Offshore wind - strategic compensation policy: strategic environmental assessment

3 Approach to the Assessment

3.1 Purpose of the Assessment

3.1.1 The purpose of the SEA is to assess the potential for likely significant environmental effects (positive or negative) that may arise from the Scottish Government Strategic Compensation Policy. Statutory guidance will also be produced to support developers and delivery partners to meet legal obligations under the Habitats Regulations whilst supporting Scottish biodiversity and climate change targets. Undertaking this SEA allows corresponding mitigation measures to be identified where necessary and highlights opportunities for enhancement in cases where beneficial effects are likely.

3.2 Scope of the proposals to be assessed

3.2.1 The Sectoral Marine Plan for Offshore Wind Energy^[156] provides the strategic framework for the ScotWind seabed leasing round, setting out the spatial footprint for offshore wind development. This is supported by the Initial Plan Framework for offshore wind for innovation and tarted oil and gas (INTOG) decarbonisation^[157]. These plans are in the process of being updated into a single plan for offshore wind energy (the ‘SMP-OWE’). As outlined in Section 2.2.5, grid infrastructure and strategic planning of the transmission infrastructure required to support the SMP-OWE is being undertaken by NESO through their HND and HND-FUE work. Whilst Option Areas for offshore wind development and broad areas for grid infrastructure have been identified through these planning processes, specific areas for where the policy will be applied have not yet been identified. This is due to current uncertainty in the final locations of offshore wind developments (recognising that final development plans are often refined through the planning/consenting process) and also uncertainty in the locations of any strategic compensation measures to be taken. It is therefore only possible to undertake a non-spatial and qualitative assessment at this stage to consider the type of impacts that could arise from the future application of the policy in Scottish waters.

3.2.2 As outlined in Section 2.1.6, the spatial extent of the policy primarily relates to the Scottish marine environment (because this is where offshore wind developments in Scotland would occur). It is recognised however that compensation measures could come forward beyond these areas. For example, compensation measures could take place on land, or outside of Scotland/Scottish waters. If an offshore wind development within the spatial scope of the policy requires compensatory measures, then the Strategic Compensation Policy would apply to those measures (whether the compensatory measure is on land or at sea). Any impacts of the policy outside of Scotland are considered in Section 4.12 (transboundary effects).

3.2.3 The potential economic and social impacts that may result from the implementation of the policy do not form part of the scope of this SEA. Additional assessments may be undertaken, as appropriate, to help estimate the socio-economic benefits, costs, and risks associated with the policy. These include a Business Regulatory Impact Assessment (BRIA), and an Island Communities Impact Assessment (ICIA).

3.3 Principles for Assessment

3.3.1 The Strategic Compensation Policy has set out a series of principles and measures for implementation of the policy. To take forward the SEA, the below aspects have been considered:

• Principles for assessment – these form the core aspects of assessment in the SEA;
• Implementation and monitoring measures - these form secondary considerations in the SEA and influence the assessment by informing the certainty of achieving the outcomes; and
• Process aspects - These are not considered in the SEA, as they relate to the process of implementing the policy, rather than a principle or measure that can affect the outcomes of the assessment.

Principles for assessment

3.3.2 The principles below have been drawn together based on the draft Strategic Compensation Policy and form the core aspects assessed, with the different options for each principle representing ‘alternatives’ for assessment. It is recognised that the implementation of some of the options would require legislative change.

