Post Finch: EIA for offshore oil and gas projects

On 16 December 2024, my colleagues Alex and Leticia wrote about the UK’s journey to reduce its contribution to climate change and mentioned the consultation launched by the Offshore Petroleum Regulator for Environment and Decommissioning (“OPRED”) on draft supplementary environmental impact assessment (“EIA”) guidance for assessing the effects of scope 3 emissions on climate from offshore oil and gas projects published on 30 October 2024. On 19 June 2025, OPRED published its final guidance and response to its 2024 consultation on the draft guidance. The guidance supplements OPRED’s existing EIA guidance for offshore oil and gas projects seeking consent from the North Sea Transition Authority which it is also updating. Such projects are subject to the Offshore Oil and Gas Exploration, Production, Unloading and Storage (Environmental Impact Assessment) Regulations 2020 (“the Offshore EIA Regulations”).

Importantly, the guidance follows the Supreme Court’s decision in R (Finch) v Surrey County Council [2024] UKSC 20 which focussed on greenhouse gas ("GHG") emissions associated with the downstream combustion of hydrocarbons produced from a proposed oil and gas project seeking development and production consent, falling within scope 3 emissions, as well as the decision in the Jackdaw and Rosebank judicial review. Although the Finch judgment considered this in the context of the Town and Country Planning (Environmental Impact Assessment) Regulations 2017 rather than the Offshore EIA Regulations, the purpose of both Regulations is to transpose the EIA Directive. 

GHG emissions are defined in the 2001 GHG Protocol as scope 1 (direct emissions from operations owned or controlled by the reporting company), scope 2 (indirect emissions from the generation or purchased or acquired electricity, steam, heating or cooling consumed by the reporting company) and scope 3 ( indirect emissions that occur in the value chain). Scope 3 emissions are split into 8 categories of upstream emissions and 6 categories of downstream emissions. The guidance confirms that the ES must consider scope 3 emissions from downstream activities associated with the production of hydrocarbons over the lifetime of the project. This remains the position even if evidence is submitted on the extent to which substitution may occur. Substitution may take place when  hydrocarbons extracted as a result of the project will replace, rather than be additional to, other hydrocarbons that would be extracted elsewhere.

The guidance sets out the expected content of environmental statements (“ESs”) relating to offshore oil and gas production projects and refers to the 6 step assessment process in IEMA’s guide to Assessing Greenhouse Gas Remissions and Evaluating Their Significance. The guidance is not prescriptive and OPRED accepts that alternative approaches may be possible. The key takeaways from the guidance are:

• Scoping the extent of the assessment: The ES should describe the reasonable alternatives studied by a developer for a proposed project. The developer will be expected to set out how the effects of the selected option compare with the environmental effects of any other reasonable alternatives considered and how it has been factored into the justification for the selected option. 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”. Environmental effects from scope 3 emissions from downstream activities largely relate to the impacts on climate from the release of GHGs;
• Determination of the baseline: The ES should consider a global baseline scenario of GHGs as the location of the project is not relevant when describing the baseline scenario for scope 3 emissions. A reasonable future estimate of global GHGs affecting climate over the lifetime of a project needs to be considered as part of the baseline scenario based on available up to date environmental information and scientific knowledge on global GHGs and climate;
• Identifying relevant and estimating scope 3 emissions: The ES should include an assessment of the downstream emissions from the use of hydrocarbons extracted as a result of the project and should explain the methodology chosen and conversion factors to estimate scope 3 emissions as none is prescribed. There is a rebuttable presumption that all produced hydrocarbons over the project's lifetime will eventually be combusted and they should be calculated using the highest anticipated hydrocarbon production expected to be produced during the lifetime of the project multiplied by a suitable conversion factor. OPRED expects that these downstream emissions from a new project will be presented in the ES against a no project (‘do nothing’) scenario (i.e. total quantity of scope 3 category 11 emissions from the project against zero scope 3 category 11 emissions for a no project scenario). Taking this approach confirms the absolute downstream emissions that may be associated with the combustion of the produced hydrocarbons over the lifetime of the project. Other scenarios can also be presented;
• Evaluating significance of the likely effects: The ES should include a comprehensive and high-quality assessment of the significance of the likely effects of scope 3 emission including cumulative effects and global and national climate effects. The expectation is that assessment methodologies will use a form of matrix that combines sensitivity of the receptor against magnitude of the impact to determine a level of significance associated with scope 3 emissions. Given the global effect of GHG emissions, the current state of the climate and the concentration of carbon dioxide and other GHGs in the atmosphere, the expectation is that the sensitivity level will be high. If a developer wishes to use substitution to help contextualise the scope 3 emissions, the developer should provide evidence to demonstrate that (i) hydrocarbons from the project will result in substitution of international hydrocarbon supplies into the UK; and (ii) there is no other demand for the international hydrocarbon supplies substituted by the project. Developers should note that given the current state of the climate and the nature of the assessment of scope 3 emissions, that the residual environmental effects (after mitigation) resulting from scope 3 emissions could still be significant for the purposes of the Offshore EIA Regulations;
• Mitigation Measures: The ES should include a delivery plan setting out any proposed mitigation which should be permanent and not speculative. The plan should provide details of third-party monitoring, reporting and verification. It is worth noting that the guidance acknowledges that the expectation of effective mitigation is limited and that purchasing carbon credits is unlikely to satisfy this. 

If you have any queries on consenting oil and gas projects or assessing their impacts, please do not hesitate to contact my colleague Alex Minhinick.