Conservation of Habitats and Species (Offshore Wind) (Amendment etc.) Regulations 2026
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Baroness Hayman of Ullock
That the Grand Committee do consider the Conservation of Habitats and Species (Offshore Wind) (Amendment etc.) Regulations 2026.
Relevant document: 55th Report from the Secondary Legislation Scrutiny Committee (special attention drawn to the instrument)
The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Baroness Hayman of Ullock) (Lab)
My Lords, these regulations were laid before the House on 26 February.
This Government are committed to delivering the clean power mission, which is central to strengthening the UK’s energy security, lowering household energy bills and driving long term economic growth. Crucially, clean power is one of the most important tools we have to tackle climate change. This statutory instrument represents an important milestone in the Government’s delivery of the clean power mission. It is not only about accelerating offshore wind; it is also a real opportunity to deliver meaningful, lasting gains for nature. This SI reflects this Government’s belief that climate action and nature recovery must go hand in hand and that, with the right approach, they absolutely can.
I will begin by setting out the issue that this SI will address. When compensating for impacts to protected sites, developers must follow the mitigation hierarchy; that means they must first avoid, and then minimise and mitigate, impacts on protected sites. Once those steps have been taken, developers are required to compensate for unavoidable impacts, normally with measures that benefit the impacted feature affected. As our offshore wind capacity grows, securing compensatory measures that benefit the impacted features is becoming increasingly difficult. This challenge has become one of the main reasons for delays in consenting decisions.
This statutory instrument tackles that issue by widening the range of suitable compensatory measures for offshore wind developments. Where measures that benefit the impacted feature are not available to compensate for the impacts of offshore wind, developers will be able to use wider compensatory measures. These will benefit ecologically similar features or the UK marine protected area network more widely. In doing so, this statutory instrument will not only remove one of the main obstacles to timely consenting but open up new opportunities to enhance and invest in nature.
So, rather than limiting compensatory measures to a single feature, developers could support broader initiatives, such as programmes to strengthen sea-bird populations. Through innovative approaches such as these, the statutory instrument demonstrates this Government’s commitment to ensuring that nature and economic growth can be achieved in unison.
Defra’s offshore wind environmental improvement package has been designed to strike exactly that balance. It brings forward measures that simplify the consenting process, supporting faster, more efficient decision-making, while continuing to protect our marine environment and meet the UK’s domestic and international commitments. This package is already delivering a more strategic, co-ordinated and scalable approach to environmental compensation for offshore wind. This has been demonstrated through the establishment of a library of strategic compensatory measures and the launch of the marine recovery fund.
This statutory instrument is another essential part of that package. Building on its existing successes, it will increase flexibility to further accelerate the deployment of offshore wind, while continuing to protect and enhance our marine environment. Today, by approving this statutory instrument, I believe we have the opportunity to deliver an approach for environmental compensatory measures for offshore wind that facilitates our transition to clean power and delivers for nature.
Before I turn to the details of the legislation, I thank the Secondary Legislation Scrutiny Committee for its thorough examination of this statutory instrument. The committee’s report raised concerns regarding the laying of the statutory instrument without publishing the accompanying draft guidance. I would like to reassure noble Lords that the policy intent has been set out transparently through the material already provided. I was pleased that the committee welcomed the publication of a policy note alongside this instrument, providing helpful context and information.
This statutory instrument has been laid ahead of the accompanying guidance, to ensure that parliamentary scrutiny can proceed without delay, while we take the necessary time to finalise the guidance to the highest standard. The guidance will support implementation once it is published on 21 May. This date will coincide with the statutory instrument coming into force, ensuring that all stakeholders have clear, comprehensive guidance in place from the first day.
The guidance will provide technical and practical support to developers and relevant public bodies, including consenting authorities. We have shared the draft widely with stakeholders and the devolved Governments to ensure that it is robust, aligned across the UK and, importantly, fully fit for purpose when published. I believe that the published policy note and the Government’s response to the consultation provide Parliament with a strong basis for effective scrutiny.
