09 Dec 2008

Measuring sustainability in major infrastructure

by Nick Thomas

Stakeholders involved in construction and infrastructure projects have some powerful incentives to apply environmental sustainability in their projects.

It's difficult to recall a time when infrastructure investment was such a hot topic.

The needs of a burgeoning population, calls for economic efficiency through better infrastructure, an impending energy crisis and now a forecast need for major economic stimulus, all point us toward infrastructure investment.

At the same time, there is an increasing awareness of the need for development to become more sustainable. This is driven not only by the threat of climate change, but also by a desire to reduce our environmental footprint and thereby make our societies healthier in the short and long term.

It's perfect timing for the development of a green rating scheme for infrastructure, which measures and rewards more sustainable design for infrastructure projects.

The need and benefits

Governments are taking sustainability seriously, and this is starting to show not only in a range of laws which promote sustainability, but also in current and emerging public infrastructure projects.

Research suggests that sustainable development also reduces long-term costs (especially with the advent of carbon trading), extends asset lives, enhances stakeholder reputation, improves attractiveness for investors, and can even reduce liability risks.

In recent years, a number of market leaders have been exploring ways in which infrastructure developments can improve environmental performance in their design, construction and operation. It is difficult, however, to encourage innovation or set standards for sustainable infrastructure without a benchmarking tool, such as a green rating scheme.

Many of us are familiar with green rating schemes for commercial buildings. The two most commonly used schemes in Australia are:

  • the Green Star scheme (established and administered by the Green Building Council of Australia) which focuses on the design and construction of a building, and addresses a wide range of sustainability characteristics; and
  • the NABERS scheme (established and administered by State Governments) which focuses on the operational energy and water efficiency of a building.

An infrastructure rating scheme is needed to recognise sustainability and provide assurance to the community and stakeholders of sustainability claims made by the infrastructure industry. Measuring sustainability is also an important element in reporting corporate social responsibility performance.

AGIC - developing the green infrastructure scheme

A national industry association, the Australian Green Infrastructure Council (AGIC), has recently been formed to establish a green rating scheme for infrastructure.

On 27 October 2008, Clayton Utz hosted a seminar, "'Building Green': Sustainability in major infrastructure" providing an opportunity for industry players to hear from Doug Harland in one of his first official engagements since his appointment as CEO of the Australian Green Infrastructure Council. The other panel speakers were Sarah Marshall, the National Environmental and Sustainability Manager at Abigroup, Steve Fermio, the Director of Planning & Environment at the Transport Infrastructure Development Corporation (TIDC) and Nick Thomas, a partner in our Environment and Planning team. The seminar was chaired by Owen Hayford from our Construction & Major Projects Group.

Clayton Utz' interest in green infrastructure derives from our roles in the infrastructure field and in sustainable development. Nick Thomas has been assisting AGIC for over a year, through one of AGIC's working groups.

What will the scheme apply to?

The rating scheme is still in an early development stage. It is anticipated that the scope of AGIC’s rating scheme will apply to the following infrastructure types:

  • roads and tunnels
  • railways and bridges
  • airports
  • ports and marinas
  • cycle and pedestrian pathways; and
  • distribution grids.

It will also apply with limited scope to:

  • telecommunication infrastructure
  • water and wastewater collection and supply, distribution and treatment infrastructure; and
  • civil engineering headworks of industrial plants (the AGIC rating scheme will measure the capacity of the site to host the plant while excluding the operational efficiency of the plant itself)

It has been suggested that AGIC may at some time in the future include mining headworks.

The AGIC scheme will not include:

  • buildings;
  • residential dwellings and developments;
  • industrial processes; or
  • infrastructure commonly referred to as social infrastructure, such as schools, hospitals and prisons.

The existing green building rating schemes already apply, or may soon apply, to these classes of developments.

Proposed assessment criteria

It is intended that assessment of infrastructure projects will consider their procurement, design, construction, operation and decommissioning. The assessment will be based upon measurements in a number of sustainability categories covering environmental, social and economic elements, with each category weighted and containing a series of scored questions and performance criteria that enable an overall score (and award level) to be determined.

During the initial development of the scheme AGIC considered 15 possible categories. Following a process of review and consolidation the proposed sustainability categories have been reduced to the following seven categories (subcategories are also being developed):

  • project management and governance
  • economic performance
  • using resources
  • emissions, pollution and waste
  • biodiversity
  • people and place; and
  • workforce.

AGIC's success will ultimately depend on industry supporting and contributing to the scheme. AGIC is hoping to pilot its rating scheme in mid-2009.

What does this mean for you?

Stakeholders involved in construction and infrastructure projects have some powerful incentives to consider the extent to which they incorporate ecologically sustainable development (ESD) in their projects, in addition to taking advantage of the benefits of green development which we mentioned at the start of this article.

There is increasing commercial pressure on developments and projects to account for sustainability principles. Governments have expressed a preference for more sustainable developments, and some agencies have indicated that ESD performance will be relevant in assessing tenders.

In addition, the courts have indicated that there will come a time when the principles of ESD will become such an important factor for government decision-making that failure to consider them in approving a project could put the planning approval for that project in jeopardy (Minister for Planning v Walker [2008] NSWCA 224).

This provides a powerful incentive to apply ESD in infrastructure projects.

The development of a green infrastructure rating tool presents an opportunity for uniform assessment of infrastructure projects on sustainability criteria, and a clear marketing and tender advantage for those who score well on the proposed rating scheme.

Thanks to Davyth Stewart for his help in preparing this article.

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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.