Grangemouth Future Industry Board Industrial Just Transition Forum minutes: January 2024

Attendees and apologies

• Neil Gray MSP, Scottsh Government
• Gillian Martin MSP, Scottsh Government             
• Graham Stuart MP, UK Government
• John Lamont MP, UK Government
• Councillor Cecil Meiklejohn, Falkirk Council
• Malcolm Bennie, Falkirk Council
• Adrian Gillespie, Scottish Enterprise
• Kenny MacInnes, Forth Valley College
• Iain Hardie, Petroineos
• Andrew Gardner, INEOS
• Stuart Collings, INEOS O&P
• Cliff Bowen, Unite the Union

Items and actions

Item 1 - Introductions

The Cabinet Secretary (NG) thanked attendees and proposed that the refinery is focus of this meeting. The Cabinet Secretary offered opening remarks and then welcomed the attendance of Petroineos. 

Item 2 - Update from Petroineos

Iain Hardie (IH) thanked the Cabinet Secretary for this opportunity and noted that Petroineos welcomed the chance to engage with attendees.

IH gave an overview of the current position of the refinery, emphasising that announcement did not convey closure. He noted the importance Petroineos places on positive relationship and engagement with their staff.

Petroineos have begun engagement with Scottish Government on articulating the economic impact of any future decision.

Petroineos stated that they do not view refinery as viable in the medium term and the transition is a prudent way to continue to meet Scotland’s fuel demands. Since the Joint Venture in 2011, the business has had significant losses; despite uptick in recent years business cannot compete in the long term.

Petroineos noted that the energy transition is a real issue and must be engaged with tangibly and taken seriously. IH noted that there are significant opportunities in transition and welcomed the support from both Scottish and UK Governments. The businesses are committed to playing their part and look forward to working with GFIB to develop these opportunities.

NG thanked Mr Hardie for his presentation and welcomed input.

Cecil Meiklejohn (CM) agreed that there are great opportunities in area following the Growth Deals and Green Freeport announcements, and supporting these is critical to Just Transition. CM stated that Falkirk Council are committed to playing their part and welcome further discussions.

Adrian Gillespie (AG) highlighted that Scottish Enterprise are working with major companies in the cluster. AG noted that there are clear opportunities and emphasised the need for collaboration.

IH welcomed Government support and suggested working further with Scottish Government to facilitate this. IH welcomed any further engagement with SG Ministers on this matter.

The Cabinet Secretary invited UKG to comment on possibility of investment to enable the refinery to continue operating.

Minister Stuart (GS) expressed that he had nothing to add, noting that it is clear that Petroineos are working on this and UKG stand by ready to hear their conclusions.

IH noted that based on feedback previously received from UKG, Petroineos had not made a request of UKG to invest. At this stage, the business had been required to set out their position based on clear position presented by UKG previously on this matter that they would not provide financial support.

(GS) confirmed that no request has been made however they would consider proposals that are brought forward.

NG reaffirmed the Scottish Government’s commitment to working closely with the business and that he is keen to hear information on the commercial basis for any decisions made on future of the refinery so consideration could be given for support. IH thanked the Cabinet Secretary for his input on this matter.

Cliff Bowen (CB) welcomed Unite’s invitation to join GFIB. Unite is interested in pursuing all opportunities for keeping industry in the area. CB noted that Unite have a skills base and current workforce and this will be the case when transitioning to biorefining.

Item 3 – Economic Impact Assessment

NG urged attendees to participate in the development of a full Economic Impact Assessment and expressed a need to be transparent across GFIB. Agreement was sought to progress and officials to take forward.

The Minister for Energy and the Environment, Gillian Martin (GM) took over the chair.

Item 4 – Open Discussion

GM expressed hope that stakeholders can all work together to realise potential at Grangemouth; Biorefinery is one example where we might turn transition to our advantage, becoming world leaders in biofuels/Sustainable Aviation Fuel (SAF). GM asked attendees what might be required in order to make this viable.

IH noted ambition for biofuels development at Grangemouth by Petroineos but explained that fiscal and policy obstacles remain. The UKG cap on Hydrotreated Esters and Fatty Acids (HEFA) for SAF production will need to be addressed and the current cap puts us at disadvantage in comparison to Europe. This will force industry to use other feedstocks and production techniques and will hinder progress of delivering biofuels at pace.

IH expressed that the current mandate for SAF is unclear and that this disadvantages the business from progressing investment. Further engagement with Government could help the business overcome these limitations with a view to encouraging inward investment into clusters such as Grangemouth.

GM asked UK Ministers for their views and asked PetroIneos for their current assessment.

IH noted the current position is commercially suboptimal with the current cap in place. Next generation technologies and projects at lower TRL levels are important however this sole focus would result missing a large opportunity to produce SAF in the near term.

(GS) reaffirmed the UK’s ambition to be a leading producer of SAF. GS committed to passing on IH’s concerns to Department for Transport officials and thanked IH for his input on this matter. GM asked officials to progress these issues.

Petroineos noted that the feasibility study, co-funded with Scottish Government, is looking to assess whether HEFA-based biorefinery has potential to transition into second-generation feedstock supply. They noted that addressing the HEFA cap will be transformational and that UKG intervention could deliver tangible help to deliver this. GM restated the Scottish Government’s ambition for everyone to assess how we can protect the economy of Grangemouth and asked for any input on this idea.

Andrew Gardiner (AG) stated that Grangemouth is the start of what a transformation will look like and that there is opportunity to use this as showcase for Just Transition. He noted the seriousness that they take the responsibility for fuel supply and want to engage with SG on just transition opportunities for our employees. GM stated that there is clearly a need to look at investment models, and potentially look to industry for private equity investment to help push infrastructure projects forward.

CB stressed the need to have tangible items delivered and the importance of actualising benefits for the Grangemouth community. CB asked both Governments what they see as next steps for Board and investment in cluster and noted that workers do not want GFIB to be a talking shop.

GM agreed with this assessment and reiterated policy and fiscal barriers. The Minister asked that the business outline these barriers in writing to SG and UKG Ministers.

GS noted that it unlikely that National policy will be reshaped unless it is applicable to all parts of UK and cautioned that attendees should be aware that changing national policy will be difficult.

IH clarified that at Petroineos the focus is on developing lower carbon fuels. The commercial hurdles are clear and the potential impact of not addressing these issues will be continued loss of domestic manufacturing coupled with increased reliance on imports.

AG noted that Scottish Enterprise are working through options appraisal for biorefinery; and engagement around policy options would help to inform this.

GM offered closing remarks to summarise the discussion and thanked all for their attendance.