Grangemouth on the Brink of Green Transformation: Scotland's Future in Focus

The closure of Scotland's only oil refinery next year has accelerated efforts in Holyrood and Westminster to outline a green pathway for the sprawling industrial complex in Grangemouth. Petroineos' decision to convert the site into a fuel import terminal, announced in November, will result in a net loss of 400 jobs—a move described by the union Unite as "industrial vandalism." This crisis is the biggest challenge yet for the Labour Party in Scotland, where it gained numerous seats in the Westminster Parliament in the July general election. Prime Minister Sir Keir Starmer promised after his electoral victory to make saving the threatened jobs in Grangemouth a top priority. Ed Miliband, the UK's Minister for Energy Security and Net Zero Emissions, is working closely with his Scottish counterpart Gillian Martin to preserve the country's largest industrial area from decline. Close cooperation between London and Edinburgh will be crucial to finance new technologies, establish pricing mechanisms, and transition supply chains from fossil fuels to low-carbon alternatives. Since July, a government-funded task force named "Project Willow" has been exploring options for developing green industries in Grangemouth. The group, advised by the consulting firm EY, is expected to report next year. Three "credible options" have been identified within Project Willow as potential future scenarios: low-carbon hydrogen, synthetic "e-fuels," and sustainable aviation fuels. These and other processes could be funded by the National Wealth Fund, a new initiative by Chancellor Rachel Reeves. The complex regulatory reforms and long construction times mean that any initiative could take years—far from the quick solutions that the unions are demanding. Unite is particularly concerned that the transition from fossil fuels will replace well-paying jobs with fewer and lower-paid ones, thus questioning the promised "just transition." A manager involved in Project Willow emphasized that Grangemouth is considered the first test case for the "just transition." Project Willow explores, among other things, how hydrogen produced from natural gas or renewable energies could power biofuel refineries and be converted into synthetic "e-fuels" to replace gasoline. RWE has plans for a green hydrogen plant in Grangemouth by 2029, while Ineos is planning a gas-powered "blue" hydrogen plant that would pump carbon dioxide into rock formations under the North Sea as part of the Acorn carbon capture project. Bioprocessing plants for e-fuels and sustainable aviation fuels, powered by green hydrogen, are other options Petroineos has already considered but would need government support to become commercially viable. The Scottish government would need to promote new supply chains to turn raw materials like used cooking oils and fish waste into carbon-free fuels. Edinburgh Airport is already working with Petroineos on SAF production, as aviation in the UK aims to transition to 10 percent lower-carbon fuels by 2030 and 75 percent by 2050. According to the airport, Scotland offers a genuine market opportunity here, even though creating an SAF market is complex. Most partner airlines desire more capacity in Europe. "The beauty of Project Willow is that it is a blank canvas," said an involved manager. "The terrible thing is that it is a blank canvas.