Meeting of the Parliament [Draft]

Meeting date: Thursday, February 8, 2024

Official Report 1157KB pdf

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Grangemouth Oil Refinery

I ask those who are leaving the public gallery to please do so quickly and quietly, as we are now continuing with our next item of business.

The next item of business is a members’ business debate on motion S6M-11396—

Stephen Kerr (Central Scotland) (Con) rose—

I have not yet finished the intro, Mr Kerr. I will call you when I have done my bit.

The next item of business is a members’ business debate on motion S6M-11396, in the name of Stephen Kerr, on the future of Grangemouth oil refinery. The debate will be concluded without any question being put. I ask members who wish to speak in the debate to press their request-to-speak buttons.

I advise members that we are resuming at 2 o’clock this afternoon for business. I therefore encourage members to stick to their allocated speaking times. I appreciate that there is a lot of interest in what is an important debate, but we have to allow time for staff to clear the chamber.

With that, I call Mr Stephen Kerr.

Motion debated,

That the Parliament understands what it sees as the importance of the Grangemouth oil refinery to the local economy and national economy; further understands that hundreds of jobs are directly linked, and thousands are indirectly linked, to the refinery; notes the concern about the potential impact that the closure of the Grangemouth refinery will have on the workers at the plant, including the potential job losses; further notes the concern about the consequences of closure for the numerous supply chains that it understands rely on production at Grangemouth, and notes the belief that the proposed closure would have a serious and detrimental impact on the energy security of Scotland and the rest of the UK.

12:50  

I apologise for the false start.

Members will be aware of the shock, worry and frustration in the Grangemouth area following November’s announcement on the future of Grangemouth refinery. I will put my cards on the table: I want to see the life of that refinery, which is one of the jewels in central Scotland’s economic crown, extended, so I will use this member’s business debate to ask the minister some specific questions that deserve her considered response.

Of course, the global dynamics of oil and gas production have undergone seismic shifts, with production waning in Europe while it has been surging in the US, China, west Africa and the middle east. Grangemouth was built in 1924 and I acknowledge that it now needs substantial investment in order to remain viable.

Petroineos is looking into alternatives for the site, including an enlarged import terminal. Its deadline of spring 2025 for final decisions is little over a year away. I believe that the Government has a role to play in ensuring a successful future for that key part of our economy. The devolution settlement resulted in a complex intertwining of energy and net zero, which means that both Governments have to work together for the sake of Grangemouth.

I wonder whether Stephen Kerr might reflect on two points. First, he is right about the investment that is required, but the site is still a profitable site according to both Petroineos and the trade unions. That is worth reflecting on.

Secondly, would Stephen Kerr reflect on the fact that the global context includes a situation where the US already has a committed price for things such as sustainable aviation fuel, but we do not have that from the UK Government?

I thank Daniel Johnson for his intervention. He has pre-empted some issues that I will come on to.

I am going to make a serious point, which is not a party-political point, even though it might feel like one. I want to hear an assurance from the minister that we will not get into constitutional game playing on the future of the refinery.

I simply want to say that Stephen Kerr has my absolute assurance on that. Both Governments have to work together for the sake of the future of the site.

I thank the minister for that response.

Both Governments must set aside whatever differences there are and embark on the task of crafting a comprehensive strategy that addresses two pivotal aspects. One is energy resilience for Scotland, and the other is the future of Grangemouth and the surrounding communities. A dialogue must be initiated—I think that it might already have been initiated—with Petroineos to unravel the true reasons behind its decision to close the refinery. Is it a joint decision involving both sides of the joint venture, or does it stem from factors beyond economic trends?

A key piece of work in extending the life of the refinery would be to reinstate the hydrocracker line, which has been inactive since April. Daniel Johnson mentioned profitability—the hydrocracker unit is critical to the profit streams of the refinery. I do not pretend to be an engineer, and I do not understand the processes, but I get that the hydrocracker is the critical unit that produces diesel and jet fuel, which are two big—if not the biggest—profit generators for the refinery.

That hydrocracker unit has not been working for a long time. Getting it back online is critical to keeping the refinery going. I ask the minister what is the latest that Petroineos has told her about the hydrocracker? When will it be up and running, and what are the issues preventing it from being restarted?

The Grangemouth future industry board was set up with worthy intentions, but it is stacked with public sector bodies and there is no private sector involvement. The board meets infrequently and the last meeting lasted for only one hour. Can the minister spell out what the Grangemouth future industry board is going to deliver? What are its specific tasks? What are the deadlines? How will it protect the future of the refinery? The workers need to be involved and their voices need to be heard at every level; local people and Falkirk Council all need to know what the board will do. The board, or a functional replacement, must get to grips with the sustainable future that is required for Grangemouth.

