Grangemouth Oil Refinery

Question

11:37:00

Asked by

To ask His Majesty’s Government what assessment they have made of Project Willow in securing the Grangemouth oil refinery and the jobs of the skilled workers currently employed there.

My Lords, Petroineos’s decision to cease refining at Grangemouth is deeply disappointing. The Government have stood with workers from the outset. Alongside the Scottish Government, we announced a £100 million Falkirk and Grangemouth growth deal package to support the local community. We launched Project Willow to find an industrial future for the site, identifying nine low-carbon business models that could create 800 jobs by 2040.

I thank my noble friend the Minister for his reply and for the commitment to the future of Grangemouth. The Project Willow report was paid for by the UK and Scottish Governments but was prepared “solely on the instructions of Petroineos”, the current owner of the site. Jim Ratcliffe, the billionaire majority owner of Ineos, is adept at getting Governments to pay for his projects while his company, and he personally, keeps the profits. The nine projects suggested in Willow offer a blizzard of possibilities when what is needed is a clear project that can be implemented as soon as possible. Will the Minister consider fast-tracking sustainable aerospace fuel, along the lines of the proposals from Unite the Union?

My Lords, I am grateful to my noble friend and of course I am very much aware of Unite’s proposal to transition Grangemouth into a sustainable aviation fuel plant. We are very grateful for the input from Unite and will continue to engage with the union. I have to say, though, that I think the Project Willow approach is the best way forward. It evaluated over 300 technologies and identified nine potential technologies. We have £200 million available from the National Wealth Fund to invest. The focus at the moment is twofold. One is to give support to the workers who are going to lose their jobs. The second is to encourage private investors to look at these proposals. We have the National Wealth Fund, with £200 million to invest, to act as an incentive and we are working very hard in relation to that.

My Lords, I draw the House’s attention to my role as chair of the Environment and Climate Change Committee. What will be the process by which the preferred option or options will be chosen out of the nine front-runners identified by Project Willow? To what extent will the Circular Economy Taskforce be involved in the decision-making?

My Lords, Project Willow set out nine potential developments. The most near-term developments include hydrothermal plastic recycling, dissolution plastics recycling and ABE bio-refining. On the question about the task force, I will certainly discuss with my colleagues the ability of the task force to input into this. Clearly, in terms of decision-making, the key thing now is to find investors for those projects. Clearly, the National Wealth Fund, with the £200 million that it is going to make available, will play an important role in that.

My Lords, the closure of Grangemouth is indeed a tragedy for the UK, and even more so for Scotland and for the 400 highly skilled jobs that are being lost. Of course, we know that this is what is referred to as the transition as we go from hydrocarbons to renewables, but, if you talk to the folk in Grangemouth, the problem, they say, is that this just transition is not very just. Indeed, if you talk to the folks in Aberdeen, they say that the just transition is not very just, as we now have data that shows that the transition of jobs from the North Sea oil and gas fields to renewable wind farms is running at 58%, and that jobs that were previously paid at £55k are now paid at £35k. So I ask the noble Lord to consider the patronising language of this just transition. Will he please go back to the department, drop the concept of a just transition and perhaps introduce a new concept called an affordable transition?

My Lords, I think the noble Lord is being unfair. Of course we want to see workers who are being displaced by changes in the industrial sector being helped and supported as much as possible, with additional training to enable them to accept good jobs in other sectors. At Grangemouth, a support facility is being made available, with training need analysts for each worker, and I gather that 300 such employees have already requested to take advantage of that. There are open evenings, career fairs and direct engagement with local employers. As for the North Sea, I just make the point to the noble Lord that, although he has an obsession with gas, the fact is, as he knows, that the UK continental shelf is a declining basin. In the last 10 years, 70,000 people lost their jobs under the stewardship of the Government he served. I did not see much effort there by that Government to establish programmes to provide good jobs. We are at the early stages. We are working very hard. The green energy sector, including nuclear, has huge opportunities and we need to do everything we can to ensure that skilled workers being displaced in some areas of the energy sector are given every opportunity to take up new roles.

My Lords, I declare my interests as set out in the register. Given what the Minister has just said, is it not important that the sorts of skills, advice, training and support that he has described for Grangemouth are available much more widely if the transition is to take place effectively—and justly—in other areas? What plans are there to bring in the skills passporting programme that we have argued for for many years, as well as the specific training that will be needed?

My Lords, I take the point, although I think it is right that we have some specific measures in relation to Grangemouth. I also think it is right to refer to a 2023 report by the CBI, which showed that there was a 9% increase in the green economy that year compared with 1% overall, and 950,000 people are now working in what could be described as a net-zero green economy. These are often very good, very well-paid jobs. We have a number of regional skills hubs. In the nuclear sector, we have a separate nuclear task force taking work forward in relation to this. The challenge we face is that, over the next few years, we need thousands more people to come into the low-carbon energy sector. We are doing everything we can, working with industry and with further education, to ensure that that happens.

My Lords, there are reports that, because of a loophole in the key energy scheme, Petroineos will get a windfall payment of £6 million. Rather than going to the multimillionaire Jim Ratcliffe, surely this money should be used for the retraining of the workers who are going to lose their jobs.

My Lords, obviously we should look very carefully at any loophole that may have been identified. I should make it clear that Petroineos has said that it has invested $1.2 billion since 2011 to maintain Grangemouth’s operation, recording losses in excess of $775 million during that period. Unfortunately, that is clear evidence that Grangemouth is not a viable commercial proposition.

My Lords, the closure of Grangemouth will make us more dependent on imports, as will the Government’s policy of not giving licences to extract shale gas or new licences for oil in the North Sea. The Government think that we can cope with being less dependent in normal times—I do not agree—but surely the Government must accept that there may come a time, in an emergency, when we will need to exploit our own resources. So why are the Government, on Saturday, cementing in the only successful shale wells on land in Lancashire, meaning that we will not be able to take advantage of them in future? Is that not an act of vindictive vandalism?

So why then did the party opposite, when in government, not allow fracking to take place? It is pure hypocrisy to attack us for a decision that we have made firmly that we will not allow fracking to take place. I take the point about energy security and reliance on imports, but I say to the noble Lord that the UK Government are required to hold stocks of oil as a member of the International Energy Agency. At the end of January 2025, we had the equivalent of 130 days of net imports, substantially higher than the required 90 days set by the IEA. There is no complacency here at all: we of course keep that under very close review and energy security is always going to be our number one priority.