Offshore wind - strategic compensation policy: consultation

4. Other Proposals

Section 4 sets out other elements of the policy that are proposed to be included within subsequent Scottish Government Guidance. Therefore, these elements of the policy are applicable to both the Scottish inshore and offshore regions.

4.1 Mitigation Hierarchy

Prior to considering and identifying compensation, the mitigation hierarchy should still be applied. This policy is not proposing any changes to the application of the mitigation hierarchy, which should still be applied in the first instance before the compensation hierarchy. However, we may set out clarity on application of the mitigation hierarchy in guidance.

Identifying and implementing appropriate mitigation measures remains the first key priority. Compensation should only be considered when the applicant has demonstrated that all other possible options and methods to prevent or minimise the adverse impact have been exhausted.

The mitigation hierarchy is set out below and should be worked through in a sequential manner, exhausting the possibilities at one level before considering the next and recording evidence of having gone through this process.

• Avoid: Taking action to prevent an impact from occurring.
• Reduce: Taking action to minimise an impact to a non-significant level.
• Mitigate: Taking action to lessen the consequences of an impact that cannot be avoided or reduced.

4.2 Marine Irreplaceable Habitats

We are aware that the UK Government are consulting on a proposal to clarify in guidance circumstances where Marine Irreplaceable Habitats (MIHs) would not be permitted to be compensated for via wider measures. One option UK Government are considering would be to define MIHs by reference to the ‘Defining Marine Irreplaceable Habitats’ report prepared by Natural England.

Scottish Government are not minded to introduce a similar requirement in Scotland. Scotland’s SNCB, NatureScot have advised that MIHs have not been used in the regulatory or planning context for the Scottish marine environment and there is no intention to introduce such a concept. However, we would welcome views on this or similar approaches.

4.3 Securing Strategic Compensatory Measures

We propose setting out in guidance the process for securing wider measures including strategic compensation at both plan and project level.

4.3.1 Scotland’s Plan Led Approach

If a Habitats Regulations Appraisal for the draft updated SMP-OWE concludes an AEOSI through the AA, then the plan may only proceed to adoption if it goes through the derogations process, subject to the decision of the Scottish Ministers.

Once the appropriate plan-level compensatory measures are identified by Scottish Ministers, plan-level compensatory measures identified in light of the adverse effects of the plan could either be implemented in advance of the impact occurring by the Scottish Government, or the measure could be included in an appropriate strategic compensation delivery mechanism, such as a Scottish Marine Recovery Fund.

When a project that has been assessed strategically through the updated SMP-OWE (e.g. ScotWind/INTOG projects) reaches consent stage and its specific adverse effects and compensation needs are identified, then as part of the derogations process for the project in which the Scottish Ministers must identify and secure the appropriate compensation, strategic compensatory measures could be secured from those already identified as plan-level compensatory measures, with the project required to compensate for their proportion of the plan level impact and identify measures from within the sectoral marine plan compensatory measure package that meet their needs. It will be possible to share measures between projects. Further information on this process will be set out in guidance.

4.3.2 Projects outwith the Sectoral Marine Planning Process

For projects that have not been assessed strategically through the draft updated SMP-OWE (non-ScotWind/INTOG projects), compensatory measures outwith the sectoral marine plan compensatory measure package may be made available through the appropriate strategic compensation delivery mechanism, such as a Scottish Marine Recovery Fund.

4.3.3 Project Led Approach

Offshore wind developers will also have the option to propose their own compensatory measures (including strategic compensation and wider measures) to meet any compensatory measure requirements.

4.4 Timing of Compensation

We propose to clarify in guidance the circumstances in which an offshore wind developer or a plan authority can deliver compensation that may not become fully functional until after the impact of the project occurs.

Under current regulations, it is already possible to deliver, in certain circumstances, compensation after the impact to a protected site has occurred. This understanding stems from the European Commission’s Habitats Regulations guidance.

Projects using derogations can currently only be granted consent provided compensatory measures will be secured. There should be a plan to undertake such measures i.e., with all the necessary legal, technical, financial, and monitoring arrangements agreed prior to the impact occurring.

We propose that guidance would set out that it is usually expected that compensatory measures are in place and functioning at the time at which damage to a protected site or feature occurs. However, we wish to increase certainty and confidence that plans and projects may be permitted to begin operation before compensation is functional, in certain circumstances, to possibly include the following:

• There is a significant lead in time for measures to be delivered to be ecologically beneficial with a high degree of success in addressing the impact.
• The ecological implications of the compensation that will become functional post-impact will be incorporated into the nature and scale of the measures e.g., a higher than usual benefits-to-impact ratio to offset any risk of impact to resilience of the network.
• The measure being more likely to deliver greater, more sustainable benefits for the feature, compared to other measures which may take less time.
• Scottish Ministers, having considered advice from the relevant SNCB, is satisfied that the relevant SNCB considers the measures are likely to meet the compensatory measure principles (see section 6.3 for Role of SNCBs).