3.3.3 The principles for assessment are:

• Defining the network
• Option A: Network means only SACs and SPAs. Retain the definition of ‘the network’, as it currently exists, to mean SACs and SPAs.
• Option B: Network means all MPAs. Modify the definition of ‘the network’ to mean the wider network of conservation sites (as described in s123 of the 2009 Act and 79(2) of the 2010 Act).
• Overall coherence
• Option A: Only SACs and SPAs (designated under the Habitats Regulations^[158],[159]). Maintain requirement for coherence as currently worded.
• Option B: Only SACs and SPAs (designated under the Habitats
• Option C: All MPAs. Measures that contribute to the improvement of sites within the MPA network. Here the MPA network is defined as the network of conservation sites described in the 2009^[160] and 2010 Acts^[161].
• Option D: Overall marine environment. Measures that contribute to improving the overall status of the marine environment. Achieved by applying the term ‘measures of environmental benefit’ or similar. The network of conservation sites described in the 2009^[162] and 2010 Acts^[163] would be included.
• Selecting compensatory measures. These principles consider within them the guidance set out for: Certainty; Urgency; Financial Feasibility; Multiple benefits; and Critical threshold.
• Option A: Measures should directly link to the feature impacted. To maintain coherence, measures should be directly linked to the feature impacted e.g. the habitat or species, but may be taken at different sites within ‘the network’ as long as they contribute to the favourable conservation status of the impacted feature.
• Option B: Measures do not need to directly link to the feature impacted, but need to improve the network. By amending or removing the requirement to ‘protect’ coherence, measures may also be taken that seek to enhance the overall resilience of the network and its ability to host the species and habitats listed in the annexes of the Habitats Regulations. These measures are not necessarily directly linked to the impacted feature.
• Option C: Measures do not need to directly link to the feature impacted, but need to improve the wider marine environment. These measures should seek to deliver against wider objectives, such as achieving GES under the Marine Strategy.
• Option D: Measures do not need to directly link to the feature impacted, but need follow a ‘selection framework’. A framework is set up whereby measures are selected in order of priority from: (1) Measures that directly link to the feature impacted; (2) Measures that improve the network associated with that feature (i.e. SAC/SPA); (3) Measures that improve the resilience of the network in terms of all MPAs; and (4) Measures that improve the wider marine environment (as in Option C).
• Additionality for compensation
• Option A: Maintain requirement for additionality. Additionality is retained. Here Scottish Government would look to define ‘normal practice’.
• Option B: Remove requirement for additionality. Remove the requirement for additionality for offshore windfarm developers.

Implementation and monitoring measures

3.3.4 As well as the above core principles, policy is also being developed regarding implementation and monitoring of measures. Options under consideration for these are set out below. These form secondary considerations in the SEA and influence the assessment by informing the certainty of achieving the outcomes. For example, more stringent monitoring of compensation measures and identification at the start of alternative actions, is likely to result in greater certainty of the compensation measures being successful.

3.3.5 Implementation and monitoring measures under consideration are:

• Timing of measures
• Option A: Measures need to be in place and operational at the time the damage occurs.
• Option B: Measures do not need to be in place and be effective at the time the damage occurs, but a level of overcompensation is required (e.g. a higher than usual benefits-to-impact ratio).
• Monitoring measures for compensation
• Option A: Benefits to impacted features must be monitored.
• Option B: Monitoring tier system: (1) Benefits to the impacted feature must be adequately monitored; If this is not possible then (2) Progress towards another objective of the measure must be monitored, for example progress toward achieving GES under the Marine Strategy.
• Adaptive management for compensation
• Option A: Potential alternative actions should be considered and detailed at the start.
• Option B: No details of alternative actions are required at the start. These can be decided on following a review of monitoring data and the decision to implement adaptive management.

Process aspects

3.3.6 The policy on ‘monitoring measures’ sets out options for:

• Initial assessment and the organisations responsible for this;
• Implementation and the organisations responsible for undertaking monitoring measures (e.g., progress towards achieving objectives); and
• Financial considerations and options for how adaptive management will be funded.

3.3.7 These will not be considered in the SEA, as they relate to the process of implementing the policy, rather than a principle or measure that can affect the outcomes of the assessment.

3.4 Scope of the Assessment

3.4.1 The scope will focus on the potential beneficial effects of the policy (e.g., improved habitats or species numbers as a result of compensatory measures), any cumulative effects arising from interactions with other comparable policy, and potential negative effects resulting from the displacement of activities to other habitats/species outwith the area of a compensatory measure being taken.