The UK2070 Commission’s Teesside task force’s paper would be a good template for that strategy. Working with businesses and universities, it is an example of how different bodies—public and private—can come together to address the kinds of challenges that are now being faced by Grangemouth.

What discussions has the minister had with her UK ministerial colleagues about sustainable aviation fuels and a biofuel future for Grangemouth? Another key question is about what are the existing regulatory barriers to the switch to biofuels. Can the minister reassure me that those barriers can be dealt with and that they will not put off potential investors?

My preference, as I said, is for the plant to remain operational, but if, after all avenues have been thoroughly investigated, that cannot be achieved and, if Petroineos, or some other private investor, is still not willing to put in the investment that is required to keep Scotland’s only refinery operating, we need to be ready with the right plan. We need to know the scale of the challenge that we will face and what we are dealing with, which means that we need a comprehensive economic impact assessment to be completed as soon as possible. The comprehensive economic impact assessment must look at the detail of the impact on jobs, gross domestic product—locally and nationally—council tax revenue, employment and other considerations. Again, the voice of the workers must be heard.

I am grateful to Stephen Kerr for his analysis of what is required. Does he also recognise that, currently, the impact on the supply chain is yet to be established, which is at least as important as what he has just detailed?

Absolutely. That is why we need a comprehensive economic impact assessment, which will be a vital piece of work. What timescale would the minister consider to be practical for delivery of that assessment? When will it be completed and published?

The term “just transition” is bandied around a lot in the Parliament, yet I know from my conversations with representatives of the Grangemouth workforce that the term provides cold comfort to most workers. Yes—some jobs will be delivered fairly quickly and some have already been delivered, but the risk of highly skilled, highly paid workers losing the their jobs and leaving the area is a devastating prospect for the local economy and, indeed, for Scotland’s economy.

We must be honest and acknowledge that anything resembling a full just transition away from fossil fuels is going to take decades. Right now, for the workforce in that community, the Grangemouth just transition feels as though it is a blunt injustice. The Grangemouth refinery is not merely an industrial facility; it is the beating heart of Grangemouth and the surrounding communities. I implore both Governments to do all that they can together to keep the Grangemouth refinery open, including giving serious consideration to Government-backed investment. Finally, let us put aside political colours and favours and work together—as we should—to ensure that the lights of Grangemouth continue to burn brightly.

I remind all members who wish to speak in the debate to check that they have pressed their request-to-speak buttons. We move to back-bench speeches of up to 4 minutes.

12:59  

I am pleased to speak in this important debate and I thank Stephen Kerr for his reflective comments. Let us hope that the debate continues to bring more light than heat.

I am a ferocious protector of my constituency of Falkirk East, including Grangemouth. The Grangemouth community is quite remarkable in its resilience and deserves praise for the pragmatic way in which it has sought to play its part in shaping our future. This can only be a worrying time for the workers, too, so I commend the efforts thus far of the unions that are involved. Grangemouth is, indeed, the beating heart of both an industrial past and a greener future.

Those who describe the refinery as a national strategic asset are right; those who have concerns about energy security are absolutely right; and those who say that we must do all that we can to retain it as an oil refinery are not wrong, but my focus must be on doing all that we can to ensure that the entire industrial cluster around Grangemouth continues to thrive—now and in the future.

What do my asks look like? I was pleased that Graham Stuart MP—the UK Government Minister of State for Energy Security and Net Zero—indicated his willingness to look at all options for the refinery. We wait to hear what more support his Government will offer, and the Minister for Energy and the Environment might be able to give more insight today on discussions thus far. I know that the UK Government will offer financial support to strategically important industrial and commercial ventures that are making a loss. I draw attention to the UK Government grant of up to £500 million for the Port Talbot site that is run by Tata Steel UK.

I pay tribute to Michelle Thomson for the work that she is doing to support the community in her constituency. Does she agree that it would be a cold shower for all of us if the economic impact assessment showed us the impact of losing the refinery with no replacement or continuity? That work would allow us to see what the Government needs to do, and what it might look like proportionately in relation to the cost that might arise from closure of the refinery.

I absolutely agree and I, too, will reflect on that in my speech.

Another barrier that I have previously highlighted is around enabling the site to be modified to become a biorefinery and to produce the likes of sustainable aviation fuel. I note that Graham Simpson pressed Graham Stuart hard on that at a previous visit to the Economy and Fair Work Committee. I agree with Mr Simpson that it cannot be right that none of the eight potential sites that have been considered thus far is in Scotland. Any measures will require a pause before starting the work to convert the refinery to an import facility. I call on Petroineos to extend its timescales to allow us all to reach a positive outcome. Petroineos has a moral duty to Grangemouth and the vital cluster that surrounds it.

