The Scottish government’s pledge to invest £25mn in Grangemouth has been welcomed by industry insiders, but is a “drop in the ocean” compared with the billions of pounds needed to secure a green future for the sprawling facility.
People close to the plans for the site said there had been concerns about UK and Scottish officials’ commitment to the investment and the regulatory change needed to turn Scotland’s largest oil refinery into a renewable energy hub.
“It’s definitely encouraging; £25mn is a drop in the ocean compared to the overall investment ask, but it allows progress to be made into the next phase,” said one of the people.
Petroineos, a joint venture between Sir Jim Ratcliffe’s Ineos and PetroChina, intends to close Grangemouth in April or May with the loss of more than 400 jobs and wider economic damage in related sectors and supply chains.
John Swinney, Scotland’s first minister, on Wednesday said: “Today, I urge the UK government to at least match our funding — and to use the powers they have to go further.
“If this is a government for the UK, then Scotland should be getting its fair share of UK-wide investments,” he added.
The first minister announced the new funding in a statement to the Scottish parliament on Tuesday.
He said the fact that operator Petroineos had sent out redundancy notices to hundreds of workers earlier this month had created a “different moment” that required “greater urgency”.
Swinney said the new Scottish funding, secured by drawing down funds generated by leasing the Scottish seabed for offshore wind projects, would “expedite any of the potential solutions that will be set out in the Project Willow report”, which is scheduled for publication in the coming weeks.
“In short, we need the UK government to do what it said it would do before the election,” Swinney said. During the general election campaign last year, Labour politicians pledged to save jobs at Grangemouth.
Ian Murray, secretary of state for Scotland, who welcomed the allocation, on Tuesday said the UK government would set out its “own next steps in due course”.
Project Willow, jointly funded by the UK and Scottish governments and marshalled by Petroineos, had “only got the green light after Labour won the election”, he said.
Mutual recriminations over the future of Grangemouth are building as the UK struggles to deliver a “just transition” for workers in legacy energy industries, given the daunting political and economic cost of moving from hydrocarbons to sustainable fuels.
With the next Scottish parliamentary election due to be held in May 2026, Labour’s support north of the border has plummeted since the party’s poor start in Westminster.
The Scottish National party government has been angered at UK funding for projects in England, such as sustainable aviation fuel (SAF) production and carbon capture and storage, which Swinney said “ignored Scotland”. He is pressing the UK to fund Scotland’s Acorn CCS project, which includes Grangemouth.
Project Willow has mapped out nine longer-term potential technologies to produce green fuels at Grangemouth, using bio feedstocks, including trees and non-food crops, as well as waste products and green hydrogen.
“There has been a naive perception that there would be quick fixes,” the person added.
Both the UK and Scottish governments have denied impeding Project Willow’s progress.
The Unite union has also called on the government to halt the planned closure and instead use the refinery to accelerate the supply of SAF for the aviation industry.
One option is a gradualist approach that would re-equip the existing refinery to process both fossil fuels and renewable feedstocks, at an initial cost of £30mn to £50mn, with production starting within one to three years, according to the union plan.
Converting the existing refinery, or building a new one, would cost £130mn to £240mn, it said, but building a related plant required to process feedstocks could bring overall capital expenditure to about £1bn.
Sharon Graham, Unite’s general secretary, called on the UK government to become an “investor of first resort”, or to bring in other investors if Petroineos showed no interest.
