Policy paper

Environmental Compensatory Measures Reforms for Offshore Wind: policy background and proposed compensation hierarchy

Published 27 February 2026

The Statutory Instrument (SI) to make the environmental compensatory measures reforms for offshore wind (The Conservation of Habitats and Species (Offshore Wind) (Amendment etc.) Regulations 2026) was laid on 26 February 2026.

The SI is part of a wider package of policy measures on environmental compensatory measures for offshore wind that was consulted on in summer 2025.

The government response to the consultation was published on 3 December 2025.

This policy note summarises:

• the wider policy and delivery context for the SI
• our plans to publish further guidance and information on this topic when the SI comes into force in May this year, including a proposed version of the compensation hierarchy referred to in the SI

Clean Power and the Offshore Wind Environmental Improvement Package (OWEIP)

The government has committed to increasing offshore wind capacity as part of the clean power 2030 mission which will help to cut bills, create jobs, deliver energy security with cheaper, zero-carbon electricity and to meet our net zero target.

The Offshore Wind Environmental Improvement Package (OWEIP) supports the growth of offshore wind by helping to de-risk and accelerate planning decisions while protecting the marine environment. As part of the package, the SI will enable a more flexible and pragmatic approach to securing environmental compensatory measures and unlock new opportunities for nature. The Marine Recovery Fund (MRF), launched in December 2025, is also part of the package. The MRF allows developers to meet compensatory requirements by paying into a fund to support strategic measures. It will be one of the delivery routes for new compensatory measures enabled through the reforms. 

Environmental Compensatory Measures Reform (ECMR)

The environmental compensatory measures reforms include:

• legislative changes
• supporting guidance
• information and explanation of some existing principles and requirements

There are a number of safeguards included in the reforms, to ensure they will be delivered and implemented in a way that maintains the UK’s compliance with all existing domestic and international commitments on nature conservation and marine protection, while enabling the growth of offshore wind.

The reforms make it possible for developers to use a wider range of environmental compensatory measures. In England and Wales, work is underway on starting to develop the measures themselves, primarily through the Collaboration on Offshore Wind Strategic Compensation (COWSC) programme. Ministers will approve the new measures and further information on the process for new measures becoming available to developers will be published when the SI comes into force.

Implementing the Statutory Instrument (legislative change)

The SI is changing existing legislation to enable the use of wider compensatory measures for offshore wind through the use of a compensation hierarchy. The changes mean that wider compensatory measures that benefit the MPA network otherwise than by benefitting the impacted feature may be delivered. Developers must apply the compensation hierarchy when proposing and determining suitable compensatory measures.

The proposed compensatory measure or measures must benefit the UK Marine Protected Area network in a manner which is reasonably proportionate to the adverse effect of the relevant offshore wind plan or project on the integrity of the European offshore marine site or European site or Ramsar site. We are not making changes to the Marine and Coastal Access Act 2009.

The SI also includes a requirement to review the SI, the guidance and the compensation hierarchy by 30 April 2031 and then at intervals of at least every 5 years after that to ensure the policy continues to work effectively.

Geographical scope

The SI makes provision in relation to relevant offshore wind activity as defined in the section 290 of the Energy Act 2023, including cabling and interconnectors. The SI applies to:

• all relevant offshore wind activity in English inshore (within 12 nautical miles) and offshore waters (beyond 12 nautical miles)
• all relevant offshore wind activity in Scottish offshore waters
• all relevant offshore wind activity in Welsh offshore waters and, in Welsh inshore waters, offshore wind projects generating over 350 MW and in relation to qualifying Secretary of State functions
• all relevant offshore wind activity in Northern Ireland offshore waters, as well as in relation to qualifying Secretary of State functions in Northern Ireland inshore waters

The UK guidance and compensation hierarchy for this SI will apply to the offshore waters of England, Wales and Northern Ireland, and the inshore waters of England, and the inshore waters of Wales and Northern Ireland where the SI applies. However, the Welsh Ministers have the option to publish their own guidance and compensation hierarchy.

The Scottish Government has laid its own Scottish SI (SSI) for its inshore waters and will publish guidance and compensation hierarchy relating to their SSI in due course. The Scottish Government’s guidance and hierarchy will also relate to the UK’s SI as it relates to Scottish offshore waters.