I know that the Scottish Government and its partner agencies are undertaking considerable work. Indeed, as has already been mentioned, by mapping current supply chains not only do we get a proper impact assessment for today, but we gain a deeper understanding of what economic policy measures can be taken for tomorrow. Proactively enabling supply chains is a fundamental part of enabling a just transition.

Skills are also an important part of developing our target operating model and, although I realise that skills belong in another brief, maybe the minister could give more information on work that is under way in both those areas.

Finally, when I was on the Economy and Fair Work Committee we raised questions about the purpose, governance and membership of the Grangemouth future industry board. I am interested in hearing more from the minister on how she sees that vital body developing.

Grangemouth is absolutely fundamental, so I want to put on the record my disappointment about the about-turn by the potential next Prime Minister, Keir Starmer, in the latest announcement about dropping the £28 billion energy fund, which had included vital promises for Scotland. Those promises included £1 billion to modernise Grangemouth and the suggestion that there could be around 50,000 clean power jobs. Obviously, that will have an immediate impact, but the vital mood music suggesting that the UK is serious about attracting global investment is severely lacking.

To that end, I encourage a clear proposition from the Scottish Government about our ambitions. I am sure that the minister will have reflections on that.

13:04  

I thank Stephen Kerr for bringing the debate to the chamber, and I welcome the tone of the debate so far.

I, too, was disappointed to hear the announcement by Petroineos last year. Like Stephen Kerr, I would like the refinery to continue operating. If there is any way to achieve that, we should do it. Stephen Kerr is absolutely right that this matter needs to involve both Governments. The UK Government certainly has a strong role to play, but so does the Scottish Government. They need to work together.

Michelle Thomson—it was a privilege to be a member of the Economy and Fair Work Committee with her—referred to our report on a just transition for the Grangemouth area. It contained a number of recommendations, one of which was about the Grangemouth future industry board, which has already been mentioned. It is fair to say that, as a committee, we were very frustrated that there was no private sector involvement with the board and, frankly, we found it to be rather secretive. In the words of the report:

“the Committee calls for more clarity on the role and purpose of GFIB and what it is intended to achieve”.

When I was on the committee, I repeatedly mentioned the role of sustainable aviation fuel. I probably raised it at every meeting and bored the pants off members, who, at that point, might not have known what I was on about, although eventually they did, because now everybody is mentioning SAF.

SAF could provide a future for Grangemouth, or a part of its future. My frustration is that, as Michelle Thomson has already said, Grangemouth has not been one of the places that have been earmarked to produce SAF. Frankly, somewhere in Scotland should be making it, but, at the moment, there is nowhere.

We came up with the recommendation that there needs to be legislation

“for a price support mechanism for SAF to accompany the mandate”,

because that

“may be required to incentivise private sector investment in UK and Scottish SAF production”.

In other words, the Government—the UK Government, in this case—needs to create a market for SAF. I gave Graham Stuart quite a grilling when he appeared before the committee—rightly so, as that is my job. The UK Government really needs to do that, because we need to create a market for SAF.

We need to look not just at SAF but at hydrogen, as there are also opportunities there. I am not completely downcast about Grangemouth. I am disappointed with the announcement that was made, but Grangemouth can have a strong future.

Nobody in the debate has yet mentioned the Grangemouth flood protection scheme, which is really important for the wider economy. Michelle Thomson and others know that I have recently written to Màiri McAllan about that. She has responded to me, and I have shared her response with others. She has committed to setting up a task force. [Interruption.] Mr Lumsden is groaning, but I think that, if he sees the letter, which I am happy to share with him, he will see that the tone was quite positive. I would like that task force to be set up, and I want the UK Government to be involved, too, because that scheme needs to go ahead.

13:09  

I thank Stephen Kerr for securing time for us to speak about this important topic. He set out the basis for the debate incredibly well. It is about investment, about energy resilience and therefore the future of our economy, and about ensuring that we have a genuinely just transition, not a chaotic end to key elements of our economy.

Michelle Thomson and Graham Simpson set out some very important points that flow from that. If we are to have a just transition, we need to retain the critical skills that we have—including those that we undoubtedly have at Grangemouth—and we need to look at what our future energy requirements will be, including for things such as SAF.

I would also like to reflect on the workforce. I have met the workforce twice since the announcement—once before Christmas and once thanks to the drop-in that was organised by my friend Richard Leonard. What struck me was the workforce’s composure, focus and seriousness at a time when many of us would just be outraged and angry. It is a profitable site, and those are highly skilled people, who thought that they were being trained to learn skills and provide opportunities for themselves and their families in the future. They are seeing those opportunities in potential jeopardy.

Having spoken to the unions, I certainly get the impression that the workforce holds the key and the answers to the future of the site with regard to their ideas about how their skills can be deployed, and particularly about the area becoming a biorefinery.

