A feasibility study exploring options for overhauling the Grangemouth refinery in Scotland is reportedly set to propose £3.8 billion of investments in low-carbon alternatives for the site over ten years.
According to the Financial Times, which said it had seen documents related to the study’s contents, a best-case scenario could see the amount rise to almost £13bn.
The feasibility study for the redevelopment of Grangemouth, known as Project Willow, is being carried out by EY and jointly funded by the UK and Scottish governments, at a cost of £1.5 million. A range of proposals for building a new long-term industry at the refinery site has been shortlisted as part of the study.
The Project Willow report is expected to be published in the coming days. Scottish acting cabinet secretary for net zero and energy Gillian Martin said this week that it was undergoing final checks. In the meantime, the FT cited the documents it had seen as showing that nine industrial opportunities could be developed at the site over the next 20 years to create a low-carbon hub.
According to the FT, the nearer-term projects being proposed as part of Willow will focus on recycling plastics and the production of biomethane from sewage and animal waste from 2028, and on turning paper waste into feedstocks for low-carbon chemicals from 2030.
Beyond that, from 2032, proposals will include an £800m sustainable aviation fuel (SAF) and renewable diesel refinery and a £340m plan to process timber into advanced bioethanol. The longer-term proposals would require regulatory overhaul as well as higher levels of capital spending.
This follows a separate report by Scottish television channel STV in February, which said the study would suggest around 400 jobs could be created at the Grangemouth site in the next five years, and up to 1,750 could be created by 2040.
Global pressures
Project Willow comes as Petroineos, a joint venture between Ineos and PetroChina, prepares to shut the Grangemouth refinery in the second quarter of this year amid global market pressures and intensifying competition from refiners elsewhere in the world.
The upcoming shutdown is set to result in 400 job losses and has prompted the UK and Scottish governments to explore options for securing a long-term future for the site and supporting the workers that will lose their jobs.
The two governments unveiled a joint investment plan for Grangemouth in September 2024. Most recently, in separate announcements made in February, the UK government and the Scottish government pledged to contribute an additional £200m and £25m respectively towards new developments at Grangemouth.
The UK government’s portion will be paid via the National Wealth Fund and it is hoped that this contribution will also help to attract private sector investment.
Meanwhile, the latest investment announced by the Scottish government will be drawn from ScotWind revenue and used to establish a Grangemouth Just Transition Fund. The Scottish government noted in its announcement that it had committed or already invested £87m in Grangemouth in total to date.
If the best-case scenario laid out in the Project Willow study is to be realised, however, significantly more investment will be required.
According to the FT, building eight of the projects would require £3.8bn, while the ‘growth case’ set out in the feasibility study will entail a further £3.45bn for additional capacity and the construction of an e-ammonia plant. Development of all nine proposals to their “full potential” would require £12.9bn of investment.
“The key point is that all of this potential can only be unlocked by policy and regulatory changes,” the FT quoted a source briefed on the report as saying. “There also needs to be a custodian to manage the due diligence and financing of a broader master plan.”
The source went on to say that the projects to be proposed in the study would already be taking place if they were currently commercial. This points to the scale of the challenge at hand. However, the source added that even three or four of the projects going ahead would be “transformational” for the Grangemouth site.
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