The Carbon Reduction Contract Schedule: PPN 01/24, explained

The key facts

• PPN 01/24, issued in March 2024, publishes a standard Carbon Reduction Contract Schedule developed by the Cabinet Office for use in government contracts.
• It applies to all central government departments, their executive agencies and non-departmental public bodies, with immediate effect.
• The schedule provides standard terms for contract specific greenhouse gas emissions reporting, supplier emissions reduction targets, and a supplier emissions Reduction Plan monitored through the life of the contract.
• Use of the schedule is optional: it should be included where relevant to the subject matter of the contract and proportionate to do so.
• Before using it, buyers should assess their own carbon maturity, the supplier's maturity, the value and estimated emissions linked to the contract, and the contract's criticality.
• The schedule is expected to be incorporated into future iterations of the government's suite of Model Contracts, and can be applied to existing contracts by variation where appropriate.
• It supports PPN 06/21, which requires bidders on major contracts worth £5 million or more per year to publish a Carbon Reduction Plan committing to Net Zero.
• The policy backdrop is the Climate Change Act 2008, amended in 2019 to target at least a 100% reduction in the net UK territorial carbon account by 2050.

What PPN 01/24 is and who it applies to

Procurement Policy Note 01/24, issued in March 2024, publishes a standard Carbon Reduction Contract Schedule: a set of ready-made terms and conditions that contracting authorities can drop into government contracts to manage greenhouse gas emissions during delivery. The Cabinet Office developed the schedule to be considered alongside broader sustainability obligations and included where it is relevant to the subject matter of the contract and proportionate to do so.

The PPN applies to all central government departments, their executive agencies and non-departmental public bodies, described as in-scope organisations, and its provisions could be applied with immediate effect. Other public sector contracting authorities are invited to adopt the same approach. The note asks organisations to circulate it to anyone in a commercial, procurement or contract management role.

The reasoning is straightforward. Environmental and emissions considerations feature in the delivery of most public contracts, so procurement is an opportunity to support the UK's Net Zero commitment: the target, introduced into the Climate Change Act 2008 in 2019, of at least a 100% reduction in the net UK territorial carbon account by 2050.

What the Carbon Reduction Schedule contains

The schedule provides standard terms that allow contract specific decarbonisation objectives to be set and delivered, and a framework for monitoring and assessing the supplier's decarbonisation performance. Three mechanisms sit at its core: contract specific greenhouse gas emissions reporting; the setting of supplier emissions reduction targets; and the monitoring and reduction of emissions throughout the life of the contract through a supplier emissions Reduction Plan.

This moves carbon from a bid-stage promise to a live contractual obligation. Rather than relying only on what a supplier said in its tender, the schedule gives the contract manager defined reporting duties, agreed targets and a plan whose delivery can be assessed over time. Further guidance on applying the schedule is published alongside the PPN and within the schedule itself.

The schedule is expected to be incorporated into future iterations of the government's suite of Model Contracts, referenced in PPN 08/23. In the meantime, in-scope organisations may use the terms in relevant new procurements, and may also apply them to existing contracts through contract variation where that is appropriate.

Deciding when to use it

Use of the schedule is optional, and the PPN is clear that it may not be appropriate for every contract. The test is the familiar one: relevance to the subject matter of the contract, and proportionality. A blanket insertion of carbon clauses into every contract is not what the policy asks for.

Before including the schedule, the PPN sets out four things a buying organisation should assess: its own understanding, or maturity, in carbon reduction initiatives and how to apply and monitor them; the supplier's maturity and ability to introduce effective measures; the value of the contract and the estimated emissions linked to it; and the criticality of the contract.

That assessment matters because the schedule creates ongoing obligations on both sides. A contracting authority that cannot review emissions reports or challenge a Reduction Plan will gain little from including the terms, and a supplier with no carbon capability may sign up to obligations it cannot meet. The maturity questions are there to keep the clauses honest.

How it fits the wider net zero policy picture

PPN 01/24 is designed to work alongside PPN 06/21, which applies to major government contracts, framework agreements and contracts awarded under dynamic purchasing systems with an anticipated value of £5 million or more per year. PPN 06/21 requires bidding suppliers to set out their commitment to achieving Net Zero by publishing a Carbon Reduction Plan. The new schedule complements that selection stage requirement with delivery stage obligations inside the contract itself.

The PPN also situates the schedule in the UK's longer climate policy story: the 2006 review of the economics of climate change, the Climate Change Act 2008 with its 2050 target and carbon budgets, and the 2019 Net Zero amendment recommended by the Committee on Climate Change. Net Zero requires emissions to be reduced and, where necessary, any remaining emissions to be balanced by offsetting schemes such as tree planting or carbon capture and storage. Government's stated intent is to keep cutting emissions while keeping costs down for consumers and supporting jobs and growth, and to use public procurement as one of the levers.

How eSourcing Data helps

The Carbon Reduction Schedule only earns its place if someone actually monitors it. eSourcing Data gives contract managers a single place to hold the schedule, the supplier's Reduction Plan and the periodic emissions reports it requires, with reporting that shows at a glance which suppliers are on target and which need a conversation.

The PPN's proportionality tests also need evidencing. The platform's audit trail records the assessment behind each decision to include or exclude the schedule, including the maturity, value, emissions and criticality factors the PPN lists, so the reasoning is retrievable long after the procurement closes.

And because the schedule is expected to flow into Model Contracts and future procurements, teams can standardise it in their eSourcing Data templates once, then reuse it consistently across relevant tenders rather than reinventing the drafting contract by contract.

What to do about it

1. 1Read the Carbon Reduction Schedule and its accompanying guidance before your next relevant procurement.
2. 2Assess your organisation's carbon maturity honestly: can you set, monitor and challenge emissions targets in contract management?
3. 3Screen upcoming contracts for relevance and proportionality using the four factors in the PPN: maturity on both sides, value and estimated emissions, and criticality.
4. 4Include the schedule in relevant new procurements, and consider applying it to existing contracts by variation where appropriate.
5. 5Align selection and delivery: where PPN 06/21 requires a Carbon Reduction Plan at bid stage, use the schedule to carry obligations into the contract.
6. 6Record the decision and reasoning for every contract where the schedule is considered, whether it is included or not.