Accelerated action and intensive work is needed to avoid a “disorderly and unjust transition” when Scotland’s only oil refinery “likely” closes, a report has warned.
With the Grangemouth refinery expected to shut in 2025, potentially impacting hundreds of jobs, the Just Transition Commission (JTC) warned of a “lack of effective just transition planning to date”.
Bosses at Petroineos previously announced plans to close the oil refinery and switch the complex to become an import station for finished fuels.
The Scottish and UK governments are already funding work, dubbed Project Willow, exploring how the site can continue to play a role amid the switch away from fossil fuels.
The JTC report said the two governments will be able to play a “positive role” in reshaping Grangemouth’s economy, but only if efforts are “adequately resourced and approached as an urgent priority of national importance from now on”.
It described a just transition plan for the site as being a “major opportunity to reset relations between industry, workers, community and the public sector so that the energy transition can bring major gains for Grangemouth”.
But the Just Transition for Grangemouth report added that achieving this “will require an accelerated schedule of intensive work via regular in-person meetings”.
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As it stands, it warned: “The likely closure of the refinery in 2025 and lack of effective just transition planning to date means the current path will deliver a disorderly and unjust transition.”
The refinery at Grangemouth is one of only six in the UK, with the Scottish site accounting for about 14% of the overall refining capacity.
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It supplies almost two-thirds (65%) of demand for refined oil products in Scotland – although it has the capacity to meet 100% of demand, but wider economic conditions mean it traditionally exports about 40% of the fuel it produces.
However, the “inevitable phase-out of fossil fuels” requires a new future for the site and its workers, with the report stating this should “involve workers and communities so that closure and greening is shaped in a socially positive way”.
The JTC said it expects to see a draft plan agreed by the end of September.
The report said all public money and subsidies given to support the transition must come with conditions – such as those ensuring fair work, community benefit, or profit-sharing mechanisms.
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Iain Hardie, from Petroineos, said: “There is a great opportunity for Grangemouth and the skilled workforce here to be at the vanguard of low-carbon fuels manufacturing, but there are a number of hurdles to overcome and questions to answer before we can map a clear route to that becoming a reality.
“As the JTC report points out, meaningful engagement between industry and government is vital.
“Delivering change will require all stakeholders to work collaboratively to develop complex commercial ecosystems which do not yet exist or are not currently economically viable without legislative or regulatory support.
“As such, we welcome the new Project Willow partnership with our colleagues in the UK and Scottish governments and hope it will enhance our collective understanding of the potential for Grangemouth to play a significant role in developing the low-carbon fuels of the future.”
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The Scottish government said it would leave “no stone unturned” in securing a sustainable future for Grangemouth.
Acting energy secretary Gillian Martin has been in discussion with UK Secretary of State Ed Miliband, who has agreed to her invitation to co-chair the Grangemouth Future Industry Board Leadership Forum.
A Scottish government spokesperson added: “We will shortly publish a draft Grangemouth Just Transition Plan, which will include a first-of-its-kind vision for the site, the long-term net zero operations we would hope to see take place by 2045 and how both the Grangemouth workforce and surrounding community can benefit from the transition.”
