The Scottish government’s commitment to invest £25 million in the Grangemouth oil refinery has received a positive response from industry experts, but many believe it’s just a small step compared to the significant funds needed to secure a sustainable future for the facility.
Sources involved in the project have expressed concerns regarding the dedication of both UK and Scottish officials when it comes to the necessary investment and regulatory changes required to transform Grangemouth into a renewable energy hub.
“It’s definitely a positive sign; while £25 million is a modest amount compared to what is truly needed, it allows for some progress as we move to the next phase,” one insider noted.
Petroineos, a joint venture of Ineos and PetroChina, plans to shut down Grangemouth around April or May, which could result in the loss of over 400 jobs and negatively impact related industries and supply chains.
Scotland’s First Minister, John Swinney, urged the UK government to at least match Scotland’s funding and to use its powers to go beyond that. “If this is a government for the UK, then Scotland should receive its fair portion of investments from across the UK,” he explained.
Swinney made this new funding announcement during a statement to the Scottish Parliament. He noted that Petroineos’s decision to issue redundancy notices to hundreds of workers earlier this month created a pressing situation that demands urgent action.
The new funding, raised through leasing the Scottish seabed for offshore wind projects, aims to accelerate any potential solutions from the forthcoming Project Willow report, expected to be published soon.
“We need the UK government to follow through on its promises made before the election,” Swinney added, referring to Labour’s pledges during last year’s general election campaign to protect jobs in Grangemouth.
Ian Murray, the Secretary of State for Scotland, who welcomed the funding allocation, assured that the UK government would outline its next steps in due course. He stated that Project Willow, which has been jointly financed by the UK and Scottish governments with Petroineos, received approval only after Labour’s electoral victory.
As discussions about the future of Grangemouth heat up, there are growing tensions regarding the UK’s efforts to ensure a just transition for employees in traditional energy sectors, given the significant political and economic implications of shifting from fossil fuels to sustainable energy.
With the next Scottish parliamentary elections slated for May 2026, Labour’s support in Scotland has waned since their disappointing performance at Westminster. The Scottish National Party government has expressed frustration at the UK funding projects in England while ignoring Scotland, particularly after Swinney highlighted the need for funding for the Acorn carbon capture and storage project, which includes Grangemouth.
Project Willow has identified nine potential technologies for producing green fuels at Grangemouth, utilizing bio feedstocks like trees, non-food crops, waste materials, and green hydrogen.
“There seems to be an unrealistic expectation for quick solutions,” remarked one industry insider. Both the UK and Scottish governments maintain that they are not obstructing the progress of Project Willow.
The Unite union has called for a halt to the planned closure and advocates for the refinery to pivot towards producing sustainable aviation fuel (SAF) for the aviation sector. One suggested approach involves gradually updating the existing refinery to process both fossil and renewable feedstocks, with an initial investment estimated between £30 million to £50 million and production slated to commence within one to three years.
Transforming the current refinery or building a new one could cost between £130 million and £240 million, with an associated facility for processing feedstocks potentially bringing overall expenses to around £1 billion.
Sharon Graham, General Secretary of Unite, urged the UK government to act as “an investor of first resort” or to facilitate other investors if Petroineos shows disinterest.