Net Zero Construction: Why Plant Hire Can't Sail Straight Into Headwinds

The UK construction sector generates £14 billion through plant hire, supporting 195,000 jobs. But government decarbonisation policy is pushing this industry into what sailors call a 'no-go zone' – sailing directly into Force 10 gales where forward progress becomes impossible.

Government policy is fixated on a utopian vision of zero emissions everywhere. While admirable in theory, this narrative is disconnected from reality and risks stalling progress in construction decarbonisation altogether. Instead of charging into headwinds, the UK needs to adjust course to move forward at an angle that makes sense commercially, practically and environmentally. 

Why the Plant Hire Model Matters for Net Zero Construction

Plant-hire is the backbone of UK construction and infrastructure. Around 66% of machines on site are hired, supporting £14 billion of economic activity and over 195,000 jobs. The model is inherently circular, but it is also fragile as hire companies are asset-rich and cash-poor. Machines are financed over years, with hire rates calculated from purchase price, maintenance, depreciation, utilisation, and a modest markup. Disrupt this formula too aggressively, and the entire system falters.

The Financial Reality Behind Low-Carbon Construction Equipment

Construction decarbonisation isn't just a technical challenge; it's also a financial one. Electric construction equipment often costs ~150% more than diesel to buy. Hydrogen combustion equipment is slightly less extreme but still ~50% higher upfront cost, with uncertain resale prospects in both cases. Even HVO, the least disruptive option, offers no clear cost advantage and faces supply constraints.

Utilisation is another killer, influenced heavily by customer demand. High fuel and infrastructure costs, and logistical or operational complexity all reduce utilisation. Electric machines require costly infrastructure and struggle with battery life in demanding applications. Hydrogen suffers storage, transport and fuel cost hurdles. Low customer demand means low utilisation and elevated hire cost, which further depresses demand, creating a vicious cycle.

Depreciation adds more uncertainty: second-hand markets for electric kit are weak, and early-generation tech is a resale liability. When you consider all these factors in combination, the hire rate for most electric machinery is 200-400% more than diesel. Currently many of these machines are heavily discounted, accepting a loss in favour of better utilisation, but this is only possible in small numbers by large hire firms.

Innovative Finance Models for Construction Equipment

Asset-Based Lending (ABL) has helped early adopters in the plant hire industry, but it's not scalable. Machines need to pay for themselves. Longer finance terms could spread risk, but they may also lock hirers into long-term agreements that are vulnerable to market changes and advancing technology. Buy-back schemes and leasing models shift risk to manufacturers but may also come with rigid timelines, so schemes with flexible terms might be something to discuss. Deposits will likely need to match the cash amount typically required for diesel plant rather than being calculated as a percentage, to avoid cash flow problems.

Construction equipment finance could incorporate remanufacturing (which in combination with hire would be an enviably circular business model!) or introduce a premium to provide residual value guarantees. Hour-based finance might help tackle machines that suffer low utilisation, and shared ownership models (presumably manufacturer/hirer) are also something that has not really been explored in detail.

Infrastructure financing could open new revenue streams with mobile charging infrastructure bundled into hire agreements, but again this requires collaboration and creativity. Without financial innovation, policy ambition will remain just that: ambition.

However, at the end of the day finance models are a way of managing risk, which is essential, but does not eliminate the risk entirely. Costs to customers are still likely to increase to some degree, and the impact of this on inflation, productivity, jobs and economic growth needs to be carefully balanced.

As policymakers push for decarbonization across the UK construction sector, plant hire companies face a 'no-go zone' of operational challenges. However, one of the biggest practical hurdles isn't technology—it's finance. The high upfront cost of electric machinery creates what many are calling the "Green Premium Problem." To understand how the industry can bridge this financial gap and unlock investment in essential zero-emission equipment, read our detailed guide on The Green Premium Problem: Financing Electric Construction Equipment and Closing the Cost Gap.

Why Policy Must Reflect Commercial Reality

Grid capacity remains a major bottleneck. Net zero construction targets hinge on enormous grid expansion, yet with long lead times and every industry competing for access, expecting megawatts of power for temporary sites is unrealistic. Hybrid machines and alternative fuels in construction are often presented as short-term fixes, but this looks increasingly unlikely. The availability of rare materials and electrical components, combined with the enormous gap between grid capacity and expected demand, suggests we are many decades away from a fully electrified landscape.

Hybrid construction machinery, alternative fuels and multi-fuel machines offer pragmatic steps forward: with more manageable initial investments, less infrastructure dependency, and better utilisation and resilience. Measures that soften disruption and allow phased progress should take preference above measures that shake up the financial foundations of the sector.

Construction site power solutions must now take centre stage. Diesel generators account for 11% of the fleet, but 36% of tailpipe CO₂ emissions from NRMM, and every decarbonisation pathway will require improved best practice for site power. Smarter energy strategies that are less reliant on diesel generators and improve grid connectivity are essential to build the knowledge base that further emissions reductions will depend on.

Government should also explore targeted subsidies and market mechanisms that create a domestic advantage. Supporting UK hydrogen and alternative fuel production could help to revitalise declining industrial areas and unlock opportunities for farmers. At present, cost pressures favour imported products, which is economically and geopolitically unfavourable. Many things are possible but not all of them are wise.

How to Move Forwards on Construction Decarbonisation

The current approach of sailing straight into headwinds ensures maximum resistance and minimal progress. We need to approach this challenge from an angle and adopt technologies, incentives and policies that complement the economic landscape. Net zero construction is a very long journey of many carefully thought-out steps, not one giant leap of faith. While fossil fuels will remain part of the mix for some time, we have a real opportunity to steadily cut emissions through smarter practices and current technologies. If we fail to recognise that, we risk capsizing the very industry we depend on to deliver greener homes and infrastructure.

Author

Luis Bassett

Decarbonisation & Sustainability Manager

Construction Plant-hire Association (CPA)

Visit: https://cpa.uk.net/

By Luis Bassett, Decarbonisation & Sustainability Manager, Construction Plant-hire Association (CPA)

Joining the UK's leading trade body for the plant-hire sector in October 2024, Luis brings almost 10 years of experience working around plant, including as a regulator. Specialising in reducing emissions from machinery and site power, Luis works closely with members, policymakers, and industry stakeholders to navigate the complex journey toward net zero, focusing on practical strategies, future technologies, and realistic timelines.