Exactly so. It is really important that we retain those skills. I pay tribute to the workforce’s focus and commitment to ensuring that there is a viable site at Grangemouth.

Let us make no mistake—this is an incredibly important site. There are only six large refineries in the entire UK, so there will be a major loss of capacity. That is important for future requirements relating to biorefining or the production of SAF, but we must remember that not all refined products are for fuel. As much as 50 per cent of every barrel of oil leads to products that are not about fuel, such as pharmaceuticals, dyes and plastics. We might be seeking to reduce our reliance on such products, but we will be relying on them long after we, hopefully, stop burning oil. Oil is an important product, and refining will be an incredibly important part of that process.

However, we all need to reflect on what has happened here. Petroineos has, in essence, made a decision based on cost. The site is profitable, but not as profitable as other sites, although it is fair to say that there is still a large degree of confusion about those factors. We need to ask why Petroineos has made that decision. It is not just about pure profitability but about stability, and we need a plan. That has been a theme across a number of—

Will the member take an intervention?

I am very happy to give way.

Does the member agree that it is slightly ironic that, even if Petroineos ultimately decides to move to an import facility, it would still be dealing in the same market? That makes me question what is going on, because the market itself is not going anywhere. I even question the talk about spring 2025.

I agree with that. We need greater clarity. I do not want to cast aspersions—the workforce is very clear about that—but, if we could understand the basis for the decision, we could provide help.

We need a plan. Other countries have price commitments around products such as SAF, which are enabling investment. Likewise, we need stability around the regime in this area. Changes in policy from Governments—and, potentially, future Governments—do not help. We need consistency and stability so that businesses can make confident investments.

I am grateful for this parliamentary time, because previously we have had only one urgent question on the matter. I note that there will be a statement, but there needs to be parliamentary time for this topic to be discussed.

13:14  

I thank Stephen Kerr for bringing the debate to the chamber. I also thank workers, the unions and the local community for their thoughts, opinions and concerns about the announcement and the future of the site.

Having grown up in Grangemouth and having managed only a mile further up the hill, I know how important the issue is to the entire area. I am angry, on behalf of the workers and the community, that the announcement was given weeks before Christmas. The bottom line of the company—which, as we have already heard, has been questioned—has been put before the workers and the impact on the community. The timetable, which has been questioned by members across the chamber, seems arbitrary, to say the least.

There is a lot of uncertainty and worry across the community. I know that local small businesses are worried about what the announcement means for them. At the drop-in that was organised by Richard Leonard, we heard that workers who are parents are concerned about their job security and what the announcement might mean in relation to uprooting their families. The ripples of the announcement reach far and wide across Grangemouth, as well as more widely across Falkirk.

As we have heard, there has been industry on the site for nearly 100 years, and I am sure that there will be industry on the site long after any of us in the chamber are here. As well as having a conversation about how jobs can continue on the site in the short term, we need to discuss what the industry will look like in the future, how we will get there and what that means for workers and those who live close to the refinery. To do all of that, we need to save the jobs, and we need Government support in that regard. It is clear that, if we leave a just transition to the companies involved, it just will not happen. We need certainty—and quickly—to stop potentially highly skilled people leaving their jobs. We need time for those dedicated and skilled workers to transfer or change their skills to whatever comes next, and we need meaningful engagement with the community about what they would like to see on their doorstep. That has not happened on the site so far.

Unions want to engage with Petroineos and the Government to explore the reasoning behind the company’s decision and what can be done to support workers. If any member has not done so already, I encourage them to read the briefing from Unite the union that came in earlier this afternoon. I also believe that, if they have not done so already, the owners of Petroineos and PetroChina should come to the site to speak to workers and explain their decision. We need a just transition, which, according to their briefing this morning, is what the workers want—a move to the site hosting industries that are better for people and the planet, that provide well-paid jobs and that have good terms and conditions.

I am aware that there are a range of opinions across the chamber as to what form the next step should take, but I hope that the community and the workers who are watching today know that their representatives, including me, are not taking this lying down and that we are committed to saving their jobs and providing a bright future for Grangemouth.

13:17  

I am grateful to Stephen Kerr for securing this debate on the future of Grangemouth oil refinery. I agree with him that Grangemouth is a jewel in Scotland’s crown. Since its establishment in 1924, the refinery has been a steadfast pillar in Scotland’s energy landscape. It has been the main supplier of fuel to Scottish airports and Scottish petrol stations and, importantly, has provided a foundation to the generations of families from the Falkirk area and beyond who have worked there since its establishment.

However, today we are here to debate a new reality. The potential closure of the oil refinery is a decision that is driven by economic realities, such as growing international competition and environmental considerations, which carry weighty implications.

