The Project Willow report has been published, setting out nine options for the transition of Grangemouth's oil refinery.
The plan, which is backed by £25m from the Scottish Government and £200m from the UK Government, aims to support jobs, unlock investment and drive growth.
The £1.5m feasibility study carried out by EY follows the recent decision by Petroineos to decommission the refinery.
It has identified long-term industrial options for the site and explored how Grangemouth can build on its skilled workforce, local expertise and energy heritage to forge a new path in low carbon production.
The proposals aim to attract private investment, including plastics recycling, hydrogen production and other projects, that could create up to 800 jobs by 2040.
To kickstart the process, Energy Minister Michael Shanks and Acting Net Zero Secretary Gillian Martin co-chaired a meeting this morning 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.
The nine projects include:
- Waste: hydrothermal upgrading (breaking down hard to recycle plastics), chemical plastics recycling, biorefining (breaking down waste material).
- Bio-feedstock: breaking down Scottish timber into bioethanol, anaerobic digestion of bioresources and digestate pyrolysis, HEFA (conversion of Scottish cover crops into sustainable aviation fuel and renewable diesel using low carbon hydrogen).
- Offshore wind conduit: Replacing natural gas with hydrogen, using this to produce methanol and convert it to sustainable aviation fuel (SAF), producing low carbon ammonia from hydrogen for shipping and chemicals.
A summary of the report stated that the nine projects “have the potential to significantly enhance low-carbon manufacturing across the UK and create a positive future for Grangemouth”, but added: “However, the report also underscores the challenges of this transformation as low-carbon fuels and chemicals remain more expensive to produce than fossil alternatives.
“This will require substantial capital investment from the private sector [£3.5bn capital expenditure] and development of new supply chains.”
Earlier this month, the Just Transition Commission warned it could take years to close the “jobs gap” left by the refinery’s closure.
A spokesman for Petroineos said: “The publication of the first Project Willow report is a milestone event for Grangemouth that could mark the beginning of a transformation for the whole cluster and, in time, create many more jobs and growth opportunities across a variety of related industries in Scotland.
“We look forward to continuing to support both UK and Scottish governments as they implement the recommended policy, regulatory and fiscal changes required to unlock the opportunities identified in our report.”
First Minister John Swinney said: “We will leave no stone unturned in order to secure the future of the Grangemouth refinery site, and the Scottish Government has already committed or invested a total of £87m to help do so.
“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.”
Swinney later spoke to journalists as he visited Celtic Renewables in Grangemouth, saying it is an example of what a sustainable future could be. He was asked if the £3.5bn figure was remotely realistic, given governments have so far contributed only a small fraction of this.
“Yes, because there’s private investment that wants to make commitments to the journey to net zero,” he responded, adding that a recent offshore wind investment conference in Edinburgh had attracted interest from around the world.
Swinney continued: “I’m confident that with the right blend of public sector investment and private sector activity, we can put together the support for projects that will create new jobs and new economic opportunities in Grangemouth.”
UK Energy Minister Michael Shanks said: “We committed to leaving no stone unturned in supporting an industrial future for Grangemouth delivering jobs and economic growth.
“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.”
Scottish Enterprise welcomed the publication and launched its own enquiry service to manage requests for information from investors and companies interested in the site.
Managing director for innovation and investment Jane Martin oversees the agency's team focused on the transition of Grangemouth.
“The Project Willow report will bolster the canon of work already being done by Scottish Enterprise and partners across the Grangemouth Cluster to build an exciting future for the site,“ she stated.
“The nine recommended projects all have the potential to help advance the development of low carbon technologies in Scotland whilst ensuring Grangemouth remains THE location of choice for investors and innovators in the sector.
“We also want to hear from investors interested in other opportunities across the wider site.
“Scottish Enterprise has a clear ambition to help create the best possible location, infrastructure and enabling environment for success, and to attract investors and industrial partners who share that ambition.”
Scottish Enterprise will now work on behalf of both UK and Scottish governments to seek out potential investors, in partnership with the National Wealth Fund, Scottish National Investment Bank and the Office for Investment, to come forward with commercially viable proposals.
Any National Wealth Fund investment will be subject to investible propositions and the fund’s criteria – the proposition must deliver a positive return, drive regional and economic growth or support activity to tackle climate change, invest in key sectors and crowd in private finance.
One of the nine options is to use low-carbon hydrogen to produce methanol, which would be converted into SAF.
Union leaders have suggested this as a way forward which could save jobs, with Unite stating the plant could be converted “relatively easily” over a few years to produce SAF.
The Project Willow document said SAF operations would commence in 2035, with a capital expenditure of up to £2.1bn required. Up to 270 staff would run the plant.
Derek Thomson, the Scotland regional secretary at Unite, urged the UK Government to back this option.
“What we’re saying is, if you’re going to accelerate anything in Project Willow, accelerate the sustainable air fuel plant,” he said in an appearance before the Scottish Affairs Committee, which coincided with the release of the report on Wednesday.
Thomson added: “It just makes no sense to me whatsoever that you wouldn’t say as a government, let’s go for the SAF project.
“It saves Grangemouth, it saves the refinery, it gets us on track to meet our mandates for our own SAF production, and it doesn’t rely on us to import oil.”
Such production, he added, could even result in making money for government.
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