I now turn to the details of the legislation. This statutory instrument will enable offshore wind projects to deliver a wider range of practical environmental compensatory measures, as I said in my introduction. Without action to expand the compensatory measures that are currently available, the UK’s ability to unlock its offshore wind potential will be constrained.
The territorial application of this statutory instrument is the UK. It has effect in relation to offshore wind developments in UK offshore waters and English inshore waters, and for certain offshore wind functions in Welsh and Northern Ireland inshore waters.
We are amending the existing regulations to introduce a new bespoke compensation duty for offshore wind. This will enable wider compensatory measures and require that all compensatory measures must benefit the UK marine protected area network.
Environmental safeguards sit at the heart of our new approach. The environmental safeguards will ensure that the most effective compensatory measures are identified, selected and implemented to deliver the strongest possible outcomes for nature. As part of this, the SI introduces a requirement for the Secretary of State to publish a compensation hierarchy. This requires developers to select compensatory measures in line with the hierarchy and to prioritise those that benefit the impacted feature, subject to certain circumstances. This hierarchy is a central pillar of the environmental safeguards underpinning these reforms.
Another key safeguard is the role of statutory nature conservation bodies, which will continue to play an important role in advising on environmental compensatory measures. Ministers will consider this expert advice alongside the environmental principles when approving wider compensatory measures.
As part of these reforms, we are exploring the development of a new public compensatory register. Our ambition is that this will bring together information on all compensatory measures delivered across the UK marine protected area network, improving transparency and helping us identify where future compensatory measures could have the greatest impact: for example, by targeting actions that contribute directly to improving the ecological resilience and long-term health of multiple marine protected areas.
All this work will feed into a wider review that assesses the impact of our statutory instrument on offshore wind developments and the environment. This review will be published by April 2031, with further reports following at intervals of no more than five years.
I recognise that there may be concerns about the reforms amending the current regulatory approach, so I want to be absolutely clear that this Government are firmly committed to delivering on our climate and nature ambitions. This statutory instrument implements necessary and timely change to the environmental compensation requirements for the offshore wind sector. We are confident that its provisions will uphold strong environmental protections, enable substantial and sustainable growth in offshore wind and ensure that nature and clean energy continue to progress side by side. I beg to move.
Baroness Grender (LD)
My Lords, I thank the Minister for setting out the statutory instrument. There is no doubt that climate change is an existential threat that demands urgent and transformative action. The soaring temperatures, floods and rising sea levels that we see are not distant warnings but present realities affecting millions.
We, the Liberal Democrats, have long championed recognition of the climate emergency and the need for a fair deal for our environment, central to which is a clean energy revolution. We are committed to an industrial strategy with tackling climate change at its core, and to a goal of generating 90% of the UK’s electricity from renewables by 2030. Offshore wind is vital to achieving that, and removing unnecessary barriers is overdue. We also recognise the Government’s ambition of reaching 43 to 50 gigawatts of offshore wind capacity by 2030, which is essential for our net-zero goals and energy security.
But this transition must go hand in hand with the protection of our precious wildlife. We cannot solve the climate crisis by exacerbating the nature crisis. Our view is clear: we must double the size of the protected area network and the abundance of species by 2050. Britain’s seas currently face serious strains. Recent sea-bird statistics show continuing declines and, tragically, 10 of the UK’s breeding sea-bird species are now red-listed. Without effective compensation, the expansion of offshore wind risks pushing vulnerable species even closer to the edge.
We support the aim of the pragmatic tier system for environmental compensation in this statutory instrument. However, we share the concerns of organisations such as the Wildlife Trusts about the inclusion of tier 3 and strongly suggest that this is revisited and perhaps revised. I thank the Wildlife Trusts for their briefing on this matter.