I want to say a little about learning from the past. The impact of Margaret Thatcher’s deindustrialisation in my Uddingston and Bellshill constituency remains profound. Once thriving with coal mines and steelworks, Lanarkshire underwent a tragic transformation, with mass unemployment plunging communities into persistent poverty, which still impacts them today. Communities were stripped of their identities and of hope, with scars that generations will never forget or forgive.

As we have heard, in Grangemouth—a town that is already burdened with high levels of social deprivation—the potential closure threatens to exacerbate existing struggles. Simply put, we cannot afford to repeat the mistakes of the past. Grangemouth needs and deserves a just transition. Although Petroineos’s decision was driven by commercial factors, we must not overlook the profound concerns regarding the workforce and the regional economy. The Fraser of Allander Institute has projected a GDP reduction of approximately 0.25 to 0.3 per cent for the Scottish economy—an announcement that is significant and worrying.

Furthermore, any jobs that are lost are not mere numbers. They represent families’ livelihoods and, as we have heard, there will undoubtedly be ripple effects across the wider community.

Does Stephanie Callaghan agree that it is very important that we get a proper quantifiable understanding of the impact of the refinery’s closure? That will help scale what Government can do and what it thinks it can afford with regard to any intervention that can extend the life of the refinery or which can give us the opportunity to have a bridge to the just transition that she is talking about.

I would certainly agree with that.

With any decision that impacts the livelihood of communities, it is imperative that the Scottish Government steps up and facilitates a just transition at pace. That means the provision of high-quality jobs, enhancing the community’s prosperity and safeguarding the community’s wellbeing being rightfully placed at the forefront.

A just transition also brings the opportunity to chart a new course towards a fairer and greener future for all. Given its history as an industrial hub, Grangemouth is uniquely positioned to emerge as a centre for green innovation.

Given the situation that we find ourselves in, if we carry on working in this collaborative way, which I am personally heartened by—and I agree with what has been said about both Governments working on this and impact assessments—I think that we can frame an opportunity here. After all, we have known for some time about the considerable complexities of putting meat on the bones of a just transition. Does the member agree?

Absolutely. I agree with my colleague Michelle Thomson—we all would, to be fair.

I was actually going to address that point. It is really good to see the Scottish Government’s commitment to collaborating with operators throughout the Grangemouth cluster to spearhead new low-carbon initiatives including carbon capture utilisation and storage, hydrogen production and biorefining. Everything possible must be done to create the right circumstances for Grangemouth to evolve into a flagship for sustainable energy production and one that bolsters Scotland’s ambition to achieve net zero emissions by 2045.

However, if we are to ensure that such future low-carbon opportunities are realised with equity and fairness at their heart for the people who live and work there, continued collaboration will be paramount. The Scottish Government must continue to work with industry, workers and communities on shared economic, social and environmental objectives.

Like others, I urge the UK Government to continue to collaborate on a truly optimal future and meaningful prospects for Grangemouth. Although the establishment of the Grangemouth future industry board marks a promising start, the UK Government must, as we have heard, focus on lifting the UK-wide barriers to sustainable aviation fuel.

We must secure Grangemouth’s future from a financial, environmental and social perspective. Through a just transition that embraces innovation, sustainability and compassion, we can shape a positive trajectory in which Grangemouth is recognised as a valuable asset that can propel the Scottish economy forward towards a cleaner and more resilient tomorrow. In that respect, listening, collaborating and meaningfully engaging with affected communities, workers and industry will be key.

13:23  

I thank Stephen Kerr for bringing this debate to Parliament, and I remind members of my entry in the register of members’ interests.

Two weeks ago today, the First Minister—I thought, unfortunately—laid the foundations for a blame game.

“Grangemouth’s hard workers and the wider community cannot be left at the mercy of UK Government inaction”,

he opined. He went on:

“The key powers ... lie, regrettably, at Westminster.”—[Official Report, 25 January 2024; c 21.]

Well, of course, I will stand second to no one in demanding that the conditions are created for a sustainable aviation fuel policy for the UK and one that will generate jobs in Grangemouth, but the message which I bring from that wider community—from those hard workers—is that they do not want to be a political football between two opposing Governments or, indeed, between Government and Opposition at this time in their hour of need, when we are—

Will the member give way?

Yes, I will take an intervention.

I hope that Richard Leonard heard what I said in that regard in response to Stephen Kerr very early doors in the debate.

Yes, I did, and I very much welcome that commitment that has been given, but I thought it was worth while reflecting on the position of the minister’s boss.

We are at a time when the workers are in their hour of need and when we are deciding on our future energy requirements, so they want both Governments and all parties to be on their side, working together for the common good. They want an extension to the operation of the refinery. They want the hydrocracker restarted. They want investment and jobs. They want transition and protection. They want ambition and hope.