The Welsh Ministers or DAERA may make regulations under section 293 of the Energy Act 2023 in relation to relevant offshore wind activities in Welsh or Northern Ireland inshore waters respectively, except where the UKG SI applies.

The SI requires consultation between the Secretary of State, the Welsh Ministers, the Scottish Ministers and DAERA in Northern Ireland on changes to guidance or the Compensation Hierarchy. We are committed to working closely together to ensure alignment between the different authorities and minimise complexity for developers and other users of the guidance.

Compensation hierarchy

The SI requires the Secretary of State to publish a compensation hierarchy made up of 3 tiers (called Tier 1, Tier 2 and Tier 3).  A proposed compensation hierarchy is in Annex A.

The compensation hierarchy:

• describes what is meant by each of the 3 tiers

• explains how it will be possible to move through the tiers

We plan to publish further information and guidance on using the compensation hierarchy and satisfying the compensation duty within the SI. The guidance will: 

• remind developers of steps to take before considering environmental compensatory measures, including on using the mitigation hierarchy and on marine irreplaceable habitats   

• explain what is meant by a benefit to the UK MPA network and being “reasonably proportionate to the adverse effects” on the integrity of the protected site 

It will also explain how the compensation hierarchy should be applied in practice, including how to:

• move through the tiers of the compensation hierarchy  

• determine whether a measure or measures are available at a specific tier  

• determine whether a Tier 2 or Tier 3 measure or measures will have a greater ecological benefit than measures higher in the hierarchy  

• present a reasoned case for progressing through the hierarchy, including when it is unfeasible to use a certain measure

The guidance will describe how Tier 2 and Tier 3 measures will be developed and implemented in practice, including information on: 

• the role of Statutory Nature Conservation Bodies 

• the Marine Recovery Fund 

• how wider measures are added to the Library of Strategic Compensation (in England) 

Explanation of existing policy (no legislative change)

In response to the consultation, we will publish further guidance when the SI comes into force. This will address how unavoidable damage from offshore wind projects is considered and compensated for the following areas.

Marine Irreplaceable Habitats (MIH)

Guidance will define MIH, the steps developers should take to avoid impacts to MIH that overlap with MPAs, and how to appropriately compensate for impacts to MIH if they cannot be avoided, reduced or mitigated.

Additionality

Current practice is that compensation in the marine environment for damage to MPAs should go beyond the measures already required for the management of protected sites. We will clarify that compensatory measures may include measures which accelerate progress towards achieving conservation objectives. We will provide further information on what measures can be considered “additional” and how these measures can be delivered, including clarity on terminology used and further information about normal site management measures.

Timing of compensation

Currently, environmental compensatory measures for damage to protected sites is generally expected to be in place before the adverse effect on a site is allowed to occur. However, it is also accepted that there are some circumstances where compensatory measures may be in place post-impact. We will clarify the existing position that the consenting authority may set a time limit on any time period between the impact and environmental compensatory measures being in place. We will set out further detail about what circumstances would be acceptable for post-impact compensatory measures, as well as clarity on terminology. This will include what is meant by measures being ‘secured’ and ‘in place’.

Adaptive management

Under current requirements, a plan for adaptive management needs to be agreed to ensure that environmental compensation can be appropriately amended if it proves to be ecologically ineffective or is not meeting its intended outcomes. This requirement applies to all relevant parties that provide a compensation plan as part of their Habitats Regulations Assessment documents, including developers and plan promoters. Adaptive management is already a condition of the Development Consent Order and other consents and we do not intend to change this. Stakeholders have asked for further clarity on how it works for any future offshore wind measures, including wider compensatory measures and measures delivered through the MRF. We will explain how it is proposed to work with the MRF.

Monitoring We will maintain the current requirement to monitor environmental compensation, which is a typical planning condition. In response to stakeholders’ request for clarity on monitoring regimes, we will make it explicit that post-consent monitoring must measure the performance of compensatory measures against success criteria. We will provide guidance, with examples, on what the environmental compensation success criteria could look like.

