Grangemouth: Green future for oil refinery needs £3.5bn, report finds
Delivering a green future for the Grangemouth oil refinery will require around £3.5bn in private investment, a report has found.
The long-awaited Project Willow study, which itself cost £1.5m, sets out nine options for the future of the industrial cluster in central Scotland.
Hundreds of jobs are set to be lost this year when the oil refinery there closes – and the report has identified nine “feasible” proposals which could attract private investment.
These include plastic recycling, fermenting timber into bioethanol, and hydrogen production, and the Scottish and UK governments say these schemes could create 800 jobs by 2040.
This month, the Just Transition Commission warned it could take years to close the “jobs gap” left by the refinery’s closure.
A summary of the report says the nine projects “have the potential to significantly enhance low-carbon manufacturing across the UK and create a positive future for Grangemouth”.
It adds: “However, the report also underscores the challenges of this transformation as low-carbon fuels and chemicals remain more expensive to produce than fossil alternatives.
“This will require substantial capital investment from the private sector [£3.5bn capital expenditure] and development of new supply chains.”
‘No stone unturned’
Commenting on the report, UK energy minister Michael Shanks said: “We committed to leaving no stone unturned in supporting an industrial future for Grangemouth delivering jobs and economic growth.
“This report and the £200m investment by the UK government demonstrates that commitment.”
And Scotland’s First Minister John Swinney, cited the Scottish government’s own £87m investment commitment, and said: “Grangemouth is home to over a century of industrial expertise and employs thousands of highly skilled workers, placing the site at a massive competitive advantage and creating a unique opportunity for investors.
“Everyone working at Grangemouth’s refinery – and in the wider industrial cluster – is a valued employee with skills that are key to Scotland’s economic and net zero future.”
One of the nine options is to use low-carbon hydrogen to produce methanol, which would be converted into sustainable aviation fuel (SAF).
Union leaders have suggested this as a way forward which could save jobs, with Unite saying the plant could be converted “relatively easily” over a few years to produce SAF, which the report said could commence in 2035, needing up to 270 staff and some £2.1bn.
A spokesman for the refinery’s owners Petroineos said: “The publication of the first Project Willow report is a milestone event for Grangemouth that could mark the beginning of a transformation for the whole cluster and, in time, create many more jobs and growth opportunities across a variety of related industries in Scotland.
“We look forward to continuing to support both UK and Scottish Governments as they implement the recommended policy, regulatory and fiscal changes required to unlock the opportunities identified in our report.”