Petroineos themselves say nothing changes until spring 2025, so there is still time for the Government to commit to supporting a programme to extend the refinery’s operation and to invest in new technologies, such as biofuels and sustainable aviation fuel, at the site.

In my discussions with the refinery workers, it has not gone unnoticed that the cabinet secretary has variously called Grangemouth—let me quote him exactly—“an ageing site”. To emphasise the point,

“the refinery is more than 100 years old”,—[Official Report, 23 November 2023; c 61.]

he has told us, as if we are dealing with a dilapidated, decrepit, obsolete, antique technology that has not had a penny spent on it for over a century.

The closure of the refinery and the opening of an import terminal was, he said, in any case, “a commercial decision” which will “future proof the site”, as though we were dealing with a world based on rational decisions, but we are not. The Grangemouth refinery is not uneconomic. It is not making a loss; it is making a profit.

So I say in plain terms to the minister that it is a strategic national asset. These are strategically important manufacturing jobs. This is a strategic national energy supply, and its future should not be determined by offshore billionaires or overseas Governments. This is Scotland’s only refinery; it is linked to the Forties pipeline. We should be refining and manufacturing our energy, not simply importing it, because never in economic history has there been an import-led economic recovery.

So let us finally see from this Government an industrial strategy which is jobs-first, people-centred, manufacturing-led and environmentally sustainable, and if that means a stake taken out in this enterprise by the Government, then that is what should happen. These workers need not just words but action. They need political leadership. They need an economic strategy, and they are looking to this Parliament and to this Government to provide it.

Before I call the next speaker, I advise that, due to the number of members who wish to speak in the debate, I am minded to accept a motion without notice, under rule 8.14.3, to extend the debate by up to 30 minutes. I invite Stephen Kerr to move the motion.

Motion moved,

That, under Rule 8.14.3, the debate be extended by up to 30 minutes.—[Stephen Kerr]

Motion agreed to.

13:27  

I commend Mr Kerr for securing the debate and for his very thoughtful contribution.

Grangemouth is a strategic national asset for Scotland, and decisions regarding it need to be taken in that light. Crude oil is refined not only for fuel but for feedstock for chemicals that are used right across our economy. Scotland produces 90 per cent of UK oil and gas and has just one refinery. To contextualise just how profitable oil and gas produced in Scotland are to the UK, last year saw a record £10.6 billion in revenue flowing from Scotland to the UK Treasury.

When I had the opportunity to question the UK Minister for Energy Security and Net Zero, Graham Stuart, just a couple of weeks ago, he admitted that the revenue from Scotland’s oil industry is funding reductions in energy bills for the whole of the UK. I wonder whether other members were surprised, as I was several weeks ago, to hear from him that, up until that point, the UK Government had had no approaches from anyone seeking funding for a rescue package.

An industry that is worth £10.6 billion a year is hugely valuable to the economy of the UK—a country or, rather, a state of 67 million people. Let us imagine for a moment how much further that would go and what we could do with it in a country of just 5 million people.

Grangemouth needs investment to save it and make it profitable into the future. It is estimated that the investment that is needed is around the £80 million mark. That is but a drop in the North Sea compared to the billions upon billions that Scotland’s oil and gas industry has poured into the UK Treasury. In fact, £80 million is only 0.7 per cent of last year’s revenue—not even 1 per cent of a year’s revenue.

Scotland has only one refinery. The rest of the UK has six, but the Scottish refinery is marked for closure. If Grangemouth is to be no more, Scotland will find itself in the uncomfortable position of being the only one of the top 25 oil producers globally with no refinery. That is a disgrace.

Does Ash Regan agree that using language such as “Grangemouth no more” completely ignores the fact that Grangemouth’s refinery has a great deal of potential if we get it right and invest some of that oil and gas revenue in its just transition to, perhaps, a biorefinery?

No, I do not completely agree with that. The way that I imagine a just transition is that the “just” part is about the people. In the future that the Government imagines, the people with the skills will largely be lost to the site if it is turned into some kind of import terminal.

Scotland needs to have a refinery once it is independent. We must continue to have a refinery and refine our own oil in it—not produce it, send it away and then buy it back at a premium. That is also an energy security issue. Reliance on global markets creates insecurity for Scotland, which is simply absurd for an energy-rich nation.

It is not an issue about which the Government—any Government—can shrug its shoulders and say, “Oh well, there’s nothing we can do.” The Scottish people expect more and expect better. The UK Government and the Scottish Government must find some vision and ambition and work together to secure a rescue plan. The UK Government must provide the funding and the Scottish Government must wake up and find a backbone. Anything less than that will be a betrayal of the workforce and the country.

