The Department for Energy Security and Net Zero (DESNZ) has published supplementary guidance to clarify how greenhouse gas ("GHG") emissions – specifically scope 3 emissions – should be assessed for offshore oil and gas projects under the Offshore Oil and Gas Exploration, Production, Unloading and Storage (Environmental Impact Assessment) Regulations 2020 ("the Offshore EIA Regulations").
This follows the landmark UK Supreme court judgement in Finch v Surrey Country Council [2024] UKSC, which held that downstream GHG emissions from the combustion of extracted hydrocarbons must be treated as an environmental effect of a project and therefore must be assessed within the Environmental Statement ("ES").
The supplementary guidance seeks to provide clarity on how scope 3 GHG emissions should be assessed for offshore oil and gas developments. Scope 3 emissions – defined under the GHG Protocol (GHG Protocol, 2001) – are indirect emissions (not included in scope 2) occurring in the value chain of the reporting entity and as confirmed in Finch, this includes those emissions from the downstream combustion of hydrocarbons extracted by an offshore project. These differ from scope 1 (direct operational emissions) and scope 2 (indirect emissions from energy consumption), which are already routinely assessed within an existing ES.
Expectations for Environmental Statements (ES)
The guidance sets out detailed expectations for the content of the ES. It confirms that:
- The ES must include a quantitative assessment of scope 3 emissions resulting from the combustion of hydrocarbons produced over the lifetime of the project.
- Where applicants wish to rely on new production displacing (or substituting) production that has ceased elsewhere, a robust justification is required – substitution alone does not negate the need for assessment of scope 3 emissions from the new production.
- The ES must assess emissions using a reasonable worst-case scenario, based on the maximum anticipated production levels submitted to the North Sea Transition Authority (NSTA).
- The ES must also present a comparative baseline, informed by existing and historical emissions data from similar offshore projects. If alternative development options were considered, baseline emissions from those options should also be addressed.
The guidance sets out a structured six-step process for the assessment of scope 3 emissions:
- define the scope and extent of the assessment;
- determine the emissions baseline;
- select the appropriate calculation methodologies;
- undertake data collection;
- calculate/determine the GHG inventory; and
- consider mitigation opportunities and repeat steps (4) and (5) as required.
The ES must explain the methodology and assumptions adopted, including how conversion factors have been applied. Where estimates are uncertain, this must be clearly communicated. Developers should also refer to IEMA's 2022 guidance on GHG emissions assessments.
Consideration of Alternatives
In accordance with Schedule 6(2) of the Offshore EIA Regulations, developers must outline any reasonable alternatives considered and provide reasoning for the option selected, considering environmental effects. The guidance confirms that this includes differences in scope 3 emissions. The ES should set out how these alternatives were assessed and demonstrate that environmental impacts, including GHG emissions, were a key factor in the decision-making process.
Environmental Protection Objectives
The assessment of likely significant effects of a project on the environment must, as per Schedule 6(5)(d) of the Offshore EIA Regulations, "take into account environmental protection objectives established in retained EU law or at national level". This means that scope 3 assessments should be framed in the context of wider legal and policy goals – such as the UK's net zero target and obligations under the Paris Agreement.
Evaluating Significance of the Likely Effects
The guidance confirms that the scope 3 emissions must be assessed for likely significant effects on the environment in line with Regulation 14(1) and Schedule 6(4) of the Offshore EIA Regulations. This includes considering the nature, scale, duration and geographic extent of emissions, as well as their contribution to climate change.
Developers should explain how these emissions could impact climate, referencing factors such as hydrocarbon type, combustion location and export destination. Any mitigation measures proposed must also be outlined, and recognised criteria should be used to assess whether the effects are "likely" and "significant".
Mitigation Measures
Schedule 6(6) of the Offshore EIA Regulations outlines that the ES should include: "a description of the features of the project or measures envisaged in order to avoid, prevent, reduce or offset likely significant adverse effects on the environment." These should be considered in the project's infancy, and ideally at the scoping stage, with a primary focus of avoiding, preventing, reducing or offsetting significant adverse effects on the environment and maximising their effectiveness.
There are 4 types of measures to consider:
- Avoidance: Preventing the occurrence of significant adverse effects.
- Prevention: Implementing measures with the objective of stopping adverse effects occurring.
- Reduction: Diluting the severity of adverse effects.
- Offsetting: Compensating adverse effects by counterbalancing them with the provision of environmental benefits elsewhere.
Emissions removal measures have the potential to address significant effects emanating from scope 3 emissions. Examples of these types of measures include carbon capture and storage, as this has been identified as suitable to address the major effects which emanate from the scope 3 emissions.
In order for the mitigation measures to remain relevant, these should be reviewed and updated on a regular basis to strengthen their effectiveness and relevancy as the project progresses.
Projects with a pre-existing development and production consent
For projects which have already obtained development and production consent, there are 3 key considerations:
- Amendments to Production rates: developers may have to apply to amend their daily production rate during the lifetime of the project.
- Assessment of Changes: Any application made to amend the production rates must contain within it, confirmation of whether the change will alter the total amount of hydrocarbons produced over the lifetime of the project.
- Scope 3 emissions: If the total production amount alters, the ES or screening direction application should include an assessment of the scope 3 emissions emanating from the increase or decrease in lifetime production levels.
Decision Making Process
The Secretary of State has the responsibility of considering the environmental effects of the project, whilst contrasting this with any potential significant effects providing wider benefits to the nation. The severity, extent, understanding and duration of the significant effects will be considered and contrasted with the Government's overall energy and environmental objectives. Economic and other advantages of proceeding with the project will also be taken into consideration. The Secretary of State will also determine the extent to which the project aligns with the Government's objectives for the future of the North Sea.
Conclusion
In conclusion, the publication of guidance from DESNZ is welcomed within industry as it provides clarity in terms of how scope 3 emissions should be assessed under the Offshore EIA regulations. The detailed guidance expands upon the requirements of the ES, which is a key component of a development consent application and will act as a useful guide to applicants both with applications currently under review and those considering such applications in the future.
