Chamber and committees

I have had many conversations with UK Government ministers on that. It is no secret to say that I was very disappointed that Grangemouth was not factored in when those initial announcements were made and Teeside was allocated £50 million. Given that project willow had probably just published its report, in which SAF was one of the nine options, it would be an understatement to say that I was surprised about that. I am not telling you anything that Ed Miliband and Michael Shanks do not know. They know how disappointed I was about that.

There is an opportunity for some of that funding to be leveraged into Grangemouth. The refinery is an ideal place for SAF production. Indeed, the Scottish Government funded some studies to allow Petroineos to bottom out its capability to produce SAF in Scotland. One of the reasons why that was not progressed is that, at the time, the previous UK Government was against removing the HEFA cap. That put a limit on Petroineos’s ambitions in that area.

Petroineos was quite up front—this was mentioned at the Grangemouth future industry board, when ministers from the previous UK Government were involved—that the HEFA cap was a real barrier to it progressing anything on sustainable aviation fuel or any biorefining projects, in relation to which the Scottish Government had given it funding to carry out studies. That was a missed opportunity.

What you have asked about, Mr MacDonald, is exactly what I have been putting to the UK Government. I hope that I am being listened to.

When I came into post as Minister for Energy, one of my first meetings was with the Scottish cluster, which, at that point, was hopeful of getting track status. It has been marched up a hill so many times, but the previous UK Government never committed to getting it track status. We pledged money to the cluster for the point at which it would need it. I had very strong signals from the cluster that it would ask for the money when it needed it; it did not see it as worth while to take the money that the Scottish Government had pledged when there was no track status guarantee. The pledge absolutely stands, and I really hope that there is an announcement on that today.

Everyone was very surprised that the project did not achieve track status under the previous Government, because it was one of the most viable carbon capture, utilisation and storage projects out there. The core team included Storegga and Petroineos, and other partners included Shell. They all wanted to take advantage of the infrastructure that we have in Scotland, including the geological infrastructure—the empty reservoirs in the North Sea—and to harness some of the work that had been done, even more than 15 years ago, when CCUS was originally funded by the UK Government. That funding was then taken away. The cluster has been very patient.

However, I also want to say that the Acorn project has the biggest capacity in the whole of the UK in relation to the amount of CO₂ that can be taken, and it potentially rivals some of the reservoirs that the Norwegians have earmarked for CCUS. There is huge capacity that could take CO₂ from all over the UK and also help our European neighbours to decarbonise some of the hard-to-abate sectors across Europe. On many occasions, the Climate Change Committee has said to both the UK and Scottish Governments that CCUS is absolutely essential for us to meet our 2045 net zero target and our UK 2050 net zero target.

I am cautiously hopeful—but very hopeful—that, in the spending review today, the current UK Government will make the commitment that previous Governments failed to make. I will be first in the queue to welcome that.

I am having very regular conversations with all energy producers in Scotland about workforce issues, capacity and potential for changing to different activities associated with the just transition. The Deputy First Minister is having the same conversations with regard to economic growth and the green industrial strategy, and the First Minister is having them as well. That is happening across all the areas that will be involved in the just transition as we decarbonise and look to maximise the opportunities that exist, particularly from Scotland’s renewables proposition. The green industrial strategy is absolutely at the heart of that—of its five main areas, the majority are energy based.

If you are looking for detail on the matter, we can get it to the committee.

Is that right? That is on the official record. [Laughter.]

At the moment, SEPA and Zero Waste Scotland are collaborating on work on aggregation, involving an analysis of where plastics that are not covered under the deposit return scheme would go for processing and what the volume of that plastic is. That information is going to be useful to potential developers.

Whether there would need to be any changes to regulations is not something that has been flagged to me as an issue at all.

We did not want this situation, Mr Coffey. We wanted Petroineos to make different decisions and potentially take forward some of the things for which the Scottish Government was offering part funding, such as switching to a different type of refinery. I have outlined some of them today. We also wanted Petroineos to extend its refining process in order for there not to be a gap between the cessation of refining and bringing new opportunities on stream. Believe me, we tried our best, but a commercial decision was made by its shareholders and its board to do it the way that it has been done, and it is for them to answer why they did it in such a way.

