Accelerated action and intensive work is needed to avoid a “disorderly and unjust transition” when Scotland’s only oil refinery closes, a report has warned.
With the Grangemouth refinery expected to close in 2025, 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.
With the move potentially impacting hundreds of jobs at the site, it was high on the agenda when Prime Minister Sir Keir Starmer met First Minister John Swinney in Edinburgh shortly after his election victory.
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 that “provided efforts in this area are adequately resourced and approached as an urgent priority of national importance from now on”, the two governments “can each still play a positive role in reshaping Grangemouth’s economy”.
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”.
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.
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, stressing in developing this there should be “dialogue with workers and meaningful participation of the community and other stakeholders”.
This plan “must be the first in a series of rapidly developed just transition plans for Scotland’s highest emitting sites”, the report adds.
It says the plan “will require a considerably more intensive sequence of meetings, including in-person, to support constructive dialogue, shared understanding and tangible new commitments”.
The report goes on: “The value of the plan will depend on the level of assurance and security it provides to workers whose livelihoods are on the line, as well as to the local community in Grangemouth.
“Grangemouth needs a new economic model that goes well beyond the refinery to leverage enduring community benefit.”
It added that 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.
Describing the refinery as an “important industrial facility and source of livelihoods”, the JTC also stressed the “just transition plan for Grangemouth must earn the trust of the workforce and the local community”.
There is a great opportunity for Grangemouth and the skilled workforce here to be at the vanguard of low-carbon fuels manufacturing
Iain Hardie, Petroineos
Here, it added: “The strategy needs to be very clear in terms of the timescales associated with each action, so that the plan can provide specific reassurance for the short, medium and long term.
“To make the vision credible, the plan must set out how progress will be monitored and evaluated against specific metrics and indicators.”
Iain Hardie, regional head of legal and external affairs at 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.”
A Scottish Government spokesperson said it will “leave no stone unturned” in securing a sustainable future for Grangemouth, and welcomed the Just Transition Commission report.
The spokesperson added: “Acting energy secretary Gillian Martin has had early constructive discussions with UK Secretary of State Ed Miliband about this over the past fortnight and we welcome that Mr Miliband has agreed to her invitation to co-chair the Grangemouth Future Industry Board Leadership Forum to take this vital work forward as well as their commitment to working with us to secure our collective ambitions for the Just Transition of the industrial cluster.
“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.”
Speaking after discussions between the UK and Scottish governments and representatives from Petroineos, Scottish Secretary Ian Murray said: “We are determined to ensure the long-term future of the Grangemouth site as part of our journey to clean energy by 2030.
“The future of Grangemouth was the first official briefing I took in office, and the Prime Minister made clear it was a priority for this Government when visiting Scotland on his first official engagement last weekend.
“That is why I am delighted we are already making significant progress on discussions around potential funding to look at a sustainable long-term solution to the Grangemouth site.
“This demonstrates what can be achieved when we reset the relationship with the Scottish Government by working in partnership to boost economic growth and make life better for everyone.”
UK Energy Secretary Ed Miliband said: “The UK Government will leave no stone unturned in seeking a future for the Grangemouth site and its workers.
“We are committed to boosting growth through an industrial strategy, and to engaging with the workers and communities of Grangemouth and the Scottish Government.
“That’s why we will be immediately funding work to explore options for a sustainable future for the site in partnership with the Scottish Government. I will also be co-chairing the Grangemouth Future Industry Board Leadership Forum to take this vital work forward.”
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