Chamber and committees

I am glad that you asked me that, because a narrative has been put out there that we are reacting to the decision that the shareholders of Petroineos made last year, when, in fact, work has been on-going for quite a long time. The Scottish Government has been working with Petroineos in particular to prepare for a just transition, or a transition in the type of work that it would do, and I have a list here of the projects that we have worked on.

In 2021, the Scottish Government provided financial support to project GRACE, which investigated a range of potential decarbonisation interventions across Grangemouth. In 2022, the business provided 50 per cent of the funding for a biorefinery pre-appraisal study for biofuels, and the Scottish Government matched the funding. Appraisal studies on fuel switching, net zero and blue hydrogen projects were funded by a 50:50 split between Ineos and the Scottish Government. There was a further study on the biorefinery in 2023, and project willow was completed last year.

It is unfortunate that the shareholders did not want to progress any of those projects. That is a real shame, because I think that there was appetite from the workers and the management of the refinery to progress those opportunities. When I first came into post as Minister for Energy, I visited the refinery to discuss some of the outcomes of the biorefinery appraisal study, and the excitement was palpable. However, the shareholders and owners did not want to take it forward. It is not true to say that project willow was done in an emergency situation—the Government, working with Ineos, has been building the case for the refinery to change what it produced for quite some time. When it comes down to it, the company made a decision not to go forward with any of those projects, based on the views of the shareholders and the board.

The fact is that that work remains: it has been done and it fed into project willow. The study was funded by both Governments, and Petroineos led the work. Up to the point that the study was published, the work was done by EY, and it is now being taken forward by Scottish Enterprise and the task force. A great deal of work has been done in preparation for what we knew could happen.

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.

That is certainly not my recollection of the situation. That £80 million was always on the table. It comes back to my first point about those discussions with the Scottish cluster about when it would need the funding.

We have been calling for the new UK Government to step up and give the funding associated with track status to the Acorn project. We are all politicians here—we wanted to prompt that funding as much as possible. There was no point in the £80 million sitting there and never being used because the rest of the funding to get the project off the ground was not forthcoming.

As I said originally, the Scottish cluster told me that it would need the funds at the point at which it knew that the project would be going ahead. I hope that, by this time tomorrow, we will have a clearer indication of what the funding for that will look like and that, at long last, the Scottish cluster and the Acorn project can get going, because we do need them.

I will try to be as brief as possible.

I will not say that you are missing something, now that I have got to the nub of your question. It is not as if in Scotland we use different plastics from those that are used in the rest of the UK. Standard plastics are used throughout the UK and Europe. We know what they are and whether each one of them is viable as feedstock for the types of operation that are coming through and that Jan Robertson is considering with her team.

SEPA and Zero Waste Scotland are analysing where those different plastic streams go for recycling and where there are gaps—for example, if processing is not happening in Scotland or the wider UK, which might mean that there is an opportunity to do it. They are also assessing the volume. That is important for the business case. The question is where the volume of the feedstock needed to turn plastics into the chemicals that I outlined will come from.

That is critical work that not only has to happen in Scotland but must be done with our UK Government partners. If any streams of plastic waste are being taken elsewhere in Europe or further afield, it is in the interests of both Governments from a carbon footprint point of view and a business development point of view to minimise that as much as possible. That work is happening and is being done by the task force.

Anything that is required in relation to regulation is being fed back to both Governments. I would expect the UK Government to take forward any regulatory changes to enable projects to progress, and the Scottish Government would do the same, should anything land on our desk.

No.

That depends on what gets taken forward. Several feedstocks are associated with biorefining. Biofuel does not just involve timber; it could be any kind of hydroprocessed esters and fatty acids.

We need to talk about what we use our land for. We do not want to displace the growing of food unnecessarily. There is a dichotomy: if we displace fruit crops for food, then we will have to import more food, and there is a carbon footprint associated with that. There is a careful balance to strike between what we use land for and the competing demands on our land. There is also quite a lot of degraded peatland that we want to re-wet in order to sequester carbon. That is an additional demand that we are putting on Scotland’s land and there is the spatial squeeze that could be associated with that.

We have these discussions on what land is used for with our rural economy colleagues. We have also recently had advice from the Climate Change Committee on what it sees Scotland’s land being used for. There are competing—actually, “competing” is the wrong word. We do not want to displace high-quality food production, as that would mean that we would have to import more of our food, which would have an associated carbon footprint, and might come from parts of the world that may not, for example, have such high animal welfare standards.

A very careful judgment has to be made. We could use feedstocks for biofuels, but we could effectively be offshoring emissions as a result. Your point is well made and this is a live conversation that we are having across all four nations and also in the Government.

Yes.

The enterprise agencies that are involved—such as Highlands and Islands Enterprise—will absolutely discuss all the opportunities for transition with any operators, but I will take that point away to consider.

That is quite interesting. Jan Robertson might be able to give more detail about the near-term projects that have come forward. There is a near-term opportunity from acetone, butanol and ethanol refining—that involves the fermentation of biowaste into chemicals—and the sifting process has bottomed out a number of opportunities in that area. Another near-term opportunity involves the recycling of plastics into hydrolysed oil.

Project willow identified nine key development opportunities—that is the shop window. The Grangemouth site is a great offer, because it is strategically placed when it comes to geography and infrastructure and it is part of an industrial cluster. If it becomes more of a chemical cluster, that is great news, because that will mean high-value jobs. One huge disappointment about the ceasing of the refinery is about jobs, because the jobs that were associated with the refinery were high value. We do not want to lack high-value job opportunities. Sustainable aviation fuel provides an opportunity on the site in the medium term, and potentially in the longer term, that would bring high-value jobs.

In the medium term, we are focused on getting some projects off the ground—specialist work has been done to put teams in place for them—but we are also looking for high-value, sustainable, low-carbon opportunities in the longer term. A few things have to happen in the regulation space—I will come on to that—and in the aviation sector to prompt the demand for SAF. Things have to happen in relation to the regulation of hydroprocessed esters and fatty acids, which is the feedstock that is associated with biorefining. The Scottish Government has given the James Hutton Institute money to do a pilot study on the cover crops that would be required, and we are hoping to do more work to ascertain how we could play our part in that. Quite a lot of things have to happen at the regulation level but, to address your wider point, attracting high-value industries is absolutely at the core of what we are doing.