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Energy Act 2023

Contents

Part 13: Offshore Wind Electricity Generation, Oil and Gas

Chapter 1: Offshore Wind Electricity Generation

Section 290: Meaning of "relevant offshore wind activity"

  1. Subsection (1) sets out the definition of a "relevant offshore wind activity". The definition includes offshore wind plans (i.e., the identification of an area for offshore wind development, whether or not any particular offshore wind electricity infrastructure is in contemplation). This would include, for example, offshore wind leasing rounds, as undertaken by The Crown Estate.
  2. Subsection (2) defines "offshore wind electricity infrastructure", which includes offshore transmission infrastructure used for the conveyance of electricity generated from offshore wind (for example, a "bootstrap" cable). These are cables in the UK marine area that convey electricity from a mixture of sources, including offshore wind-generated electricity. This definition would not include other marine infrastructure, such as port developments.
  3. Subsection (3) outlines that offshore infrastructure used for the conveyance of electricity generated from sources other than offshore wind is covered by subsection (2)(b)(ii), provided that it will also be used for the conveyance of electricity generated from offshore wind.

Section 291: Strategic compensation for adverse environmental effects

  1. If a relevant offshore wind activity has undertaken all feasible measures to avoid, reduce and mitigate an "adverse environmental effect" (as defined in subsection (4)) on protected sites, a public authority may decide to agree to a relevant offshore wind activity in the public interest (such as energy security and net zero targets). Compensatory measures must then be undertaken or secured.
  2. This section enables the public authority that is subject to environmental compensation obligations to determine that compensatory measures taken or secured count towards discharging relevant environmental compensation obligations. The intention is that ‘strategic compensation’ may be delivered in relation to one or more relevant offshore wind activities, through the powers in subsection (3).
  3. A definition of ‘public authority’ is included in section 295. Section 291 only applies where a public authority is subject to one or more environmental compensation obligations (a statutory duty or condition under 291(2)). The reference to "the public authority" in 291(3) is to whichever public authority is subject to the environmental compensation obligation in question. For example, the Scottish Ministers may be the public authority that is subject to an environmental compensation obligation in certain cases.
  4. Subsection (3) sets out that the public authority may determine that measures taken or secured, or to be taken or secured, by it may count towards discharging its environmental compensation obligations. It enables the delivery of strategic compensation, for example through the ‘banking’ of measures that have already been delivered so they can be allocated against future relevant offshore wind activities and enables measures that will be delivered in the future to be allocated against relevant offshore wind activities. When considering whether the environmental obligations have been discharged, a public authority may rely on a combination of measures that have already been taken and measures to be delivered in the future. As per subsection (5), these measures may be taken either at the same site(s) as the relevant offshore wind activity or elsewhere.
  5. Subsection (7) allows for one public authority to treat measures taken or secured (or to be taken or secured) by another public authority as measures taken or secured (or to be taken or secured) in the exercise of its own functions if it has the consent of the other public authority. For example, this could allow the Marine Management Organisation to treat compensatory measures that have already been taken or secured by the Department for Energy Security and Net Zero’s Secretary of State as taken or secured by the Marine Management Organisation when determining a marine licence in relation to a relevant offshore wind activity, provided the department’s Secretary of State has given consent to do so.
  6. Subsections (6) and (8) provide definitions for the interpretation of section 291, giving the meaning of protected marine areas and relevant conservation objectives with reference to existing legislation.

Section 292: Marine recovery fund

  1. This section confers powers to introduce one or more Marine Recovery Funds (MRFs), which will support delivery of strategic compensation (in relation to one or more relevant offshore wind activities). Commercial, competition and other project management information sensitivities can limit opportunities for offshore wind farm developers to easily deliver strategic compensatory measures in collaboration with other developers. A MRF is intended to be an optional route for developers or public authorities to discharge compensation conditions imposed on them in respect of an "adverse environmental effect" (as defined in section 291(4)). This means that, where appropriate measures are available to an MRF, they will be able to make a payment to discharge the relevant condition (if the person who imposed the compensation condition makes a determination to the effect).
  2. Subsection (1) confers a power on the Secretary of State for the establishment, operation and management of one or more MRF, to be made by regulations. Subsection (2) describes a MRF as a fund into which payments may be made for expenditure on strategic compensatory measures to compensate for the adverse environmental effects of relevant offshore wind activities. Subsection (3) makes clear that the following provisions do not limit the scope of the regulation making power in subsection (1).
  3. Subsection (4) sets out provisions which may be made using the regulation making power in subsection (1) relating to a "compensation condition" (defined in subsection (5)), specifically that regulations may make provision enabling a determination to be made by or on behalf of the person who imposed the compensation condition as to whether and the extent to which a payment into a MRF discharges a compensation condition. A payment may discharge a compensation condition in whole or in part.
  4. Subsections (7) and (8) set out further provisions which may be made using the regulation making power in subsection (1) to enable the funds paid into the MRF(s) to be spent on the various activities needed to deliver and maintain strategic compensatory measures for the required duration. Subsection (8) also makes provision for the delegation of functions related to the operation or management of an MRF to one or more authorities and third parties as appropriate.
  5. Subsection (9) provides which functions may be delegated to the listed public authorities. Subsection (10) provides that regulations under section 292 that make provision for the delegation of functions to a Scottish public authority, a Welsh public authority or a Northern Ireland public authority must require the consent of the Scottish Ministers, the Welsh Ministers or the Department of Agriculture, Environment and Rural Affairs in Northern Ireland (as relevant).
  6. Subsection (11) provides for the cancellation of a delegation of a function, and for the Secretary of State to retain the ability to exercise functions in parallel. Subsection (12) requires the Secretary of State to consult the devolved administrations prior to making regulations, to the extent that the regulations relate to activities in their areas. Subsection (13) clarifies that new regulations are subject to the negative procedure.

