PPN 016: Carbon Reduction Contract Schedule · first published 17 February 2025
This Procurement Policy Note (PPN 016) introduces a standard carbon reduction contract schedule — a set of optional terms and conditions (T&Cs) that central government buyers can add to contracts to manage supplier decarbonisation. It requires suppliers to report greenhouse gas (GHG) emissions, set reduction targets, and maintain a Carbon Reduction Plan (CRP) for the life of the contract. The schedule is optional and buyers must judge whether it is relevant and proportionate to each contract. This PPN is an update to a March 2024 version; the only change is new terminology to align with the Procurement Act 2023, which applies to procurements commenced on or after 24 February 2025 — there is no new policy or new call for action. For contracts commenced before 24 February 2025, the previous version (PPN 01/24) still applies. If you are bidding for central government contracts — especially higher-value ones — you may find this schedule included in your contract, requiring you to track and reduce your emissions throughout delivery.
WHO THIS APPLIES TO
THE ENKII VIEW
The schedule is optional, but buyers are expected to use it where relevant and proportionate — meaning it is likely to appear in higher-value, higher-emission contracts. SMEs that already have a Carbon Reduction Plan and emissions monitoring in place will find it far easier to accept these terms without delay or negotiation. The link to PPN 006 (which mandates Carbon Reduction Plans for contracts above £5m per year) signals that the government is building a joined-up carbon compliance framework; SMEs targeting that tier should treat carbon reporting as a standard capability, not a one-off exercise.
1. Prepare or update a Carbon Reduction Plan (CRP) that covers your GHG emissions baseline, reduction targets, and the actions you will take — so you can accept carbon reduction contract terms quickly if a buyer includes the schedule.
SMEs bidding for any central government contracts — The schedule requires suppliers to report GHG emissions, set reduction targets, and maintain a CRP throughout the contract. Having this ready before contract award removes a negotiation risk and signals maturity to buyers assessing supplier readiness.
2. Publish a compliant Carbon Reduction Plan as required by PPN 006, and ensure it is kept up to date — this is a mandatory pass/fail requirement at that value threshold, and PPN 016 builds on it.
SMEs bidding for central government contracts above £5m per year (inc. VAT) — PPN 016 explicitly supports PPN 006, which requires a published CRP for contracts above £5m per year inc. VAT. Failure to have one in place means exclusion from those bids.
3. Check your existing contract to see whether carbon reduction terms were included under PPN 01/24, and continue meeting those obligations — the new PPN does not replace them for pre-24 February 2025 contracts.
SMEs currently delivering central government contracts commenced before 24 February 2025 — The Procurement Act 2023 does not apply to contracts commenced before 24 February 2025; PPN 01/24 remains the applicable version for those contracts.
4. Be aware that your buyer may seek to add the carbon reduction schedule to your existing contract via a variation — review the schedule now so you understand what GHG reporting and target-setting obligations it would impose before you are asked to sign.
SMEs currently delivering central government contracts (any value) — The PPN explicitly states that in-scope organisations 'may also choose to use these terms in relevant procurements, or apply them to existing contracts, through contract variation, where appropriate.'
5. Monitor whether your public sector buyers adopt this schedule voluntarily — the PPN encourages wider public sector bodies to apply it, so build carbon reporting capability now rather than waiting for it to become a contract requirement.
SMEs bidding for wider public sector contracts (e.g. NHS, local government) — The PPN states 'Other public sector contracting authorities may wish to apply the approach set out in this PPN', signalling likely broader adoption over time.
Every rule below quotes the official document verbatim.
PPN 016 applies to all central government departments, their executive agencies and non-departmental public bodies (referred to as 'in-scope organisations'). (Central government departments, executive agencies, and non-departmental public bodies)
“The contents of this Procurement Policy Note (PPN) apply to all central government departments, their executive agencies and non-departmental public bodies and are referred to in this PPN as 'in-scope organisations'.”
Use of the carbon reduction schedule is optional but should be included where relevant to the subject matter of the contract and proportionate to do so. (All in-scope organisations considering including the schedule in a contract)
“Use of the carbon reduction schedule is optional but should be included where relevant to the subject matter of the contract and proportionate to do so.”
The carbon reduction schedule requires contract-specific GHG emissions reporting, supplier GHG emissions reduction targets, and a supplier Carbon Reduction Plan to monitor and reduce emissions throughout the contract life. (Contracts where the carbon reduction schedule is included)
“These include contract specific GHG emissions reporting, setting supplier GHG emissions reduction targets and monitoring and reducing GHG emissions throughout the life of the contract through a supplier Carbon Reduction Plan.”
Before including the schedule, buyers must assess: their own carbon reduction maturity, the supplier's carbon reduction maturity and ability, the contract value and estimated GHG emissions, and the criticality of the contract. (All in-scope organisations considering including the schedule)
“Before including the carbon reduction schedule in a contract, in-scope organisations should assess: their understanding (i.e. maturity) of carbon reduction initiatives and how to apply and monitor these; the supplier's understanding (i.e. maturity) of carbon reduction initiatives and ability to introduce effective measures; the value and estimated carbon GHG emissions linked to the contract; the criticality of the contract”
The updated PPN (reflecting Procurement Act 2023 terminology) applies to procurements commenced on or after 24 February 2025. (All in-scope organisations)
“The Procurement Act 2023 and the Procurement Regulations 2024 apply to procurements commenced on or after 24 February 2025.”
For procurements commenced and contracts awarded before 24 February 2025, the previous version PPN 01/24 still applies. (In-scope organisations with contracts commenced before 24 February 2025)
“For procurements commenced and contracts awarded before this date, please refer to PPN 01/24.”
This update does not constitute a change in policy or a new call for action. (All in-scope organisations)
“This update does not constitute a change in policy or a new call for action, but in-scope organisations should continue to apply any ongoing obligations set out in the provisions of this PPN.”
PPN 006 (which this PPN supports) requires bidding suppliers to have a Carbon Reduction Plan for contracts with an estimated value above £5 million per year including VAT. (Contracts above £5m per year (inc. VAT) under the Procurement Act 2023; Special Regime contracts excluded)
“It applies to public contracts, including frameworks, dynamic markets, and contracts awarded in accordance with frameworks and dynamic markets, for goods, services, and works. Special regime contracts are excluded. The PPN applies to contracts with an estimated value above £5 million per year (including VAT) under the Procurement Act 2023, except where it would not be relevant and proportionate to the contract.”
Other public sector contracting authorities (outside central government) may wish to apply the approach in this PPN but are not required to. (Wider public sector bodies (optional))
“Other public sector contracting authorities may wish to apply the approach set out in this PPN.”
The carbon reduction schedule is expected to be incorporated into future iterations of the suite of Model Contracts, and can also be applied to existing contracts via contract variation where appropriate. (All in-scope organisations)
“It is expected that the carbon reduction schedule will be incorporated into future iterations of the suite of Model Contracts (see PPN 013 Using Standard Contracts). In-scope organisations may also choose to use these terms in relevant procurements, or apply them to existing contracts, through contract variation, where appropriate.”
This briefing is enkii's interpretation of the official document — the official text always governs.
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