their publicised credentials relating to sustainability and the environmental impact of materials.
Carbon Border Adjustment Mechanism (CBAM)
The EU will begin to phase in CBAM rules in October 2023. CBAM targets carbon-intensive imports with the aim of reducing the risk of carbon leakage. The measure will require importers to pay a tariff to make up the difference in carbon price that would have been required had the goods been produced in the EU. Initial goods under the spotlight include iron, steel, cement and aluminium. The UK government has also indicated its intention to consult on a UK CBAM to address carbon leakage.
While the fashion industry has to date largely been the focus of previous greenwashing claims, the CMA has highlighted that misleading and unsubstantiated green credentials will be targeted in more sectors including travel and transport.Mandatory digital waste tracking
Mandatory digital waste tracking is expected to become live in 2023. Over 200 million tonnes of waste is produced annually in the UK. The digital system will require many organisations to classify their waste and dispose of it correctly. This will enable businesses to track the different types of waste produced and will assist in the transition to a circular economy.
Energy performance certificates (EPC)
EPC regulation for commercial property is set to change in 2023. From 1 April, all rented commercial properties are required to have an EPC rating of band E or above unless an exemption applies. While this may place an obligation on landlords to carry out works on rented properties, this is also likely to result in more onerous obligations on contractors to ensure high energy efficiency ratings of new builds and fit-out works.
National Infrastructure Assessment 2023
The National Infrastructure Commission (NIC) is due to publish its next assessment later this year. Launched in 2015, the NIC evaluates the UK’s long-term economic infrastructure requirements and outlines challenges and strategies for addressing infrastructure needs. Challenges identified in the 2021 baseline report include decarbonisation, a circular economy and transport among others. This year’s report will provide recommendations to address these challenges.
Building Safety Act 2022
The act introduced a new gateway regime for higher-risk buildings designed to ensure that building safety risks are considered at three distinct stages (gateways) of design and construction. The Gateway 1 regime (before planning permission is granted) was introduced previously. Gateway 2 (stop/go point prior to construction) and Gateway 3 (completion/final certificate state) are expected to come into force between April and October 2023 with secondary legislation.
Procurement Bill
We are likely to see enhanced scrutiny of environmental credentials.The Procurement Bill is expected to come into force in 2023. The bill aims to overhaul the public procurement regime with a simpler and more transparent system. There are over 350 procurement regulations, many deriving from EU directives. The bill consolidates these into a new uniform public procurement regime. The new system aims to achieve greater transparency through a ‘noticing’ regime which spans the full lifecycle of public procurement.
Data Protection and Digital Information Bill
The bill overhauls the UK’s data protection regime aiming to update and simplify the current framework. The proposed changes to the definition of ‘personal data’ reduces the scope of information likely to fall under the definition making it more business-friendly. Further potential updates include changes to the way complaints are handled and enforced, new powers for the Information Commissioner’s Office to refuse complaints and the increase of fines under the privacy and electronic communications regulations regime bringing them in line with the UK GDPR. This may be particularly relevant to the construction industry where personal data may be collected through the use of digital entry procedures and drone/photographic surveys.
Aggregates levy
The Finance Bill 2023 proposes changes to the exemptions from the aggregates levy effective from 1 April 2023. Firstly, a limitation will be imposed on the current unmixed aggregate exception. From April, the exception will only apply if the aggregate is returned to the original site for a purpose connected to winning aggregate or other minerals. Additionally, a new exemption will be created for aggregate arising unavoidably as a by-product of construction, replacing four existing exemptions.
Separately, the Scottish government intends to introduce a Scottish Aggregates Levy Bill that will replace the UK framework. The proposed levy is provisionally scheduled for 2025.
Chris Dickson, Partner, CMS Cameron McKenna Nabarro Olswang
Christopher.Dickson@cms-cmno.com