The UK government has committed £200mn ($253mn) for investment in clean energy for the site where UK-Chinese firm Petroineos' 150,000 b/d Grangemouth refinery, due to be permanently shut this year, is located.
The government said on 23 February that it will work alongside private sector partners to develop new industries and leverage additional funding through the £200mn in public investment allocated from the UK's National Wealth Fund (NWF). The NWF was set up last year by the government to support investment in clean energy industries and mobilise private sector involvement across the UK.
"The funding will be available for co-investment with the private sector to help unlock Grangemouth's full potential and secure our clean energy future," UK prime minister Keir Starmer said.
Petroineos is planning to close the Grangemouth refinery in Scotland, this year and turn it into an import terminal because of high costs and declining fuel demand in Europe. Refineries in Europe have long faced competitiveness issues from larger and newer refineries in other regions including the Mideast Gulf, Asia-Pacific and Africa. Around 30 refineries have closed in Europe since 2000, while 2.5mn b/d of crude distillation capacity was added outside the region in the past three years alone.
Only around 65 workers will be retained by Petroineos to run the terminal once the Grangemouth refinery closes. The government committed to provide a training guarantee for the staff at the refinery to gain new skills at local colleges.
UK union Unite welcomed the announcement, saying that the "significant investment should be the start of a real industrial plan for Grangemouth that both safeguards Scotland's energy security and delivers the jobs of the future." But the union warned that clear timescales for the development of Grangemouth and details on jobs were needed.
Unite is supporting the conversion of the refinery into a biorefinery for the production of sustainable aviation fuel (SAF). Petroineos said last year that it did not deem the refinery conversion viable, after having considered it. The firm did not immediately reply to a request for comment following the release of the new government funding.
The UK government announcement comes after Scotland's first minister John Swinney committed to allocate £25mn from the proceeds of the Scottish offshore wind leasing round ScotWind to establish a just transition fund for Grangemouth.
"The aim is to expedite any of the potential solutions that will be set out in the Project Willow report, as well as other proposals that will give Grangemouth a secure and sustainable future," he said last week. Project Willow is a feasibility study commissioned by the UK and Scottish governments to identify long-term industrial options for the site. The report is due to be released this spring.