Under these regulations, tier 1 and tier 2 measures provide direct or closely related ecological benefits to the affected species or habitat. We are concerned that tier 3 is different. It would allow measures that give broader benefits across a wider marine protected area network without a direct link to the species or site damaged. I look forward to being corrected on this by the Minister if I have got it wrong. That risks weakening the principle of ecological coherence. For example—I would be very happy to hear a response to this specific example—harm to a kittiwake colony should not be compensated through unrelated education projects that do nothing to restore the lost birds.
Lord Roborough (Con)
My Lords, I also thank the Minister for introducing the draft conservation of habitats and species regulations today and I share many of the concerns laid out by the noble Baroness, Lady Grender. Before I begin, I draw the Grand Committee’s attention to my register of interests as an owner and developer of onshore wind energy infrastructure.
We on these Benches recognise the challenging situation that offshore wind developers face and the need to simplify the process to make schemes deliverable. Equally, we recognise the environmental issues. This month’s updated assessment and good environmental status of the UK marine strategy shows that cetaceans, birds, fish, benthic habitats, food webs, contaminants and marine litter have not met good environmental status. Another six categories have been partially met or are uncertain; only two categories have seen GES met. The update highlights the mixed picture for marine ecosystems, with high pressure on our seas, which are getting warmer, more acidic and oxygen depleted. This is not an encouraging picture and highlights why legislation, such as that we are considering today, needs to be given detailed scrutiny.
These regulations seek to shift how compensation for the environmental impact of these developments is determined and delivered. The compensation, rather than necessarily focusing on the features directly affected, could target similar features, potentially elsewhere in the UK’s MPA network. My first concern with the SI, which, as others have mentioned, has already been highlighted by the Secondary Legislation Scrutiny Committee, is that it leaves much of the crucial detail to future guidance. The Government have conceded that they are taking a novel approach, but this is no justification for asking the House to approve a framework without being clear how it will operate in practice. The Government conducted a six-week public consultation ahead of these reforms, and it simply is not clear why the draft guidance could not have been published to coincide with this legislative process. Instead, the guidance will be published only once the SI has come into force on 21 May. This is not good practice.
My second concern is that this approach allows for a similar approach to that taken under the Planning and Infrastructure Act, which the House spent so much time on earlier this year, which allows environmental damage through development with the conscience salved by payment to a general fund, although, at least in this case, I am grateful that the compensation hierarchy is protected from the outset. Like the noble Baroness, Lady Grender, I am also grateful to the Wildlife Trusts for their briefing on this. It is the third tier of compensation where the main issue lies, potentially allowing for irreparable damage to key threatened species and habitats without any requirement for that species or habitat to obtain compensating benefit. Can the Minister reassure us that tier 3 would not be permitted in these circumstances and that it would not be allowed to become the default setting as a simple way of bypassing the compensation hierarchy? It would also be helpful to receive reassurance that the compensation funds raised through this legislation would be applied only to damage being caused by the offshore wind industry rather than becoming a general pot that could be used in other industries.
It has been left to the future guidance to set out the hierarchy of compensation measures, determining which are the most beneficial to the MPA network. How will the condition of this network be better monitored in order to understand which measures are the most beneficial? As has been pointed out by Wildlife and Countryside Link, many assessments are over six years old, and many features are not assessed at all. Further, any agreements reached with developers must be deliverable and viable so as not to deter investment.
Building on the recommendation of RenewableUK, how will the forthcoming guidance balance the timing requirements involved in implementing compensation measures with the project’s construction schedules, for example? Can the Minister confirm that the guidance will be kept under review to respond to concerns as they arise, while giving certainty in what is already a complex policy environment? Is it likely that the guidance will address the concerns I have raised? Which agency will be responsible for implementing this legislation and who will cover its costs?
It is hoped that the establishment of marine recovery funds will enable developers to compensate for environmental impacts for multiple projects, yet MRFs are not mentioned in the Explanatory Memorandum. It is also important to note that MRFs are voluntary schemes. Can the Minister explain what the Government anticipate the take-up of MRFs will be and how significant a role they will play in environmental compensation?