3.4.2 The scope of the assessment has been undertaken with consideration of the environmental topics set out in Schedule 2 of the 2004 Act^[164]. A review of these topics suggests that potentially significant effects would focus on Biodiversity, Flora and Fauna; Soil (benthic (seabed) substrates); Water; Climatic Factors (including marine carbon sequestration/ blue carbon processes); Cultural Heritage; and Landscape/Seascape.

3.4.3 The rationale for scoping in and out each of the SEA topics is set out below:

• Biodiversity, Flora, and Fauna: In
• The proposals considered are directly related to biodiversity, seeking to contribute to a reversal of biodiversity decline in the Scottish marine environment. The policy considered will seek to support enhancement of the natural environment and thus will include biodiversity restoration within its scope. Potential for impacts on species and habitats should be considered under this topic.
• Population and Human Health: Out
• There are no environmental impacts considered likely on the topic of population and human health. If there appears to be any potential for socio-economic impacts from the policy, then additional assessments may be undertaken, as appropriate, to help estimate the socio-economic benefits, costs, and risks associated with the policy.
• Soil: In
• Soils, for the purposes of this SEA, are taken to be benthic (seabed) substrates. Through the development of offshore wind farms there is the potential for damage to benthic substrates. Compensatory measures may therefore affect these habitats.
• Water: In
• Water quality, in line with broader objectives of the Water Framework Directive^[165] and the UK Marine Strategy^[166], should be scoped in. Measures taken to improve ecological or environmental status/biodiversity of water bodies and marine regions/sub-regions could impact overall water quality.
• Air: Out
• No significant environmental impacts on air quality are anticipated from these proposals.
• Climatic Factors: In
• This topic should be scoped in on the basis that taking measures to generate a healthy and functioning marine environment will promote ecosystem resilience to climate change and may contribute to enhanced capability for carbon sequestration/blue carbon. Additionally, having this policy in place will enable offshore wind developments to proceed, which will contribute to meeting Scottish Government net zero targets.
• Material Assets: Out
• Consideration of material assets in SEA covers a wide variety of assets and resources, including built assets such as infrastructure relating to energy generation and distribution. Whilst the Strategic Compensation Policy would apply to relevant offshore wind infrastructure, there are no environmental impacts considered likely on this topic. The deliverability of the policy is being considered by Scottish Government, alongside development of this SEA. If there are potential socio-economic impacts then additional assessments may be undertaken, as appropriate, to help estimate the socio-economic benefits, costs, and risks associated with the policy.
• Cultural Heritage: In
• As a maritime nation there are strong cultural and historical links with the marine environment in many areas of Scottish society. Additionally, MPAs may be designated for the purposes of protecting historic and cultural heritage. Any potential policy that could interact with this should be scoped in i.e., the potential for compensatory measures to limit activities within certain areas for nature enhancement purposes.
• Landscape/Seascape: In
• The Sectoral Marine Plan for Offshore Wind Energy SEA^[167] considered landscape/seascape in its assessment, in the context of introducing those developments into the marine environment. The conclusion was that significant effects could be foreseen. However, regarding measures that respond to the impact of offshore wind developments we anticipate that effects are unlikely to be ‘significant.’

3.4.4 Consultation responses on the Screening and Scoping Reports (see Appendix 2 - Screening and Scoping Consultation Comments) have been reviewed and where appropriate have been built into the scope and methodology of the assessments. For example, based on the consultation responses received, the SEA topics of water and landscape/seascape have been included in the scope of the assessment. SEA objectives have also been refined to incorporate the responses received.

3.5 Consideration of Reasonable Alternatives

3.5.1 In accordance with the 2005 Act, there is a requirement to consider reasonable alternatives that fulfil the objective of the plan as part of the SEA. As outlined in Section 3.3.2, the different options for each principle represent ‘alternatives’ for assessment. They are all equally weighted.