If offshore wind developers or plan authorities believe there is a justification for using a compensation measure that becomes functional after impacts have occurred, the timings and rationale should be established early in the HRA process and set out in any outline or detailed compensation plan(s). Plans should specify how the measure will be delivered.

In exceptional circumstances, this approach could support projects which already have consent but have been unable to discharge their consent conditions as they move closer to construction phase. This would however need to include suitable and robust safeguards through the consenting process (for example, the Scottish Ministers having taken advice from SNCBs is reasonably confident that the measures are suitable) to ensure that although the impact is experienced before compensation, there is minimal risk that the measure will not be taken at all when it comes to delivering.

4.5 Dealing with Small Impacts

We propose to clarify in guidance, circumstances where compensation is required for small levels of impact to a protected site.

Where predicted levels of impact are small enough to be considered insignificant on their own, consideration will still be needed over the cumulative significance of the impact in-combination with similarly insignificant effects of other plans or projects. SNCBs are already able to advise that the impact from a project would not make an appreciable contribution to any risk of an in-combination effect and can be excluded from further consideration. Ultimately, the decision maker is responsible for deciding the likely significance of a predicted impact, both alone and in-combination with other plans and projects.

Depending on the circumstances, offshore wind developers or plan authorities may be required to provide mitigation, or possibly, compensation for small predicted levels of impact either alone or in combination. The scale of any mitigation/compensation would however reflect the scale of the impact.

These circumstances could include, but not be limited to the following:

• The site or feature is already in poor condition and failing to meet conservation objectives for the impacted feature.
• The site or feature is highly sensitive.
• There are high levels of uncertainty over predicted mortalities due to poor data availability in relation to the proposed plan/project and others impacting the site.
• There are unavoidable contributions to a significant in-combination impact from multiple projects on the same site (and uncertainty about the impact of projects in application stage at the site that are yet to be consented). Many seemingly small contributions at a site can result in a significant in-combination effect.

We are also considering how small impacts identified through the draft updated SMP-OWE AA could be addressed strategically.

4.6 Application to Live Projects

The proposals set out in this consultation will apply to relevant offshore wind activities as defined in the Energy Act 2023, including those activities that have already entered the planning or consenting process in Scotland when the EAR SSI is adopted.

This includes applications and plans in the consenting/planning process and those that have been granted consent/marine licence(s) but have yet to fully discharge their consent conditions. Any consideration of alternative measures should include consideration of the compensation hierarchy, as described in section 3.3.

Offshore wind developers or plan authorities wishing to utilise compensatory measures under the proposed reforms set out in this consultation may need to apply to amend relevant consents, if necessary.

4.7 Overcompensation

We propose to clarify in guidance the instances where overcompensation for the adverse effects of an offshore wind plan or project may be optional and or advisable.

These instances could include the following:

• Where there is uncertainty in relation to the efficacy of the proposed compensatory measure(s) at the commencement of a project (one of the core purposes for overcompensation early in a project).
• Implementing multiple measures which are all aiming to compensate for the same level of impact simultaneously could be considered as overcompensation and potentially reduce the resource burden of adaptive management (AM).
• Where measures being in place and effective in advance of predicted impacts is not fully achievable (see section 4.4 on Timing of Compensation) overcompensation could be required in these instances.
• Overcompensation could involve implementing a primary and an alternative measure from the beginning rather than waiting, potentially reducing the resource burden of AM.

We would welcome your views on when overcompensation should be required, in light of the proposal to enable wider measures including strategic compensation.

Offshore wind developers or plan authorities may wish to implement additional actions or invest in the marine environment beyond what is required to compensate for adverse effects, for the sake of improving the environment and corporate responsibility ambitions. The Scottish Government encourages positive actions in support of marine protection, enhancement, or restoration. In these circumstances we recommend proposing additional ‘non-compensation’ actions with the Scottish Government who may seek advice from the relevant SNCB.

4.8 Adaptive Management

Adaptive management (AM) of compensatory measures is an approach to the delivery of compensatory measures where, if a measure is not functioning as expected or delivering what it is intended to, an adjustment is made to the measure, or the measure is replaced with a different measure. Having AM measures identified early as part of identifying appropriate compensatory measures supports effective and efficient delivery of compensation. AM is an important tool in the identification and delivery of compensatory measures to ensure that compensation has adequately delivered against its objectives.

The Scottish Government is minded to maintain the current approach to adaptive management. However, we propose to provide additional guidance on AM, particularly in relation to the implementation of wider measures.