We cannot stand by and see more of Scotland’s key assets lost. History tells us that, once they are gone, they are gone for ever. We cannot stand by and see a strategic asset lost to us for ever.

13:32  

As mentioned in my entry in the register of members’ interests, I am a member of Unite the union and the GMB, and I undertake other trade union activities.

I join colleagues in thanking Stephen Kerr for securing this important debate. I echo my Scottish Labour colleague Daniel Johnson, who was right to say that the Scottish Government needs to devote some of its chamber debating time to the matter because that would allow for a fuller debate and more parliamentary scrutiny.

There will, indeed, be such an opportunity next week, when the cabinet secretary will deliver a statement. It is up to the Parliamentary Bureau to decide whether that is extended. Of course, members all have colleagues who go along to the bureau.

I point out that we are in recess next week.

I will be guided by you as always, Deputy Presiding Officer.

I welcome the commitment that the minister gave to Stephen Kerr at the start of the debate on what workers and the people of Grangemouth—and, indeed, the people of Scotland—need, which is collaboration between not only the Scottish Government and the UK Government but all the key stakeholders. Stephanie Callaghan was right to bring us back to what matters. It is about people, their families and livelihoods. We can get caught up in the big economic picture, but the debate is about people and we need to hear their voices, too.

I am not a member of the Economy and Fair Work Committee, so I will defer to colleagues who were part of the inquiry into the just transition for Grangemouth. It is significant that the committee did that work. The report is good, and some things have been addressed.

However, I was concerned and disappointed to read at the very top of the report that Ineos turned down the committee’s opportunity to give evidence. I am not sure of the reason for that. That would have been a good opportunity to set out and get on the record what work the company is doing to contribute to Scotland’s net zero targets.

To be completely accurate, the committee approached Ineos rather than Petroineos. I just want to make that distinction.

That is a useful clarification.

The report mentions the Grangemouth future industry board, which I understand has been recently repurposed. Graham Simpson touched on that, and there are definitely questions about getting the right people around the table and the potential roles for the Scottish National Investment Bank and people from the community, including workers and trade unions. I know that the UK Government recently hailed the repurposing of the future industry board as an opportunity for both Governments to come together. I hope that it is received in that spirit.

As we have heard in the debate, the approach to the issue has largely been consensual and cross-party. Richard Leonard recently hosted a drop-in session and we met Unite shop stewards who do not want politicking—they want to hold politicians to account and they want us to work together in the national interest.

I know that time is short and I have taken a couple of interventions, so I will conclude by saying that Derek Thomson, the Scottish secretary of Unite, told us that every option must be on the table. As we try very hard to build a just transition for workers and communities, we have to get our act together collectively. Every option must be on the table, but we need a planned approach. We have heard about the importance of an industrial strategy, which has been lacking, and we heard in the debate a commitment to joint working. Let us see what happens after recess.

13:36  

I nearly did us all out of a week’s recess, for which I apologise.

I agree with the spirit of Monica Lennon’s speech, particularly in her final words, that every option must be on the table. That should be the phrase that we keep in mind as we go forward. I thank Stephen Kerr not only for bringing the issue to the chamber but for his extremely constructive and collegiate speech and for his general attitude, and I thank the other members, who, with the odd exception, spoke in that spirit.

My colleagues are right to say that the people of Grangemouth, the wider Grangemouth area, the wider Falkirk area and the community are listening to what we say on the issue. We all have to put our shoulders to the wheel and look at every option. I fully believe that, although the announcement has been greatly worrying to the people who currently work in the refinery, we have everything to gain if we get this just transition. This is a test for us; the first test of the just transition is whether we can keep the refinery open in some shape or form.

Before I go into what the Government has been doing, I want to reflect on some of what has been asked of me. We need to look at the barriers to deployment for a biorefinery. On Mr Kerr’s point on that, he will probably be aware—and if he is not, I can certainly send him the details, and I recommend that he gets in touch with colleagues at Petroineos—that Petroineos has identified regulatory barriers to becoming a biorefinery, such as the hydroprocessed esters and fatty acids cap. The HEFA cap is the cap that has been put on the use of the crops that would provide feedstock for a biorefinery. The UK Government has put a cap on that, which is complex, because it is about food security and the percentage of crops that can be used for biorefinery.

I want to reflect on what executives at Petroineos told me in that regard, which was that if the HEFA cap was lifted, they could transition to being a biorefinery very quickly. They are already in the appraisal phase of the biorefining, and they have also said to me in meetings that staff could be trained very quickly—within, I think, six months. I could be wrong on that, but it was a very short period of time.

I note that Petroineos is being careful in the use of the word “could”. Is such a transition part of its intention? Is it beyond words? Does Petroineos suggest that it “would,” transition, rather than that it “could” transition?