3.5.2 The overarching option of ‘do nothing’ (i.e., not to implement the Strategic Compensation Policy) is also considered as a reasonable alternative.

3.6 Assessment Methodology

Assessment of potential effects

3.6.1 Based on the available data and strategic nature of SEAs, a high level, qualitative desk-based assessment of potential likely significant effects of the policy has been undertaken which compares the potential impacts against the receiving environment.

3.6.2 The assessment of potential likely significant benefits has considered how environmental pressures will reduce and how environmental gains can be achieved as a result of the Strategic Compensation Policy. The assessment of potential likely significant negative environmental effects has considered information on current/ recent activity and an indication of potential displacement of activities.

3.6.3 The assessment has involved gathering evidence-based assumptions on potential positive or negative environmental impacts on the wider environment before describing those effects identified.

3.6.4 The assessment draws on a number of different sources of information, including:

• Spatial information, such as that gathered using Scottish Government’s Geographic Information System (GIS);
• Monitoring information from previous or ongoing strategies and plans that relates to the policy;
• The results of any previous SEA work that is directly/ indirectly applicable to the policy; and
• Published guidance from other UK Government or associated bodies.

3.6.5 Relevant sources of information have included research projects being promoted through the Scottish Marine Energy Research (ScotMER)^[168] and The Crown Estate’s Offshore Wind Evidence and Change Programme (OWEC)^[169]. Other relevant offshore wind programmes or initiatives include OWIC^[170], ORE Catapult^[171], Carbon Trust^[172], ORJIP^[173] and Offshore Energy SEA Research Programme^[174].

3.6.6 The key potential environmental effects or impact pathways that are likely to arise from the policy are as follows:

• Potential neutralising and beneficial effects from compensatory measures taken for environmental impacts of offshore wind farms; and
• Potential adverse effects resulting from the displacement of activities from regions of compensatory measures into new areas and the intensification of activities in areas where these activities already occur.

3.6.7 The assessment of potential benefits to marine habitats and species has considered in generic terms how the pressures on the marine environment might reduce and how environmental gains may be achieved as a result of the adoption of the policy and reasonable alternatives.

3.6.8 For the assessment of adverse environmental effects, a high-level qualitative review of activities that might be displaced and the potential implications of that displacement on the marine environment has been undertaken. Alongside this, depending on the details of implementation, there is the potential for adverse effects resulting from the gradual erosion in the condition of certain habitats and species. This is because the greater flexibility in the application of compensatory measures under some principles could result in the specific features/designations impacted by an offshore wind development not necessarily benefitting from the measure. Potential adverse effects from this has been considered in the assessment of individual principles.

3.6.9 The assessment has included consideration of the potential for cross border (within the UK) and transboundary effects on EU Member States as a result of activities being displaced out with Scottish jurisdiction.

Assessment criteria

3.6.10 It is not possible to undertake a spatial analysis of site-specific information to determine the potential scale/magnitude of these effects, in advance of specific locations being identified where the policy will be applied. Therefore, for the purposes of this assessment, only indicative criteria to define the nature or type of potential effects that may result from the policy and reasonable alternatives have been used (i.e. beneficial (+), adverse (-) or neutral (o)).

3.6.11 The assessment assumes that any compensatory measures are secured for an equal length of time (i.e., long term) under each option, unless specified otherwise.

SEA objectives

3.6.12 The potential implications of the proposed policy and reasonable alternatives have also been assessed against SEA objectives. The SEA objectives that have been applied in this assessment are presented below.

