The Offshore Hydrogen Regulatory Framework - Another piece in the Hydrogen Regulatory Jigsaw

The Department for Energy Security and Net Zero (DESNZ) has now launched its consultation on its proposals for legislative changes to facilitate offshore hydrogen production, storage and connectivity to the mainland.

In the consultation these innovative projects are referred to as FOAK (first of a kind) offshore projects, being hydrogen projects where hydrogen is produced offshore, utilising offshore wind generation, and stored offshore before being piped to the mainland.

The focus on this policy area by DESNZ will be welcomed by the industry and represents another positive step in piecing together the regulatory elements of the Hydrogen ecosystem. 

Scope of the consultation

The consultation rightly recognises that a global review of the relevant existing regulatory framework and development of a specific suite of regulations is needed to deliver the future offshore hydrogen economy in the UK. 

However, this consultation has a specific focus on safety standards, environmental impact assessments, and licensing requirements connected to the construction, operation and ultimately decommissions of offshore hydrogen production projects.  These are distilled into two key areas:

• Granting approval to construct and operate offshore pipelines; and
• Licensing of offshore hydrogen storage. 

The expectation is that there will be a further pipeline of consultations on related issues, whereby DESNZ bounces off proposal for regulatory changes and market framework with the energy market and key stakeholders, including in respect of:

• Funding structures
• Offshore hydrogen production
• On short hydrogen production
• Health and Safety regulation

Key Principles

The underlying philosophy of the consultation is that existing authorisation processes and approvals body, the North Sea Transition Authority (NSTA) for offshore oil and gas pipelines, can (and should be) used for the purposes of regulating hydrogen projects.

The logic for this approach is based on the fact that the NSTA already has well established processes and the technical expertise to regulate offshore oil and gas activities.  The inclusion of hydrogen within this processes is therefore considered an extension and evolution of the NSTA’s existing role.

In summary the proposals DESNZ is seeking feedback on are:

• To expand the Pipeline Works Authorisation process and role of NSTA to include authorisations for offshore hydrogen projects;
• For the Offshore Petroleum Regulator for Environment and Decommissioning (OPRED) to operate a functioning pipeline decommission regime;
• To extend the NSTA existing offshore gas storage licensing provision to include hydrogen storage; and
• To designate hydrogen as a gas under the 2020 Offshore EIA Regulations bring hydrogen within the scope of these regulations and ensuring that the NSTA cannot grant any Petroleum Act or Energy Licence consents without the agreement of the Secretary of State.

Responses to the consultation are to be provided by 22 May 2023 and DESNZ is anticipating engagement from the whole spectrum of stakeholders interested in the accelerated growth of the Hydrogen economy.

Bevan Brittan – Supporting the Green Hydrogen Market

Our dedicated Energy Team at Bevan Brittan are leading legal commercial advisers with over 30 years’ experience of the UK Energy sector and are able to support and advise our clients on all aspects of the delivery of Green Hydrogen.  We welcome the opportunity to work through any queries that might arise from the Offshore Hydrogen consultation and working with all stakeholders in the market to support the onshore and offshore Green Hydrogen economy across the UK. Contact Rupert Lugg.