Small impacts

We will set out how small impacts on protected sites should be compensated for and advise that the simplest and quickest way to do so is by applying to the Marine Recovery Fund (MRF).

Live applications

There may be projects or plans that have already entered the application stage that are yet to finalise their compensation plans. We will explain how the reforms will be available to applicants and plan promoters who are already in the planning process.

Register of compensation

We plan to create a register that collates information on environmental compensation; the location, scale and intention of each measure. This could be published as a register which can be regularly updated. We are exploring options for delivering the register, including holding discussions with potential operators, estimating the cost of different solutions, and identifying information the register should contain. Defra’s ambition for the register is to bring together information from across the UK. The Scottish Government also consulted on an approach that would be supportive of collaboration on a UK-wide compensation register. The outputs of the register will be used to inform the review of the SI and to enable plan and project promoters to identify where and how compensatory measures are already being used.

Get in touch

If you have queries about this topic, get in touch at offshorewindreform@defra.gov.uk

Annex A: Proposed Compensation Hierarchy for relevant offshore wind plans and projects

This hierarchy is required by the Statutory Instrument the Conservation of Habitats and Species (Offshore Wind) (Amendment etc.) Regulations 2026.

The Secretary of State and Scottish Ministers must publish a compensation hierarchy that must be followed when selecting environmental compensatory measures for relevant offshore wind plans or projects. The Welsh Ministers may decide to publish a hierarchy in certain circumstances for specific matters.

This hierarchy applies to all relevant offshore wind plans or projects in English, Welsh and Northern Ireland offshore waters. It also applies to relevant offshore wind plans or projects in:

• English inshore waters
• plans or projects with a capacity above 350MW and where the Secretary of State has qualifying functions in Welsh inshore waters
• plans or projects where the Secretary of State has qualifying functions in Northern Ireland inshore waters

Where environmental compensatory measures are required for impacts to features of Special Areas of Conservation, Special Protection Areas and Ramsar sites, the following tiers must be followed in sequential order.

Guidance on how to apply this compensation hierarchy and certain terms used will be available when the SI comes into force.

Tier 1 – Measures that benefit the impacted feature

Measures must be prioritised that provide ecological benefits for the impacted feature.

There are 2 circumstances where it is permissible to move to Tier 2:

1. If there are no measures available at Tier 1 for the impacted feature.

2. Where there is an available Tier 1 measure but there is an appropriate  evidence-based justification, in the view of the consenting authority, having considered SNCB advice, that moving down the hierarchy to a measure or measures in Tier 2 will have a greater ecological benefit to the UK Marine Protected Area network than the available Tier 1 measure.

If there is a Tier 1 measure available, and there is not an appropriate evidence-based case that another measure or measures would have a greater ecological benefit to the UK Marine Protected Area network, progression to another tier is not permitted.

Tier 2 – Measures that benefit a similar feature

Measures that provide ecological benefits to a feature, or groups of features, which are ecologically similar to the impacted feature. Such measures are wider compensatory measures, and they must be approved by the relevant Minister for use in Tier 2.

There are 2 circumstances when it is appropriate to move to Tier 3:

1. If there are no measures available for a feature or features that are ecologically similar to the impacted feature.

2. Where there is an available Tier 2 measure, but there is an appropriate evidence-based justification, in the view of the consenting authority, having considered SNCB advice, that moving down the hierarchy to a measure or measures in Tier 3 will have a greater ecological benefit to the UK Marine Protected Area network than the available Tier 2 measure.

If there is a Tier 2 measure available and there is not an appropriate evidence-based case that another measure or measures would have a greater ecological benefit to the UK Marine Protected Area network, progression to the next tier is not permitted.

Tier 3 – Measures that benefit the wider UK Marine Protected Area network

Measures that provide ecological benefits to the UK Marine Protected Area network more widely. Such measures are wider compensatory measures, and they can only be used if they have been approved by the relevant Minister for use in Tier 3 and when:

1. Measures are not available in Tier 2.

2. There is an appropriate evidence-based justification, in the view of the consenting authority, having considered SNCB advice, that a Tier 3 measure will have a greater ecological benefit to the UK Marine Protected Area network than available measures in Tier 2.