The 5 options being investigated by Labour and the SNP to save Grangemouth’s future

It has been obvious for some time that the industrial hub, responsible for around six per cent or Scotland’s total emissions and almost one third of the nation’s industrial pollution, cannot exist as we move towards a net zero economy by 2045.

Grangemouth is a crucial part of Scotland’s economy with more than 2,000 full-time equivalent jobs in the immediate industrial cluster and thousands more individuals employed in supply chains.

But the companies who operate at Grangemouth, largely Ineos and Petroineos, have raised concerns over Labour’s energy plans, particularly proposals to halt new North Sea oil and gas licences being approved.

Lobbying records published last week show that Andrew Gardner, CEO of Ineos’s forties pipeline system and chairman of Ineos Grangemouth, met Scottish Labour leader Anas Sarwar to “reconsider Labour’s policy on the North Sea oil and gas sector”, raising “concerns on the banning of new oil and gas exploration licences including in relation to energy security, jobs and the transition to net zero”.

Despite Labour sticking to its energy strategy, the new UK government has wasted no time in making Grangemouth, and the hundreds of jobs under imminent threat, as a key priority. Prime Minister Keir Starmer, Energy Secretary Ed Miliband and Scottish Secretary Ian Murray have all spoken out about the need to work with SNP ministers to future-proof the site.

The Scottish Government’s just transition plan for Grangemouth, first promised in the 2022 programme for government and a draft strategy then pledged by the spring of 2024, has still not been published.

Both of Scotland’s governments have now earmarked £800,000 each to draw up a blueprint of long-term options for Grangemouth. There are a few options, all of which could happen in tandem to transform the plant into Scotland’s green technology centrepiece.

Biofuel hub for sustainable aviation fuel

This is not a new idea for Grangemouth, but plans to use the facility to ramp up the production of sustainable aviation fuel have never really got off the ground.

In 2020, Celtic Renewables received permission for a biofuel hub at Grangemouth, but this is limited to a demonstration plant. The plant will produce green chemicals - bioacetone, biobutanol and bioethanol - which could be crucial to allow the chemicals operations at Grangemouth to continue without relying on fossil fuels.

Upcoming UK-wide rules, as they stand, will require 10 per cent of air travel to be powered by sustainable aviation fuel (SAF) by 2030 - with Grangemouth seen as a key hub for scaling up production of the fuel.

With the Petroineos refinery currently producing jet fuel for Scotland’s main airports, it would potentially be a good fit for Grangemouth to produce SAF.

Green hydrogen

Green hydrogen has been shouted about by the Scottish Government for some time - with SNP ministers claiming it could be a £25 billion export market for the nation.

Labour is also keen to scale up production of green hydrogen, which is required by energy-intensive industries such as chemicals production at Grangemouth and other processes that need high heat that cannot be easily achieved by renewables.

Green hydrogen is produced by splitting water molecules into hydrogen and oxygen, a process called hydrolysis, powered by renewable energy.

German firm RWE plans to develop a hydrogen plant at Grangemouth, with Ineos already keen to use the fuel to transition away from polluting fossil fuels. The operation could be up and running by 2029 but will need the backing of UK and Scottish governments, who are both supportive of the technology.

Labour’s proposed national wealth fund has earmarked hydrogen storage for investment while the new government has a target to double the production of the fuel to 10GW by 2030.

Connected to North East carbon capture and storage project

The last UK government pledged investment in Scotland’s carbon capture and storage project at St Fergus in the North East, despite the programme being delayed for years after missing out on the first round of funding. There are still no timescales set out for the project and that will be something for the new Labour government to consider.

But the project, once it gets off the ground, and assuming the questionable technology can be scaled up commercially, could open another door for Grangemouth.

Those behind the project believe the Acorn project at St Fergus, already connected to Grangemouth through pipelines, could see emissions prevented from entering the atmosphere from the plant, potentially prolonging the life of the current chemicals operations into the net zero age. Labour has already acknowledged the Acorn project could be linked up to Grangemouth and the benefits it could bring to the cluster.

Key port for boosting Scotland’s renewables

Labour has already revealed its intention to upgrade Scotland’s ports to boost renewable energy production and also manufacturing of wind turbines.

Grangemouth is already a key port for renewables and part of the Forth freeport zone, with potential UK government investment to upgrade infrastructure allowing the site to become a key hub for Scotland’s renewable industries.

GB Energy HQ?

Labour has long-committed to its power generation company, GB Energy, being headquartered in Scotland. But the Prime Minister repeatedly insisted during the election campaign that the location had not been determined.

Aberdeen is seen as the favourite for the boost, given the city is central to the UK’s energy sector. But Grangemouth would also be a worthy home for the new company, given the existing operators and its transport links.