There is a realistic chance that one of the UK’s largest oil refineries can be converted into a hub for green chemicals, sustainable fuels and plastics, Scotland’s first minister says.
Grangemouth oil refinery, which is being shut down by its UK and Chinese owners PetroIneos this year with the loss of 400 jobs, could become a world leader in low carbon chemicals and green fuels, John Swinney told media on Wednesday.
The refinery’s closure, after 100 years of production, is expected to hit up to 2,000 jobs in the east of Scotland. Trade union leaders and policymakers see Grangemouth as a casestudy in ensuring the transition from oil and gas is fair and just.
Swinney said workers and local businesses faced “enormous difficulties”.
“What we have to make sure is that we manage the transition from the dependence on fossil fuels to an approach that delivers net zero,” he said. “I think it can be done at scale [and] I’m confident we can deliver those new prospects for these communities.”
He was speaking after the UK and Scottish governments published a report from the consultancy EY that said up to 1,200 jobs could be created by attracting low-carbon businesses to Grangemouth. However, that would be too late for workers being laid off this year.
EY identified nine industries including plastics recycling; biorefining of chemicals from organic waste; bioethanol and sustainable aviation fuel production; biomethane production from organic waste; and low-carbon hydrogen from renewable sources and ammonia.
Those industries would require substantial investment, the report said. About £3.5bn would be needed to create about 800 jobs over the next decade. As much as £7.5bn could be spent if those businesses expanded, to create 1,200 jobs by 2040.
Earlier in March Keir Starmer, the prime minister, announced £200m in UK government funding to help support five green businesses at Grangemouth; the Scottish government has put up £25m for a just transition fund.
Michael Shanks, the UK government’s energy minister, chaired a local taskforce meeting with Gillian Martin, the Scottish government’s net zero secretary, on Wednesday morning. “We are committed to leaving no stone unturned in supporting an industrial future for Grangemouth delivering jobs and economic growth,” he said.
Energy analysts and environment campaigners are sceptical about some of these technologies, in particular mass production of hydrogen and sustainable aviation fuel, because they believe the costs and energy involved greatly outweigh the gains.
But Mark Simmers, chief executive of Celtic Renewables, a Grangemouth-based firm where Swinney launched the report, which is already making green chemicals, said he believed the plans were realistic.
His firm, which makes acetone, butanol and ethanol by fermenting whisky byproducts, waste potatoes and molasses, hopes to build a plant eight to 10 times larger than its current factory at the refinery site. Its products help make nail varnish, paints, medicines and household cleaning products, replacing crude oil-based chemicals.
“We’ve got this great facility with a range of utilities, land and a lot of resources from a feed stocks perspective, but also from a people perspective,” Simmers said. “So repurposing that for a low carbon manufacturing complex, I think is a great and a realisable plan.”
The investment agency Scottish Enterprise would oversee possible investments, Swinney said. “This is going to take time. It’s going to take investment, and it’s going to take commitment, but the Scottish government is here for the long haul,” he said.
