A feasibility study into the future of the Grangemouth refinery, published today, proposes a range of projects from recycling plastic to the production of sustainable aviation fuel but will take years to develop and require billions from private investors.

It recommends re-industrialisation of the site, known as Project Willow, after the loss-making oil refinery closes in the coming months.

EY has been working with the UK and Scottish governments and the £1.5m report outlines nine industrial opportunities over the next 20 years to create a low-carbon hub. The cost of developing all nine is said to require investment of between £7bn and £13bn.

The nearer-term projects will focus on recycling plastics and the production of biomethane from sewage and animal waste from 2028, and on turning paper waste into feedstocks for low-carbon chemicals from 2030.

From 2032, proposals include an £800m sustainable aviation fuel (SAF) and renewable diesel refinery and a £340m plan to process timber into advanced bioethanol. The longer-term proposals require regulatory overhaul as well as higher levels of capital spending.

Petroineos, a joint venture between Ineos and PetroChina, is shutting the refinery amid global market pressures and intensifying competition from elsewhere in the world.

The shutdown will result in 400 job losses, and the UK government has made a pledge to enhance payments to those displaced.

Prime Minister Sir Keir Starmer announced during the Scottish Labour party conference in February that £200m would be released via the National Wealth Fund to leverage private investment of up to £600m. The Scottish government has contributed £25m.

Today, First Minister John Swinney said: “Grangemouth is home to over a century of industrial expertise and employs thousands of highly skilled workers, placing the site at a massive competitive advantage and creating a unique opportunity for investors.

“This report sets out a wide range of viable alternatives for the refinery site, demonstrating that a long term, new industrial future at Grangemouth is achievable.

“We will continue to work closely with the UK Government to realise these opportunities and Scottish Enterprise stands ready to support inward investors looking to progress any of these technologies.”

UK Energy Minister Michael Shanks said:   “We will build on Grangemouth’s expertise and industrial heritage to attract investors, secure a long-term clean energy future, and deliver on our Plan for Change.” 

To kickstart the process, Mr Shanks and Scotland’s Acting Cabinet Secretary for Net Zero and Energy Gillian Martin this morning co-chaired a meeting of the Grangemouth Future Industry Board with local industry leaders, Falkirk Council, trade bodies and unions.

Scottish Enterprise and the UK Government’s Office for Investment will work with Petroineos to market the proposals set out in Project Willow and seek investor interest. 

Stephen Boyd, director of the Institute for Public Policy Research, the think tank, said governments and agencies must turn potential developments into tangible opportunities.

He added: “It remains to be seen whether the support promised by both governments will be sufficient to leverage the scale of private investment required.” 

Carbon capture ‘deadline’

The SNP has said it is “time to deliver” as UK Net Zero and Energy Security Secretary Ed Miliband confirmed a decision would be made at the June Spending Review on the much delayed Scottish Carbon Capture Acorn project. 

In response to a question from SNP MP Seamus Logan, whose constituency is home to the Acorn project, Mr Miliband said “the right place to make decisions for this…will be at the Spending Review in June.” 

Last week business leaders wrote to Chancellor Rachel Reeves warning the Acorn project in Aberdeenshire must be treated as an “immediate priority” stating that “there is no route for Scottish industry to decarbonise, threatening jobs and investment”. Signatories included the CBI, Prosper, the Institute of Directors, Scottish Financial Enterprise, Scottish Chambers of Commerce and industrialist Sir Ian Wood. 

Mr Logan said: “Ed Miliband stood up and said this is a matter for the Spending Review in June, but now is the time to deliver – if Scottish Carbon Capture is coming down the line then it should be confirmed at the Spring Statement next week, not delayed till June.”