Securing a future for Grangemouth: First Minister's statement - 18 February 2025

Presiding Officer, members will be aware that last September, Petroineos announced its intention to close the Grangemouth refinery between April and June of this year.

In that intervening period, there has been engagement between the United Kingdom Government and the Scottish Government with Petroineos to try to avert that closure. I want to put on record my appreciation to Gillian Martin and respective UK Ministers, Ed Miliband and Michael Shanks, for their leadership in this regard.

Despite efforts to date, on 5 February, Petroineos confirmed that it would cease refining operations, and began notifying the workforce of redundancies.

Any redundancy, whether voluntary or compulsory, is a matter of deep regret.

That is particularly so given that this government believes that refining at Grangemouth should continue, that this closure is premature, and that it is detrimental to Scotland’s transition to net zero.

Petroineos have confirmed that 65 workers will be retained by the company at the import terminal, but, that clearly does not make up for the hundreds who are losing their jobs.

This government’s immediate focus, rightly, is on providing those who are losing their jobs with targeted skills support.

Our PACE support - which offers assistance to individuals who are at risk of losing their jobs – has been activated. Furthermore, an initial careers fair that will enable those affected to be connected with other companies who have employment opportunities available will be held on 6 March. As of today’s date, up to 19 companies have indicated their participation in this careers fair.

We have worked with Forth Valley College to set up an online platform to assess workers’ training needs and the information gathered is currently being analysed to determine what upskilling and training we can put in place.

Drop-in sessions will also offer training on some of the steps involved in preparing for re-employment.

Workers’ engagement with this process has been high, but we know there is likely to be a small number of people who are proving harder to reach. Government officials and college staff will therefore liaise with UNITE the Union to find ways of identifying those individuals and helping to meet their training needs.

That is because to this government, every person, every family and every business impacted by the closing of the Grangemouth refinery, matters.

Everyone working at Grangemouth’s refinery is a valued employee with skills that are key to Scotland’s net zero future. We want them to stay in Scotland and continue to make their lives here. We will do all we can to ensure they have a future in the Scottish economy as we make the transition to net zero.

That is why we are also working to secure Grangemouth’s role in that future and create an investible, industrial strategy for the site.

Our draft budget for 2025-26 allocates £7.8 million for support at Grangemouth - including £2.8 million in the forthcoming financial year of a total funding commitment of £5 million over 3 years, to support INEOS’ Fuel switching project. 

We have worked closely with the business and Scottish Enterprise to develop this project, recognising the criticality of transitioning to cleaner fuels such as hydrogen.

Supporting the business as it transitions is critical to ensuring that INEOS O&P continues to play a crucial role in Scotland’s economy. 

It gives certainty to the workforce and to the business that this Government is committed to working with them to secure a long term and sustainable future.

However, I am determined to go further to help secure a just transition for Grangemouth.

I can therefore announce today that this week, the Government will lodge a Stage 3 amendment to the Budget Bill to allocate an additional £25 million to establish a Grangemouth Just Transition Fund.

That funding, derived from the proceeds of the ScotWind process, will be available immediately in the new financial year to support businesses and stakeholders to bring forward investible propositions over the next 12 months, and if necessary, beyond.

The aim is to expedite any of the potential solutions that will be set out in the Project Willow report, as well as other proposals that will give Grangemouth a secure and sustainable future.

Through the Grangemouth Future Industries Board, we will work with the local authority, businesses and the unions to explore and accelerate projects and proposals that support this ambition.

Through Project Willow, we will have the foundations of a strong evidence base for future investment in technologies such as plastics recycling, hydrogen production and the development of sustainable aviation fuel.

We will also consider proposals made by UNITE and its members, and continue to pursue other options, including any as yet unknown potential investments.

Presiding Officer, when I said my government would leave no stone unturned to find the right solutions to secure the future of Grangemouth, I meant it.

That includes extensive and meaningful collaboration with the UK Government.

Just yesterday, I met with the Energy Secretary, Ed Miliband where we both agreed that the collaboration between our two governments has been constructive. We also agreed for that to continue.

I have also had several discussions with the Prime Minister, and I will continue to ensure that my government, at all levels, engages meaningfully and substantially.

That is because I am convinced that Grangemouth can and does have a potentially bright future contributing to Scotland’s net zero economy, and I want the government I lead to do everything possible to secure that future.

The Scottish Government will continue to urge the UK Government to put adequate measures on the table to address the immediacy and urgency of the situation at Grangemouth.

That is necessary because I understand fully the consequences for the Scottish economy of the closure of the Grangemouth refinery at this critical juncture.

The UK Government clearly recognises the need to safeguard economic and energy interests.

Just last weekend, the UK Government said up to £2.5 billion will be put towards supporting the steel industry via the National Wealth Fund; and the production and development of Sustainable Aviation Fuel in Teesside has already received in the region of £50 million in support from the Advanced Fuels Fund.

The support for Sustainable Aviation Fuels developments in Teesside comes on top of UK Government support for Carbon Capture and Storage in Teesside when there has been no green light offered for the project involving Grangemouth.

Today, I have come to Parliament to assure the workers, businesses and communities whose fortunes for so long pivoted around Grangemouth, that my government will do all we can to make that continue long into the future.

Within our limited powers and budget we are acting. But we believe also that more needs to be done to secure the future of Grangemouth through the following steps.

First, we will continue to work with the UK Government to drive forward the next phase of Project Willow - enabling and supporting the consideration of any and all alternative investible propositions for Grangemouth. 

Second, we will continue to press the UK Government – as I did again yesterday – for immediate progress on Acorn and the Scottish Cluster of carbon capture projects.

In October, the UK Government announced £21.7 billion for carbon capture and hydrogen projects in Merseyside and Teesside – but ignored Scotland. Grangemouth cannot wait for this to be dragged out any further by the UK Government.

Third, we will press the UK Government for urgent progress on allocating funding for the second round of hydrogen production projects.

Scotland and indeed, Grangemouth is well-placed to lead on the production of green hydrogen and I know that a number of Scottish businesses submitted funding proposals to the UK Government's hydrogen allocation round which closed last April – nearly a year ago.

These businesses are still awaiting a UK Government decision on shortlisting. We need immediate progress on this.

Finally, I urge the UK Government to at least match our funding commitment to deliver a Just Transition Fund for Grangemouth. The initial funding the UK Government has provided for the Growth Deal is welcome.  But spread over a ten-year period, this funding does not recognise the urgency of the situation now faced in Grangemouth and needs to be accelerated.

My government has made the strategic decision to support this key activity through an additional draw down of ScotWind revenue totalling £25 million, to add to the £7.8 million in our budget for 2025-26.  Altogether, the Scottish Government – with a finite budget – has committed or already invested £87 million in Grangemouth.

We need the UK Government to do at least the same and deliver a fair amount to avoid significant economic disruption in central Scotland, and to protect and promote Scotland’s – and Grangemouth’s – future interests.

In short, we need the UK government to do what it said it would do before the election.

The Scottish Government has always recognised the strategic significance of Grangemouth to the Scottish economy.

We recognise the significance of the fact that we are now facing a programme of redundancies at Grangemouth and the impact this will have on the lives of those employed at the site.

We recognise this moment means we have to intensify our response and our actions.

My commitments today demonstrate the necessity to do that. I urge the UK Government to do the same.

We are committed to work with the UK Government to bring forward real investment to save Grangemouth, and the jobs, businesses and livelihoods which depend upon on it.

We will do all that we can to achieve that aim.