Grangemouth: Project Willow report unveils plans for 800 jobs and 9 investment projects

Ambitious plans to transform the Grangemouth industrial hub into Scotland’s green energy epicentre will need £3.5 billion of private sector investment - raising fears over the feasibility of a blueprint to create 800 new jobs.

The Project Willow study, conceived by Petroineos and Ineos chiefs and funded by £1.5 million from the UK and Scottish governments, has published nine potential projects to give the hub a new lease of life as the economy shifts away from fossil fuels.

Ineos announced the closure of its oil refinery in Grangemouth last year | Michael Gillen

The nine projects include chemical plastics recycling, transforming timber from Scottish trees into bioethanol, using cover crops to produce sustainable aviation fuel - as well as plans to use the site as base to turn Scotland’s offshore wind potential into low-carbon hydrogen.

But for the project to become a reality, the feasibility report has warned that “the challenges of this transformation as low-carbon fuels and chemicals remain more expensive to produce than fossil alternatives”.

Read more: Inside Project Willow: How trees, waste and wind will transform Grangemouth

It adds that “this will require substantial capital investment from the private sector (of) £3.5bn and development of new supply chains”.

That £3.5bn of private sector investment is for the “base case” that could create 800 jobs and add £700m to GVA - while billions more of corporate investment could create up to 1,200 jobs and add £1.2bn to the economy in a “growth” scenario.

If all nine feasible projects reach their full potential, it could take more than £7.5bn of investment.

The proposals, which are backed by £200 million from the UK government and £25m from the Scottish Government, aim to support jobs, unlock investment and drive growth.

The Acorn project carbon capture and storage proposals are also crucial to the future operations at Grangemouth, with UK energy secretary Ed Miliband indicating a decision on funding will be made in June.

The report has been published by the consultancy firm EY following the decision by Petroineos to close Scotland’s only remaining oil refinery, which is losing the company £385,000 a day, with the loss of 400 jobs.

Read more: Ed Miliband reveals deadline for Scotland's crucial carbon capture approval

Earlier this week, First Minister John Swinney told investors at the Global Offshore Wind Investment Forum in Edinburgh, hosted by his government, that Scotland’s ambition is “to be nothing less than this century’s global leader in clean, secure energy”, stressing that “the potential reward for achieving that is nothing short of generational”.

Mr Swinney outlined to investors that the industry could be worth £100bn if all plans to scale up renewables proceed as planned.

The First Minister has insisted that Grangemouth’s legacy of “over a century of industrial expertise” puts the site “at a massive competitive advantage of creating a unique opportunity for investors”.

John Swinney, speaking at Celtic Renewables at Grangemouth | Michael Boyd/PA Wire

Speaking to The Scotsman at Celtic Renewables in Grangemouth as the Project Willow report was published, Mr Swinney rubbished concerns that the Scottish Government has struggled to lever in private sector investment for green energy and net zero projects at the scale required.

He said: “On Monday we had an incredibly successful offshore wind investment conference - we had countless investors here from around the world who are actively engaged in particular projects.

“We’ve got the investments such as Sumitomo at Nigg, the investments going on at Ardersier, we’ve got investment at the Cromarty Firth.

Green investment has been attracted to the Port of Nigg

“We’ve been doing the hard yards and it’s now beginning to reap some rewards.”

But concerns have been raised by opponents about the ability to lever in the ambitious amount of private sector funding.

Scottish Conservative shadow net zero and energy secretary, Douglas Lumsden, said: “These hypothetical green jobs will do little to reassure workers at Grangemouth who are receiving their P45s right now.

“Given the SNP’s track record when it comes to attracting green investment, many will doubt that they can raise the £3.5bn in private sector investment that will be needed to make this a reality.

Conservative MSP Douglas Lumsden | supplied

“At the same time, the SNP and Labour should do the right thing and drop their reckless opposition to Scotland’s oil and gas industry.”

As well as the £3.5bn of private sector investment the UK and Scottish government will need to lever in, a radical overhaul of legal and regulatory rules will need to take place to allow clean industries to use waste, plastic and timber as feedstocks for new processes at Grangemouth.

Pressed by The Scotsman during his visit to Celtic Renewables on whether these regulatory changes will happen, Mr Swinney said: “There’s obviously a range of regulatory issues that have got to be worked through as part of the proposals that are here.

“We’ve got to take care to do that and work with different sectors to make that possible.”

Read more: Labour's North Sea plan to create additional energy jobs - despite oil and gas decline

He added: “This plant here is a really interesting example of how essentially, a process that produces the chemicals that underpin a number of everyday products originate from the process from fossil fuels. This company, Celtic Renewables, has essentially replaced that with products from everyday waste, including potatoes.

“There’s opportunities to make that journey and that transition and I think this report offers the possibility of doing that.”

UK energy minister, Michael Shanks, said: "We committed to leaving no stone unturned in supporting an industrial future for Grangemouth delivering jobs and economic growth.

"This report and the £200 million investment by the UK government demonstrates that commitment.”

The nine processes outlined in Project Willow include using animal and food waste to create biomethane and e-fuels through anaerobic digestion, using low-carbon hydrogen alongside, fats, oil and grease and cover crops to produce sustainable aviation fuel (SAF) as well as a hydrogen-fuelled methanol plant that could also produce SAF.

The Project Willow document says SAF operations would commence in 2035, with a capital expenditure of up to £2.1bn required, with up to 270 staff running the plant.

Derek Thomson, Scotland regional secretary at Unite, urged the UK government to back this option.

Grangemouth could become a hub for sustainable aviation fuel (Picture: Lisa Ferguson/National World)

Speaking at the Scottish Affairs Committee, he said: “What we’re saying is, if you’re going to accelerate anything in Project Willow, accelerate the sustainable air fuel plant.

“It just makes no sense to me whatsoever that you wouldn’t say as a government, let’s go for the SAF project.

“It saves Grangemouth, it saves the refinery, it gets us on track to meet our mandates for our own SAF production, and it doesn’t rely on us to import oil.”

Iain Hardie, regional head of legal and external affairs at Petroineos, which operates Grangemouth refinery and conceived Project Willow, said: "The publication of the first Project Willow report is a milestone event for Grangemouth that could mark the beginning of a transformation for the whole cluster and, in time, create many more jobs and growth opportunities across a variety of related industries in Scotland.

“We look forward to continuing to support both UK and Scottish governments as they implement the recommended policy, regulatory and fiscal changes required to unlock the opportunities identified in our report."