Offshore renewable energy: decommissioning guidance for Scottish waters

3. Policy and legislative framework

Requirement for decommissioning programmes

3.1 The UK Government introduced a legal obligation on developers and owners of relevant objects to prepare and carry out a decommissioning programme, and to put financial security in place, through the Energy Act. Changes to the Energy Act, brought about by the Scotland Act 2016, provide that the Scottish Ministers, rather than the Secretary of State (of the UK Government), exercise functions in relation to the decommissioning of relevant objects which are located either wholly in Scottish waters or in the Scottish REZ.

3.2 The Scottish Ministers wish to implement decommissioning requirements in such a way that it does not hinder the development of relevant objects, whilst at the same time ensuring that the tax payer is protected against having to organise and fund decommissioning activities.

International obligations

3.3 International obligations to decommission disused installations have their origins in the United Nations Convention on the Law of the Sea ("UNCLOS"), 1982. This requires abandoned or disused installations or structures to be removed to ensure safety of navigation, taking into account generally accepted international standards.

3.4 International Maritime Organisation ("IMO") guidelines and standards on the removal of offshore installations and structures on the continental shelf and in the exclusive economic zone were adopted in 1989. The IMO's standards set out that any infrastructure placed in the marine environment should be designed with full removal in mind, and full removal will be the default position for relevant objects unless there are strong reasons for any exception.

3.5 Relevant work has also been undertaken under the OSPAR Convention, which guides international cooperation on the protection of the marine environment of the North-East Atlantic. OSPAR Guidance on Environmental Consideration for Offshore Wind Farm development (2008)^[3] incorporates ideas on the decommissioning of wind farms in the marine environment.

3.6 This guidance treats the international conventions under UNCLOS and OSPAR as applying both in territorial and internal waters. ('Internal waters' refers to waters around estuaries and islands, which may be classified as 'internal')².

3.7 The Scottish Ministers expect decommissioning programmes to provide costings based on total removal. Where, in exceptional circumstances, any infrastructure is to be left in situ, it is expected that costings are provided for both scenarios.

Decommissioning provisions in the Energy Act (as amended)

3.8 The key decommissioning provisions in the Energy Act (Sections 105 to 114), are explained in Annex A. In summary, the Scottish Ministers have:

• the discretionary power to serve a notice on the responsible person requiring submission of a costed decommissioning programme
• the power to approve the decommissioning programmes with or without modifications or conditions (where the Scottish Ministers consider that these are required)
• the power to reject the decommissioning programme

3.9 Where the Scottish Ministers reject a decommissioning programme, they may prepare an alternative decommissioning programme themselves and recover the costs of preparing such programmes from the responsible person. The Scottish Ministers are required to review decommissioning programmes from time to time, and have the power to make regulations relating to the decommissioning of relevant objects.

Role of the Crown Estate Scotland

3.10 The Scottish Ministers and the Crown Estate Scotland (which issues leases for offshore renewable energy developments) will work together to avoid duplicating decommissioning requirements imposed on developers / owners. The Scottish Ministers have agreed with Crown Estate Scotland that the responsible person's assets will only need to prepare one decommissioning programme, which will be submitted to the Scottish Ministers, as per the Energy Act.

3.11 Responsible persons covered by the decommissioning requirements of the Energy Act may be required to provide financial security for decommissioning to the Scottish Ministers. Crown Estate Scotland may have additional financial requirements for decommissioning for assets outside the scope of the Energy Act, residual liability issues, third party claims and consequential loss.

3.12 The Scottish Ministers will consult with Crown Estate Scotland on decommissioning programmes submitted by the responsible person and will consider Crown Estate Scotland's advice on decommissioning programmes submitted by the responsible person. The Scottish Ministers will also consult Crown Estate Scotland on in-operation reviews of and modifications to the approved programme, if there are substantial changes to a previous version.

Finance and Public Administration Committee

3.13 One of the roles of the Scottish Parliament's Finance and Public Administration Committee is to scrutinise matters relating to or affecting the revenue or expenditure of the Scottish Administration. Contingent liabilities may require notification to or approval of the Finance and Public Administration Committee, in line with the requirements of the Scottish Public Finance Manual section on contingent liabilities^[4].

3.14 The Committee will scrutinise whether to accept the contingent liability, as well as the due diligence undertaken. When scrutinising the contingent liabilities, the Finance and Public Administration Committee can approve the liabilities, propose an amendment to them or recommend they are rejected. In the latter case, the matter can be referred to the Parliamentary Bureau for debate and it would then be for the Parliament to decide whether to allow it to proceed.

3.15 Section 5.16 and 5.17 below provide context as to where the committee response fits into the wider Scottish Ministers decision making process.