Section 293: Assessment of environmental effects etc

  1. This section confers a power on the appropriate authority to make provision by regulations for the assessment of environmental effects of relevant offshore wind activities on protected sites; and make provision about the taking or securing of compensatory measures for adverse environmental effects on those sites. New regulations for the assessment of environmental effects will apply to relevant offshore wind activities only.
  2. Subsection (2) provides that the appropriate authority is the Secretary of State or where relevant to regions in Scotland, Wales and Northern Ireland, the Scottish Ministers, Welsh Ministers and the Department of Agriculture, Environment and Rural Affairs respectively. Subsection (3) sets out that Welsh Ministers are not the regulation-making authority for generating stations that are nationally significant infrastructure projects.
  3. Subsection (4) sets out the modifications that may be made to assessments required under Regulation 63 of The Conservation of Habitats and Species Regulations 2017, Regulation 28 of The Conservation of Offshore Marine Habitats and Species Regulations 2017, Regulation 48 of the Conservation (Natural Habitats &c.) Regulations 1994, and Regulation 43 of the Conservation (Natural Habitats, etc.) Regulations (Northern Ireland) 1995. This includes the matters to be dealt with, who carries out the assessment, prohibiting the granting of consent, compensatory measures, and which existing legislation may be disapplied or modified, including devolved legislation.
  4. Subsection (5) refers to existing legislation which may be disapplied or modified, and subsection (6) clarifies the legislation that cannot be disapplied or modified. Both subsections include details of relevant legislation across the Devolved Administrations which may, or may not, be disapplied or modified. For example, regulation 29 of The Conservation of Offshore Marine Habitats and Species Regulations 2017 which refers to a plan or project being carried out for Imperative Reasons of Overriding Public Interest, cannot be modified or disapplied.
  5. Subsection (7) sets out that regulations made by the Secretary of State may not remove a function from a Scottish, Welsh or Northern Ireland public authority or provide for such functions to be exercisable, concurrently, by another person. Regulations may, however, modify such a function.
  6. Subsections (8), (10), (11) and (12) set out provisions which may be made under section 293, including to enable a person specified in the regulations (or the appropriate authority) to give a direction; to require the appropriate authority or a specified person to give guidance; and to confer functions on certain people. Subsection (9) prevents regulations authorising the giving of a direction to a Scottish or Welsh public authority by a person other than (as the case may be) the Scottish Ministers or the Welsh Ministers. Subsection (13) provides definitions for terms used in section 293.

Section 294: Regulations under section 293: consultation and procedure

  1. This section sets out the consultation and procedural requirements that the Secretary of State, Scottish Ministers, Welsh Ministers, and the Department of Agriculture, Environment and Rural Affairs must follow when making of new regulations under section 293.
  2. Subsection (1) sets out the bodies whom the Secretary of State must consult, including in certain circumstances the devolved administrations. Subsection (2) provides that new regulations are subject to the affirmative procedure.
  3. Subsection (3) sets out the bodies whom Scottish Ministers must consult, including the Secretary of State and, in certain circumstances, the devolved administrations. Subsection (4) provides that new regulations made by Scottish Ministers are subjective to the affirmative procedure.
  4. Subsection (5) sets out the bodies whom the Welsh Ministers must consult, including the Secretary of State and, in certain circumstances, the devolved administrations. Subsections (6) and (7) provide that the power to make regulations is exercisable by statutory instrument which must be laid before and approved by a resolution of the Senedd Cymru.
  5. Subsection (8) sets out the bodies whom DAERA must consult, including the Secretary of State and, in certain circumstances, the devolved administrations. Subsections (9) and (10) provide that the power to make regulations is exercisable by statutory rule and must be laid before and approved by a resolution of the Northern Ireland Assembly.

Section 295: Interpretation of Chapter 1

  1. In addition to section 290 and section 291, this section sets out the definitions for terms used throughout this Chapter, including "adverse environmental effect", "consent", and "protected marine area".

