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A plan mapping out a green future for Scotland’s imperilled Grangemouth oil refinery proposes £3.8bn of investments over a decade, rising to almost £13bn under a best-case scenario.
A feasibility study of potential options for the site — known as Project Willow — said nine industrial opportunities from recycling to biofuels could be deployed over the next 20 years to create a “flourishing low-carbon hub,” according to documents seen by the FT.
But the proposals lay bare the scale of investment and regulatory work needed for Grangemouth, raising questions over the UK and Scottish governments’ ability to deliver on this litmus test of the energy transition.
Project Willow, undertaken by EY, has been carried out by both governments and Petroineos, a joint venture between Sir Jim Ratcliffe’s Ineos and PetroChina. An outline of its recommendations is expected to be published in the coming days.
Last September, Petroineos confirmed it would close the oil refinery at the heart of the complex near Falkirk in the second quarter of this year, causing 400 job losses and fears of wider economic damage through central Scotland.
Implementation of the proposed projects will now pose a challenge for the UK and Scottish governments, which have pledged to save jobs and develop clean industries while reaching net zero greenhouse gas emissions.
“The key point is that all of this potential can only be unlocked by policy and regulatory changes,” said one person briefed on the report. “There also needs to be a custodian to manage the due diligence and financing of a broader master plan.”
News channel STV reported last month that Willow could create 400 jobs in the next five years, rising to 1,750 by 2040.
The UK and Scottish governments have pledged £200mn and £25mn, respectively, for viable developments. UK prime minister Sir Keir Starmer hopes the funding will attract three times as much private sector investment.
Industry insiders, however, fear bureaucratic inertia could put off private enterprise. “We are worried this will all just disappear into the civil service,” said one of them. “Officials have already said the whole thing is too difficult.”
Government would need to shape a favourable investment climate by funding mechanisms for costlier clean fuel while fostering forestry and crop feedstock supply chains, the person added.
“These projects would already have been happening if they were commercial today,” the person said.
Petroineos declined to comment. The UK government said the prime minister’s £200mn “transformational” commitment to Grangemouth sought to “unlock its potential.”
The Scottish government called on UK ministers to enable new technologies to be “deployed at pace”, saying most of Willow’s recommendations would be directed at Westminster.
From 2028, Willow’s near-term projects focus on recycling plastics, the production of biomethane from sewage and animal waste and, from 2030, turning paper waste into feedstocks for low-carbon chemicals.
Longer-term proposals, from 2032, would require larger capital spending and significant regulatory overhaul.
One is an £800mn sustainable aviation fuel and renewable diesel refinery using waste fats and crops to tap airlines’ growing demand for lower-carbon fuels. But with only a quarter of the feedstock available locally, scaling crop yields would be vital, the documents said.
Another, costing £340mn, would process Scottish timber into advanced bioethanol, a greener alternative to petrol. But some question using trees as a fuel feedstock when the UK already imports 80 per cent of its timber.
Building eight of the projects would require £3.8bn, with the report’s “growth case” visualising another £3.45bn for additional capacity and the construction of an e-ammonia plant.
Overall, £12.9bn would bring all nine developments to their “full potential,” including the use of Scotland’s plentiful wind power to generate green hydrogen.
“Even if only three or four projects make it through, it would be transformational for Grangemouth,” said the industry insider.
