Just Transition for the Grangemouth industrial cluster: discussion paper

Context – Where Are We Now?

Overview of Grangemouth

The Grangemouth industrial cluster is home to a concentration of strategic infrastructure assets and high-value employment. There are estimated to be over 2,000 full-time equivalent (FTE) jobs present in the immediate industrial cluster,^[4] with thousands more individuals employed in operators’ supply chains. However, the area [Grangemouth] – due to its productive and energy intensive manufacturing processes was responsible for around 6% of Scotland’s net greenhouse gas emissions in 2021.^[5] Given the critical role of Grangemouth to Scotland’s economic and climate imperatives, it is the ambition of the Scottish Government and public sector partners to see the site remain not only a key manufacturing base for the future, but also one that is significantly decarbonised, and that it realises its potential to support broader carbon reduction across Scotland. This has been highlighted by the UK’s Committee on Climate Change, recommending that a specific focus on the Grangemouth cluster is key to Scotland’s industrial decarbonisation and the accomplishment of Scotland’s targets.^[6]

As well as Scotland’s largest container port, ^[7] the cluster comprises several operating assets in the downstream oil, gas and petrochemicals sectors, manufacturing products and outputs that are of significant value to Scotland’s exports, and to resilient domestic energy supplies. These downstream assets and the wider petrochemical complex are the principal employers and industry in the Grangemouth and Falkirk area. The manufacture of petroleum and chemical products was the second largest industry for Scotland’s international exports in 2019, accounting for 11% of all exports outside of the rest of the United Kingdom, and an industry valued at £3.8 billion in 2019.^[8] Grangemouth is central to this. The cluster is also a key location for oil and gas infrastructure of national significance, home to the terminus of the North Sea Forties Pipeline system, Scotland’s sole refinery, and largest petrochemicals works.

The cluster now has the opportunity to build on the industrial heritage, knowledge, skills and experience already located there. For example, the production and handling of hydrogen requires a depth of chemicals expertise which can already be found at Grangemouth, and supporting activity which is also highly compatible with bio-based manufacturing opportunities. The downstream sector, including businesses responsible for processing oil and gas, utilising extensive resources to decarbonise processes and products, can help other sectors decarbonise, becoming a primary influencer in the future supply of lower carbon energy. Hydrogen is a major opportunity area: This gas is a critical component in attaining net zero (and in Scotland’s future energy system in particular) and, as the largest producer of hydrogen in the world, the downstream sector could maintain and grow its role in producing and delivering zero-carbon emitting hydrogen to consumers – across industry, and potentially to transport and domestic sectors.^[9]

This existing knowledge base also has the potential to attract new and innovative industries, via co-location, to become an anchor point for low-carbon supply chains – aligning with the National Strategy for Economic Transformation^[10] where developing strong regional economic strategies is highlighted as a key driver for increasing productivity.

Grangemouth is linked to a network of oil and gas pipelines and infrastructure to onshore and offshore assets in the North East. This access to existing and legacy infrastructure connecting the regions, alongside well characterised CO2 storage capacity in the North Sea, offers the potential for carbon evacuation from Grangemouth and its permanent and safe

storage. Grangemouth’s source emissions, infrastructure and carbon capture utilisation and storage (CCUS) potential makes the site a key component of the Scottish Cluster and the Acorn Project.^[11] And, in turn, CCUS is central to the future sustainability and competitiveness of the Grangemouth complex.

This infrastructural opportunity could also provide the backbone to deeply decarbonise wider Central Belt industry, offering the potential for competitive advantage in a carbon constrained world. The longstanding experience in oil and gas at the site provides a centre of much expertise and transferable skills to kick-start what could become a whole new industry for Scotland. However, realising this opportunity requires urgent action from the UK Government and clarity on its cluster sequencing process.

^[12]

27% of all Scotland’s industrial emissions (75% of emissions from Scotland’s UK ETS users are concentrated at Grangemouth)

6% of all Scotland’s total emissions

Existing Experience

• Utilising existing expertise in producing and handling of hydrogen with opportunities to become a hydrogen production hub of the future

Carbon Emissions

• Pooling collective carbon emissions to prop up early stage carbon capture projects

Scale

• Clustering to scale up and produce a compelling case for future UK Government decarbonisation/ industrial funding

Chemical Knowledge

• Harnessing the depth of chemicals knowledge that is highly compatible with biobased manufacturing

New Industries

• Attracting new and innovative industries that will be necessary for the transition to net zero

Academic Institutions

• Leverage nearby academic institutions and world-leading expertise