The closure of Scotland’s only oil refinery risks a repeat of the social devastation caused by the end of the coal and steel industries, expert advisers to SNP ministers have warned.
Scotland’s Just Transition Commission (JTC) said Petroineos’s decision to end operations at the Grangemouth refinery had been made with “minimal engagement with workers, the community or government ministers”.
In a statement, the commission warned the move ran “directly counter to a just transition” from traditional industries to a “low carbon economy.” Around 400 jobs are expected to be lost.
Referring to the social and economic upheaval of the 1980s, it said it was “deeply concerned that we will see a repeat of previous unmanaged industrial transitions in coal and steel whose harmful effects are still felt by communities across the country”.
The warning came the day after Neil Gray, the SNP’s Energy Secretary, said that the closure was a commercial decision that reflected the Scottish Government’s ambitions for decarbonising industry.
In an update to MSPs on Thursday, he insisted that the firm’s announcement that the refinery would shut by 2025 had not been finalised and he wanted it to continue operating “as long as possible”.
He rejected accusations that SNP “hostility” to further exploration in the North Sea had contributed to the decision, arguing it was down to “global factors” rather than anything the UK or Scottish governments had done.
But the Tories said the SNP and Labour had “set out to demonise the oil and gas industry at every opportunity” and argued the “message” being sent out by Scottish ministers was risking thousands of jobs.
About 500 people are employed at the refinery. It is estimated only about 100 would be needed for the planned import terminal.
Petroineos has said the timescale for the transition had “not yet been determined”, but the work was expected to take about 18 months.
The decision by the firm, a joint venture between PetroChina and Sir Jim Ratcliffe’s INEOS, also leaves Scotland and the north of England more dependent on imported fuel. Grangemouth supplies 80 per cent of Scotland’s fuel.
Commission urges clarity on plans to support workers
The JTC is an independent body that advises the Scottish Government on its plans to transition to a low carbon economy and publishes an annual report on progress.
It is led by Prof David Reay, chairman in carbon management at Edinburgh University and executive director of the Edinburgh Carbon Institute.
The commission’s statement said: “We urgently need to understand what plans, if any, have been made to support a transition for workers impacted by these changes beyond redundancies, as well as what steps will be taken to ensure we are not effectively off-shoring emissions currently associated with the Grangemouth site.”
In a direct challenge to SNP ministers, it added: “The announcement underlines clearly the need for government to play an active role in safeguarding workers and communities through the transition, since the market alone will not deliver a just transition.”
The closure was announced a month after Andrew Gardner, the chairman of Petroineos, warned that Labour’s plans to ban new North Sea oil and gas projects put Grangemouth at risk.
Humza Yousaf, the First Minister, has also opposed the Prime Minister’s decision to award new oil and gas licences, saying it “flies in the face” of the country’s climate goals.
Michelle Thomson, Falkirk East MSP, told Holyrood that Grangemouth “already struggles with high levels of social deprivation, and the ultimate closure potentially will be felt acutely in the town”.
Speaking after meeting trade union leaders, Mr Gray responded: “We absolutely recognise the uncertainty, the anxiety, the feeling of despair that this announcement will place on a range of people.
“I give my assurance to work collaboratively with all partners to ensure that any impact of this and subsequent decisions are mitigated as far as we possibly can.”
But Douglas Lumsden, the Scottish Tory energy secretary, highlighted the SNP’s decision to bring the Greens into government.
He said: “The Cabinet Secretary should now accept that the message the government is sending out is putting thousands of jobs at risk, including those at Grangemouth.”
Petroineos was approached for comment.
Robert Johnson is a UK-based business writer specializing in finance and entrepreneurship. With an eye for market trends and a keen interest in the corporate world, he offers readers valuable insights into business developments.