That is obviously a question that is best put to Petroineos, because it is making commercial decisions. However, I got the sense that that would be its intention if that option were on the table and if the cap on HEFA was looked at again by the UK Government.

Graham Stuart was in that meeting as well. He said that it was not in his portfolio arrangement because it goes into the wider agriculture portfolio. However, two cabinet secretaries—Mairi Gougeon and Neil Gray—and I have written to follow up on that on behalf of Petroineos, because that is what the workforce wants as well. It is ready to go, and that could secure its future.

I also want to mention the economic impact assessment. It is absolutely vital, but just as vital is the just transition plan, which is action focused and makes an assessment of the economic gains for the site and the wider community if we were to change to any of the options that are on the table. I see that as part of the Grangemouth future industry board’s remit.

I wonder whether those two points come together in an important way. It is well and good to talk about just transition and the need for a plan, but unless the board considers things such as the HEFA decision, which the minister mentioned, and other decisions that might lie in other departments, we do not really have a plan. It needs to be joined up. There is an investment gap. Peak oil was 20 years ago, but we have only installed 10 per cent of our offshore wind generation capacity.

Daniel Johnson makes an important point. I was going to come on to that. Graham Simpson talked about the market for what the site would be producing—particularly sustainable aviation fuels. I will say a little word about what the Scottish Government is doing on that. We have a working group, which Màiri McAllan set up, with the airports of Scotland, and the cabinet secretary, Neil Gray, is meeting airlines and airports in Scotland about that market.

Grangemouth has the potential to be a leader in the UK in providing sustainable aviation fuel, which would make a difference in respect of the climate change targets of both Governments. It would make a difference to the sustainability of aviation in the future if the airlines and airports were willing to set out their stall and say, “We will take on that product.”

I want to mention a couple of other people. Gillian Mackay talked about the impact on the wider Grangemouth town economy, which was backed up by Stephanie Callaghan. Those lessons in history are important. Members will know that I am a child of Clydebank, which suffered the same kind of situation that Stephanie Callaghan’s constituency did.

I thank the minister for taking the intervention. The Grangemouth site is quite unique in how close it is to the town and where people live. In some cases, the site is only across a road and down a grass verge from people’s houses. Will the minister commit to involving the community in what the site looks like, what comes next and the impact on their living environment?

That is an important consideration. At the moment, the Grangemouth future industry board has the unions and Petroineos involved, but it also has the council and community councils involved. That is possibly the conduit, but if it can be widened out in some shape or form, I am up for that.

I was at the first meeting of the Grangemouth future industry board, and we thought that we needed to have more frequent meetings, which we have already outlined. We also decided to look at the scope of what the group does and, potentially, have some sub-groups. We need it to be action focused rather than a talking shop. We need to look at the plans for the future and lift the barriers.

Emerging technologies such as hydrogen production and biofuels manufacturing could sustain the refinery and provide jobs, not only for the existing workforce but also for the future workforce of Grangemouth and the wider area. Business cannot do that alone, and commercial decisions must be made, but I am heartened by the tone of the debate and the comments about both Governments working together.

Graham Stuart, John Lamont and Neil Gray were also at that meeting. Off the back of that meeting, Neil Gray and I wrote to the UK Government ministers involved to follow up on some of the assurances that they had given us that they wanted to be fully involved in protecting the future of the refinery.

I am very grateful for the minister’s patience in allowing me to make a second intervention. Before she concludes, will she comment on the issues that have been raised about the hydrocracker? That seems to me to be a vital component in extending the life of the refinery as it is.

Secondly, has work begin on the economic impact assessment that a number of us have talked about? Does she have an estimate of when it might be produced? I simply think that it would give us all a huge impetus to make sure that what we are talking about in relation to transition actually happens.

In responding, minister, please could you start to close?

I will wind up.

I thank Stephen Kerr for the reminder—I was going to come on to the hydrocracker. On that issue, there is not much that I can say, as it is commercially sensitive, but we know that the site’s operators are working at pace to get it back online as quickly as possible. That is really all that I can say at the moment—that information has come from the operators themselves—but it is absolutely fundamental.

As for the economic impact assessment, that has actually been done by the group itself. Obviously, our officials are involved in assessing the economic impact; there is a Scottish Government assessment, and Scottish Enterprise are involved, too, as members would hope.

From my point of view, I would say that everything possible is being done to look at what Governments, agencies and the private sphere can do to realise the site’s potential. Geographically, it is ideally located; it has a long history of providing Scotland with fuel and energy security; and it has the most expert workforce whom we cannot afford to let down, for the reasons that all members have highlighted in the debate. Members have my assurance—and the cabinet secretary’s assurance—that we in the Scottish Government will work with whoever has solutions for prolonging the refinery’s life.

13:47 Meeting suspended.  

14:00 On resuming—