Our concerns about this SI are focused on how the changes will operate in practice. The devil is always in the detail. To be clear, we on these Benches support the development of affordable, home-grown energy sources; that is why we oppose the Government’s ongoing ban on new oil and gas licences in the North Sea. Indeed, amid a web of subsidies, environmental schemes and regulations such as these, it is crucial that we do not lose sight of the big picture. We need to prioritise our energy security in cost-effective ways in order to lower the overall cost to the taxpayer, while being responsible and honest custodians of our ecosystems in order to benefit future generations. As the Minister laid out earlier, I know that she shares these aims.
I look forward to hearing the Minister’s response. I am conscious that I have asked quite a few questions so, if she feels the need to write, that is of course welcome.
Baroness Hayman of Ullock (Lab)
I thank the noble Lords who have taken part in this debate. I will try to be brief because we have some votes coming up fairly soon. I will write to noble Lords on anything I have not covered; I thank noble Lords for their thoughtful contributions and comments.
We are trying to strike the right balance in establishing a new approach to environmental compensatory requirements for offshore wind. We need to accelerate our shift towards renewable energy, but we also need to ensure that we still have positive outcomes for the environment—in particular, the marine environment. What has come across today is that both Ministers and noble Lords understand the importance of getting that balance right.
We have covered a lot of ground so I will do my best to cover some bits quite quickly. On the publishing of the guidance, as I mentioned in my opening speech, I recognise the concerns expressed by the Secondary Legislation Scrutiny Committee on our approach of laying the guidance in draft for the moment then laying it in full after we have debated it. It is critical that we deliver this statutory instrument. We have been fully transparent about the policy intent that underpins both the SI and the guidance. As I said, the response to the consultation and the published policy clearly set out what the guidance is going to cover. We have tested the draft guidance with users and held constructive discussions with key stakeholders to discuss the guidance content; we have also collaborated closely with the Scottish Government to ensure that we have proper alignment.
As I said, the guidance will apply in English waters to Wales and Northern Ireland waters, which is why the work that we have done with the devolved Administrations has been so important. The guidance will outline the wider compensatory measures and will explain how a developer could demonstrate that any proposed compensatory measures would provide ecological benefits to the UK’s marine protected area network. It will also explain that this will be achieved in different ways for each tier of the compensation hierarchy, which will give more information on that. The guidance will also cover the requirement for all wider compensatory measures to be taken from the library of strategic measures, and it will lay out an expectation for wider compensatory measures to be delivered through the marine recovery fund, because that is the best way to have a proper, co-ordinated approach.
I come to the point about ensuring that the compensatory measures do not lead to a deterioration. The Division is on so I will have to come back—I am very sorry.
Baroness Hayman of Ullock (Lab)
My Lords, I was just finishing talking about questions on guidance. On the last point on that, whether the guidance would be reviewed, I can confirm that it will be reviewed and updated as part of the review process, and that is included in the statutory instrument.
I was asked as well how we were going to ensure that the wider compensatory measures introduced by the SI do not lead to the deterioration of specific species, populations and habitat types. The noble Baroness, Lady Grender, referred in particular to sea-birds. We have carefully considered how to avoid this, because the last thing we want to see is deterioration in affected species and habitats. All the wider compensatory measures will be evaluated on a case-by-case basis and will use expert advice and the best available scientific evidence to ensure that they are ecologically robust. That approach aims to mitigate declines in specific habitats or particular populations.
In addition, the proposed public compensation register, as well as the review that I just mentioned, will help to ensure that we can monitor the environmental impacts of the wider compensatory measures on specific habitats and species. We will keep a really close eye, because there is no point bringing something in if it is not going to do what we want it to do. I reassure noble Lords that we will ensure that the new approach to offshore wind is implemented in a way that continues to abide by our domestic and international commitments.
I was also asked about the timing of compensatory measures. On timing, the guidance will cover that compensatory measures should be in place and functional by the time damage to a protected site begins. The guidance will also outline the circumstances in which the adverse effect may occur before the measure is in place and functional—but the whole point is to have it in place when that starts, so that it is up and running.
