Securing future of Grangemouth oil refinery ‘will test Scottish and UK relations’

Securing the future of Grangemouth oil refinery will be a litmus test of how the Scottish and UK governments reset their relationship after Labour’s election win, and their first challenge in achieving climate goals fairly, according to the expert body tasked with assessing the economic impact of energy transition on local communities.

The Just Transition Commission , set up by the Scottish government, has published its report a week after Keir Starmer described Grangemouth as a “real priority” on his first visit to Scotland since he was elected as prime minister.

Grangemouth’s owner, Petroineos, announced last November that it intends to cease refinery operations as soon as 2025 , raising concerns about the job security of the more than 500 people directly employed at the site near Falkirk and the impact of closing one of the UK’s six remaining large oil refineries on fuel supplies.

Satwat Rehman, a co-chair of the commission, said there was some optimism at the recent reassurances of a “one-team approach”, with the UK government’s energy secretary, Ed Miliband, and the Scottish government’s acting energy secretary, Gillian Martin, co-chairing a working group exploring options for the site.

“We’re now seeing a far less hostile relationship between governments, but we want to see a timeline for bold action from both administrations and that can only be done alongside unions and the local community, who up till now feel they have had very little beyond words,” Rehman said.

Describing this as “an early litmus test”, the report urges both governments to undertake “an accelerated schedule of intensive work”, warning that a lack of effective planning to date means “the current path will deliver a disorderly and unjust transition”.

The current plan is to replace the refinery with a fuel import terminal, which would substantially cut jobs. Other options include replacing it with a facility creating plant-based biofuels.

The commission, which conducted extensive interviews with the local community, described how the 99-year-old refinery had driven huge wealth creation and local inequality, with the community now “in urgent need of greater investment”.

One of the key messages of the report is that any transition plan must focus on earning the trust of the workforce and local community.

Rehman said: “This is hugely symbolic for both the UK and Scottish governments. People are looking to see if they have learned the lessons from previous failed industrial transitions, like coal and steel, and can get it right this time.”

The commission on Thursday wrote to the chancellor, Rachel Reeves, the Scottish secretary, Ian Murray, and Miliband welcoming “a positive strategic reset” in the relationship between Holyrood and Westminster and urging both governments to support not only those currently at risk of losing their jobs but also younger generations who need skills and training.

The report says any public money used to support a green transition must come with conditions attached to ensure there are economic benefits to the surrounding community. “Grangemouth needs a new economic model that goes well beyond the refinery, leveraged to deliver enduring community benefit,” it says.

Rehman said: “Ineos appears to have made its decision without proper consideration or consultation, so there is a need to retrofit a just transition at the same time as recognising this is not just about the site itself but looking at the local community in its entirety.”