I want to come back to the point about how well-placed Grangemouth, as an industrial cluster, is for new opportunities. Grangemouth has had it tough in the last year, and the closure is devastating for the wider community—the refinery has been there for more than 100 years and it is totemic. There are 400 or 500 high-value jobs associated with the plant. There are other viable industries in the Grangemouth cluster that are still there and working but looking to the future as to how they can expand and diversify.

As devastating as it is that Petroineos has made the decision to cease refining at Grangemouth, with project willow bringing in other opportunities that are associated not only with the refinery but with the wider cluster, there is an opportunity for Grangemouth to become a real powerhouse. It is connected in the pipeline infrastructure; it is associated with the green port; it is ideally located in the heart of Scotland; it is on the Firth of Forth; and it is an industrial cluster that has a long-term future.

Michelle Thomson mentioned some areas where we could focus our energy on what the site could become in the future. At the moment, our focus is on reducing the gap between the refinery closure and what that future will be, as much as possible. Many of the workers have been redeployed to other parts of the Ineos company, and there have been fairs at which other companies, such as Scottish Power, have offered jobs to workers who are facing redundancy. Forth Valley College is providing those workers with opportunities for reskilling and filling in skills gaps. Those opportunities have been accelerated by the money that has come in from the Scottish and UK Governments. The college has a centre of excellence, which is making a wider offer to the area through the courses that it is providing related to future jobs that are associated with a just transition.

However, the central fact remains that workers were given notice of redundancy and are having to find other work, with the exception of the small percentage of them who are being redeployed to the import terminal, and the ones who are involved in the decommissioning of the site. It is a staged approach, but the fact remains that refining has ceased there.

It is not the way that things should be done. The role for Governments is to try to encourage different decisions to be made. Where we are unable to do that, we are trying to reduce the gap as much as possible. We are working at pace through the task force to say that the site is absolutely open for business in order to bring low-carbon opportunities into that cluster. I hope that, in however many years’ time, we can look back and say that, although we did not want what happened to happen, it was a turning point for Grangemouth that enabled it to become a low-carbon industry cluster.

Kenny MacDermid has just given me what I think is the final figure for the funding to date, which is £87 million. That is for lots of things—the growth deal, additional resources, studies that have been done on hydrogen, and something that I should have mentioned when we were discussing project willow, which is the £2 million funding for the feasibility study on the pipeline. When we think about project willow, project GRACE—or the Grangemouth advanced capture project—the biorefinery and so on, we can see that the numbers all mount up. I can certainly furnish the committee with that information in writing.

I have great sympathy with what is behind your questions, because I have the same questions. My UK Government partners in the task force know of my concerns. There must be consideration of the flexibility that is needed. The £25 million just transition fund is modest in comparison with the funds that the National Wealth Fund has at its disposal. The UK Government wants what we want—for the projects to be taken forward.

On how the National Wealth Fund operates, it has stated that it will put in money for projects that are commercially viable. We do not want something that could become commercially viable and which just needs an injection of more seed funding not to be supported. I am discussing the issue with the UK Government. Should such a situation arise, I would make the point that the National Wealth Fund must step in so that we do not jeopardise any projects that have the potential to be very successful. I do not think that it would want to jeopardise such projects. There will maybe need to be a bit of flexibility. At what point would the NWF consider something to be sufficiently commercially viable for it to step in? I am concerned that that has not been quantified to me.

The good news is that UK Government ministers and I have been working closely on the issue. That is a real sea change in comparison with what happened previously, when there was not close collaboration. The task force reports to ministers. At least monthly, we have a meeting where we bottom out a lot of these questions. Jan Robertson reports to us on the status of all the projects, too. Therefore, it is not as though we will not know about the risks in relation to growing something—we are in the room, having granular-level updates on the projects.

Yes.