Grangemouth oil refinery closure plan is a wake-up call about the need to future-proof Scotland's economy – Scotsman comment

The need for a ‘just transition’ to a net-zero economy in which people’s livelihoods are protected is underlined by Petroineos’s plan to close Scotland’s only oil refinery

News that the Grangemouth oil refinery could close as early as spring 2025, with the loss of hundreds of jobs, represents a severe blow to the economy. The facility processes more than a third of the North Sea's crude oil and is said to be responsible for four per cent of Scotland’s gross domestic product. Even if that is an over-estimate, there is no doubting its importance.

The company that owns the site, Petroineos – a joint venture between Chinese state-owned firm PetroChina and UK-based Ineos – partly blamed global market pressures for its decision to shut the refinery and replace it with a fuel import terminal. However, chief executive Franck Demay added that “as the energy transition gathers pace, this is a necessary step in adapting our business to reflect the decline in demand for the type of fuels we produce”.

There have been many warnings about “stranded assets” and “stranded jobs” as the world moves away from fossil fuels. While there are other factors in this decision – and climate change is sometimes used to make tough decisions seem more palatable – it should be clear that this is a problem which is only going to get worse.

For all the talk about a “just transition” that enables oil workers to find new jobs, both the Scottish and UK governments have failed to foster a renewable energy sector on anything like the necessary scale. In his autumn statement, Chancellor Jeremy Hunt announced measures to reduce delays to green energy projects caused by the planning system and problems getting access to the National Grid – welcome steps that should have been taken years ago.

The planned closure of the Grangemouth refinery should be a wake-up call – to both our governments, other fossil fuel companies and their staff. The UK is still heavily reliant on oil and gas, and will be for some time to come. However, a new industrial revolution in which electricity is the dominant form of energy has already begun and modernising, or future-proofing, our economy is one of the most fundamental priorities of our time.