Chapter 2: Oil and Gas

Section 296: Arrangements for responding to marine oil pollution

  1. This section allows the Secretary of State to make regulations related to oil pollution emergency planning, response, and inspection for offshore oil and gas operations, offshore CO2 storage activities and offshore hydrogen production and storage works. Subsection (2) states, in more detail, what type of operation or infrastructure will be captured by the regulation making powers. Subsection (3) sets out that regulations may make provision about the implementation, maintenance, and review of an emergency plan. Subsection (4) specifies how the subsection (1) power may be used to cover the reporting of incidents. Subsection (5) provides inspection powers. Subsection (6) makes further supplemental provision about the type of matters that may be covered by the regulation making power, which includes the following:
    • New or amended definitions, to account for new activities (such as hydrogen production and storage),
    • Delegation of functions,
    • The charging of any fees associated with regulatory functions,
    • The keeping of information, and
    • The creation of criminal offences or civil penalties in relation to contraventions of the regulations.
  1. This section also sets out the maximum penalties associated with any criminal offence, as well as maximum civil penalties that could be issued.

Section 297: Habitats: reducing effects of offshore oil and gas activities etc

  1. This section contains a power to make regulations for the purposes of, or connected with, habitats assessment of offshore activities relating to oil and gas, including carbon dioxide storage and hydrogen production and storage. Subsections (2) and (3) enable regulations to be made preventing a specified type of activity from being carried out, or licence being granted, unless the Secretary of State has first considered the implications for relevant sites and granted a consent (which may be subject to conditions). Subsection (4) enables the Secretary of State to give directions. Subsection (5) provides that regulations cannot be made under subsections (2), (3) or (4), unless the Secretary of State considers they would contribute to the protection of relevant sites.
  2. Subsection (6) explains that a "relevant site" may be defined in accordance with the regulations, but that definition must be framed by reference to natural habitats or habitats of species.
  3. Subsection (7) contains further details about the provisions that can be made under the power in this section. For example, regulations may provide for:
    • definitions,
    • to confer functions,
    • revocation or modification of consents,
    • fees for associated regulatory functions, and
    • enforcement.
  1. This section also sets out the maximum penalties associated with any criminal offence, as well as maximum civil penalties that could be issued.

Section 298: Regulations under sections 296 and 297: procedure with devolved authorities

  1. This section requires the Secretary of State to carry out a consultation process, as set out in subsections (1), (2) and (3), with relevant devolved authorities, where regulations under Section 296 contain provision within devolved competence. Subsection (4) sets out the meaning of "relevant devolved authority".
  2. This Section also requires, under subsection (5), the Secretary of State to obtain consent: from Scottish Ministers, where regulations under Section 297 contain provision within Scottish devolved competence; and, under subsection (6), from Welsh Ministers, where regulations under Section 297 contain provision within Welsh devolved competence. Subsection (7) provides interpretive provision for "devolved competence".

Section 299: Charges in connection with abandonment of offshore installations

  1. Subsection (1) inserts a new section 38C into the Petroleum Act 1998 ("PA 1998").
  2. New section 38C of the PA 1998 contains powers to make regulations to charge for costs related to regulatory functions related to the decommissioning of offshore oil and gas infrastructure, under Part 4 of the PA 1998.
  3. Section 30 Energy Act 2008 applies Part 4 PA 1998 (subject to modifications) to the decommissioning of carbon storage installations established for offshore activities requiring a licence under section 17 of the Energy Act 2008. Therefore, new section 38C PA 1998 will apply to the decommissioning of offshore carbon storage installations too.
  4. Subsection (2) amends section 30 of the Energy Act 2008. It provides that the negative resolution procedure will apply in the Scottish Parliament should Scottish Ministers exercise the new powers in Section 38C of the Petroleum Act 1998 to make regulations to charge for their functions in connection with decommissioning of carbon storage installations.
  5. The remaining subsections of this section provide for consequential amendments to Part 4 PA 1998. In particular, the two fee charging provisions currently contained in section 29(5) and section 34(4) of that Act will be omitted once the relevant subsections of this section are commenced in accordance with regulations made under section 334 (Commencement).

Section 300: Model clauses of petroleum licences

  1. This section provides that all model clauses regarding the change of control of a Licensee in possession of any current and future Seaward Petroleum Production licences and all Landward Petroleum Production licences (but not Landward or Seaward Exploration licences) will be amended to include new ex ante (before the event) powers for the Oil and Gas Authority (OGA). This is to ensure that the governance, technical and financial capability of a Licensee in possession of a Petroleum Production licence is not undermined by an undesirable change of control and replaces the OGA’s existing ex-post (after the event) powers to intervene after the change of control of a Licensee.

Section 301: Power of OGA to require information about change in control of licensee

  1. This section grants powers to the OGA to request information which is reasonably required by the OGA in order to exercise its functions in relation to a change or potential change of control of a petroleum Licensee.

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