• Biodiversity, Flora, and Fauna
• (1) Enhancement of marine and coastal ecosystems, including species and habitats, and their interactions, supporting the achievement of Good Environmental Status.
• (2) To maintain and enhance the ecological coherence of the MPA network and ensure conservation objectives for marine protected areas are achieved.
• Soil
• (3) To support an enhanced functioning of the seabed to improve ecological value to improve biodiversity.
• (4) To increase coastal resilience and enhance coastal habitats.
• (5) To reverse and reduce adverse impacts on ecosystem function and productivity to support and enhance biodiversity.
• Water
• (6) To maintain or work towards achieving Good Ecological Status and Good Environmental Status
• Climatic factors
• (7) To enhance resilience and preserve and enhance existing marine and coastal carbon stocks and carbon sequestration potential.
• Cultural Heritage
• (8) To conserve and/or enhance cultural and historical heritage associated with the marine environment^[175].
• Landscape/Seascape
• (9) To minimise adverse coastal landscape character and/ or visual impacts.

3.7 Building on previous assessments

3.7.1 This SEA builds on previous and ongoing SEAs that have been undertaken on marine environments undertaken by the Scottish Government. This includes the following:

• the designation of Nature Conservation MPAs (assessed in 2013)^[176];
• phase one fisheries management proposals for inshore MPAs (assessed in 2014);^[177]
• the designation of an additional suite of marine SPAs (assessed in 2018)^[178] ;
• the designation of four additional MPAs (assessed in 2019)^[179];
• the designation of the West of Scotland MPA (assessed in 2019)^[180]; and
• 2018 proposals for management measures applying to PMFs^,[181];
• proposals for management measures applying to Offshore Marine Protected Areas in Scottish Waters (currently under assessment);
• proposals for management measures applying to PMFs and inshore MPAs (currently under assessment);
• SEAs undertaken on the Sectoral Marine Plans for Offshore Renewable Energy in Scottish Waters^[182];
• the more recent Sectoral Marine Plan for Offshore Wind Energy^[183] and Sectoral Marine Plan for Offshore Wind for Innovation and Targeted Oil and Gas Decarbonisation (INTOG)^[184];
• the National Marine Plan 2 (NMP2) ^[185]; and
• 2024 proposals for Marine Conservation Order provision changes^[186].

3.7.2 The policy under consideration in this SEA would interact with and support the SMP-OWE and NESO’s HND and HND-FUE work, which together have an overarching aim of facilitating the sustainable development of offshore renewable energy in Scottish waters. The SMP-OWE is subject to a separate SEA. The policy may also interact with the NMP2.

3.7.3 As some of this other SEA work is ongoing, these concurrent assessments have been used to inform the current assessment as far as possible, providing a more complete understanding of cumulative effects in particular.

3.8 Cumulative Effects Assessment

3.8.1 Cumulative effects have been considered in two ways in the assessment:

• Firstly, as the cumulative effect of the implementation of the different principles outlined in Section 3.3;
• Secondly, the cumulative effect of the implementation of the Strategic Compensation Policy alongside other plans and programmes.

3.8.2 Cumulative effects assessments present significant methodological challenges owing to limitations of data availability from other plans and programmes, and uncertainties in where the policy may be specifically applied. Other plans, programmes, and strategies that may similarly impact key environmental receptors have been included, such as the SMP-OWE, NESO’s HND and HND-FUE work, the NMP2, proposals for management measures applying to offshore MPAs, proposals for management measures applying to PMFs and inshore MPAs, and the Scottish Government Marine and Coastal Restoration Plan^[187] (all under separate assessments).

3.8.3 Following consultation on 2024 proposals for Marine Conservation Order provision changes, the Scottish Government decided not to take forward proposals at this time^[188]. Scottish Government are continuing to explore the regulatory framework for marine restoration as part of the development of a marine and coastal restoration plan, as set out in the Scottish Biodiversity Delivery Plan 2024 – 2030^[189]. The MCO provision changes therefore are not considered within the cumulative effects assessment.

3.9 Mitigation and Monitoring Proposals

3.9.1 The identification of mitigation measures is an integral part of the SEA and policy development processes. Proposals for monitoring will be provided in the Post Adoption Statement. These will focus on the significant environmental effects identified in this assessment.