Grangemouth’s closure is not the simple tale of a dying industry, but a more complex strategic retreat forced by economic inevitability.
Originally a BP asset, the refinery passed through Innovene to INEOS in 2005, and since 2011 has operated as a 50/50 joint venture with PetroChina under the name Petroineos. Despite media and union claims of chronic losses, financial records show the refinery was profitable in most years, generating £80 million in 2022 alone. A major loss reported in 2020 was largely a one-off accounting impairment, not a collapse in operating performance. The company claims to be losing £385k a month.The shutdown of crude processing in April 2025, despite recent profitability, suggests the decision might have been driven by long-term strategic factors, not only short-term insolvency.
This move marks a wider move across Europe, away from domestic refining towards fuel import & distribute hubs, as part of dealing with longtime over-capacity in the refining industry and “green” restructuring.
Around £50 million was allocated to convert Grangemouth into an import-and-distribution terminal, aligning with INEOS and government decarbonisation agendas. The result: roughly 400 direct jobs lost, alongside local economic fallout through the extended supply chain. Yet companies like Scottish Power are already stepping in to rehire displaced engineers into renewables. This is a market failure, followed by a deliberate transformation of national energy infrastructure... though it is presented to the public in the language of crisis.
Grangemouth must be reappraised in the light of market over capacity and technology advance. Its model must be updated to fit.green "pivot" and consequent regulatory path chosen by political and corporate elites.
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Detail on Grangemouth
The as-is:
*Ownership*
50/50 joint venture (INEOS & PetroChina), not wholly INEOS-owned, half Chinese
*Profitability*
Profitable outside a 2020 anomaly, but claims of monthly losses of £385k is why CEO Ratcliffe pulled the plug finally
*Strategic Shift*
Transitioned to an import terminal, same in Europe due to global overcapacity in refining and newer, low cost plants in asia and elsewhere. This over capacity dates back many years, but now as a result of the green pivot it is only getting worse. Why did Ratcliffe even buy Grangenouth? It's only because it was his part of this niche industry.
*Economic Impact*
Hundreds of jobs at risk, but there are still two local green investment possibilities that could offset some job losses.
*Conclusion*
Ratcliffe couldn't sell it and the government doesn't want to or can't invest enough (£225m on a 50-50 basis). This tells us that this piece of industrial infrastructure is past it's expiry date and needs to be updated or removed. What's happened is that Ratcliffe tried to repurpose it, but reality is the global economy and technology have moved on and left it standing still.
*What to do*
There could be a strategic push here for low cost, competitive refining advantage, that would give Scotland some control over, it's energy supply instead of being victim. Two the global market.
But it's also true that there's not much you can do about job losses, these are inevitable, other than retrain the workforce into new technology roles... And that's the job of government.
*Options*
Option 1: Green Energy Hub & Fuel Import Terminal
Transforming Grangemouth into a low-carbon hub under Project Willow is a long-term investment (£3.8 billion over ten years to £13 billion in a full rollout...roday's estimates only) .
The plan relies on private capital, alongside a £200 million UK and £25 million Scottish government commitment, to deliver nine green projects (recycling, biomethane, sustainable aviation fuel, hydrogen, e‑ammonia) via synergies with the Acorn CCS scheme. Plastic recycling alone may cost about £600 million and employ ~250 people, while larger facilities like SAF -
(Sustainable Aviation Fuel), a low-carbon alternative to traditional jet fuel, made from biomass, waste oils, or synthetic feedstocks. It can reduce lifecycle emissions by up to 80%, and is a key plank in UK and EU net-zero aviation strategy -
or hydrogen plants. Rhese could require up to £800 million each ro set up. Supporters project 800–1,750 jobs by 2040, but success hinges on favourable regulations and sustained investment
Option 2: Restart Refinery via Hydrocracker Revival
Reactivating Grangemouth’s hydrocracker and processing North Sea crude offers a quicker, lower-cost route focused on preserving core infrastructure. MPs and unions estimate a £60–80 million investment to restart the hydrocracker. Additional upgrades such as connecting to the Forties pipeline and adapting for North Sea streams like Rosebank, would require further uncosted, unspecified, engineering expenditures. This strategy could potentially triple profitability, maintain existing jobs, and support a transition in the interests of the community, as part of the site's future biofuel roll-out. However, it doesn’t address long-term decarbonisation, and would require parallel green investment.
Summary:
Option 1 demands £3.8–13 billion in green investment (public + private), targeting a transformational renewable hub with long-term job growth.
Option 2 needs a £60–80 million injection to preserve refining capability, buy time, and sustain local employment while transitioning more gradually.
Final Conclusions
As a piece of industrial infrastructure, Grangemouth is well out of date. It has been overtaken by newer plants, by over-capacity in the industry, buy a switch to renewables, by more modern clean technologies. On economic grounds, it should be updated requiring considerable investment or the entire area repurposed - perhaps as an aeronautical construction site, servicing the burgeoning aeronautical engineering talent in Edinburgh.
Inevitably, in any industrial transformation, the workforce will be reduced and the government needs to step in with retraining programs.
From a strategic point of view, the objective must be for Scotland to retain independence and control in its energy supply. But equally, creative plans are needed for new strategically important industries in Scotland, things can be made, and this site could be the basis for that renewal - MSGA. Take Strata as an example.
