Grangemouth’s slow demise has begun with the closure of Britain’s last remaining synthetic ethanol plant at the site.

Sir Jim Ratcliffe, the billionaire owner of operator Ineos, blamed high energy prices and carbon taxes for shutting the facility. Eighty workers have been redeployed across the site.

The group said last March that it would stop ethanol production because of falling demand in Europe and increasing pressure from imports. 

The loss-making ethanol plant mainly supplied the healthcare and pharmaceutical sectors and its closure 40 years since opening will directly affect 500 other workers.

The closure of the oil refinery is scheduled for the first half of this year unless a rescue package can be put in place.

Sir Jim warned that Britain is now entirely dependent on imports of synthetic ethanol which is used in a variety of products such as drugs, paints, cosmetics and disinfectants. He said it was part of a policy of “de-industrialising” Britain in the name of environmentalism which is merely shifting producution and emissions elsewhere.

The oil refinery, a joint venture between Ineos and PetroChina, will see another domestic supply turned off when it is converted to an fuel-import terminal with the loss of 400 jobs.

“We are witnessing the extinction of one of our major industries as chemical manufacture has the life squeezed out of it,” said Sir Jim.

Stuart Collings, chief executive of Ineos Olefins and Polymers UK, added: “We’ve seen a shrinking market, lower prices, higher costs and we’ve reached the point where it [the ethanol plan] no longer makes sense.” 

Ten large chemical complexes in the UK have closed in the past five years, including sites in Billingham and Lynemouth in the northeast, and no new chemical plant has been built for a generation, the company said.

Chemical production in Britain, once dominated by the likes of ICI, has fallen sharply in recent years, down almost 40% since 2021. The Chemical Industries Association blamed increasingly uncompetitive energy costs, carbon policies and a sustained fall in global demand.

Steve Elliott, chief executive of the association, said: “The government needs to ask itself: does the UK want to make or break a key manufacturer?”

The UK government said it is developing an industrial strategy that works for Scotland and the whole of the UK, but it “comes after over a decade where Scotland’s industries had no joined-up plan for growth.”

A task force, Project Willow, was set up after Petroineos and involving representatives of the two governments, trade unions and other local stakeholders, is considering potential rescue plans or alternative uses for the site, including conversion to producing sustainable aviation fuel.