A number of other environmental safeguards accompany the statutory instrument, and I shall put them on record too. In England and Wales, wider compensatory measures will need to be drawn from the library of strategic compensation measures, which contains measures approved by the Defra Secretary of State or by Welsh Ministers for some projects. In Scotland, the measures do not need to be taken from the library. We are also in discussion with the Northern Ireland Executive as to whether they wish to approve the measures in the library.
Statutory nature conservation bodies will, of course, continue to advise on the ecological effectiveness, feasibility and viability of any proposed compensatory measures, and all compensatory measures, as I have just said, will be monitored to ensure that they deliver their expected outcomes. If we think that they are not going to function as expected, adaptive management will usually be required to adjust or replace the measure.
The SI also includes a requirement for the review. The point of the review is to assess the statutory instrument as a whole and assess the compensation hierarchy and guidance against any objectives. That will include assessing the impact on the environment and on offshore wind consenting. The mandatory review will ensure continued scrutiny and accountability. As I say, we will be keeping a close eye on it.
We are also exploring the development of a public compensation register. The idea around that is that it will collate information on environmental compensatory measures right across the UK marine protected area network, in order to improve transparency and highlight any further opportunities that could be brought in.
I was also asked about the use of funds and the uptake of the marine recovery fund, which is critical, as the noble Lord, Lord Roborough, said. It is already established and has received applications, and we are pretty confident that developers will use it. As I mentioned earlier, we have done a lot of work with stakeholders to ensure that what we bring in will be fit for purpose. I clarify that the funding comes from developers and can be used only for offshore wind compensation.
The noble Baroness, Lady Redfern, asked what is meant by “reasonably proportionate” and whether the definition will keep the existing levels of environmental protections. The guidance will set out the considerations for determining whether the benefit of a compensatory measure or the package of measures is reasonably proportionate to the adverse impacts. In broad terms, what we are saying is that delivering compensatory measures with benefits that are reasonably proportionate to the impacts of the protected site will require a consideration of the magnitude of the impact of the plan or project in comparison with the quality and anticipated ecological benefit of the compensatory measure. I hope that helps to clarify.
The compensatory measure would not need to exactly match the impact, but there would need to be a credible evidence-based assessment of the level of ecological benefit to be provided in order to compensate for any impact. Consenting authorities will be required to assess what is reasonably proportionate on a case-by-case basis. They will rely on expert advice, including the advice of statutory nature conservation bodies, which will continue to provide advice on all the different compensatory measures.
The noble Baroness, Lady Grender, mentioned tiers. Developers will have to demonstrate through a robust evidence-based case that no other feasible ecologically effective tier 1 measure is available or that any wider measures would deliver a greater ecological benefit. The consenting authority, having considered advice from the statutory nature conservation bodies, will make the final decision. In making that final decision, it must be absolutely satisfied that any justification for moving through the hierarchy is absolutely sound. These safeguards will ensure that the compensatory measure cannot be bypassed if it is available and remains the most ecologically beneficial option.
I hope that I have covered everything—I will check Hansard and, if not, I will come back to noble Lords; having had two votes in the middle of this, I am starting to lose track. Turning back to the statutory instrument, the legislation is to provide a more flexible, pragmatic approach to securing environmental compensatory measures for offshore wind and to unlock these new strategic opportunities to drive nature recovery.
It is important that we are prepared to make bold and carefully considered changes because we need to make sure that our marine protected areas and the wider marine environment can recover and thrive alongside any expansion of clean energy infrastructure. As I am sure noble Lords are aware, we seem to be in an increasingly unstable world, so it is important that we have secure, sustainable, renewable energy that is homegrown. This statutory instrument is a critical component on the UK’s path to becoming a clean energy superpower, while at the same time ensuring that we protect our marine environment, which is absolutely integral to our approach. I beg to move.