The future of the UK’s last remaining ethylene plant, at Grangemouth in Scotland, has been secured by a £150 million support package, including £120 million invested by the government.
The government said the ‘unique’ plant is strategically important for UK’s critical national infrastructure, energy, manufacturing and North Sea operations. It said the deal secures ‘operational commitment’ from Ineos for the plant and £30 million investment from the company. The package will protect chemical production and 500 jobs at the Ineos site, plus hundreds more in the supply chain.
“This package will help secure the site’s operations and contribute toward improving energy efficiencies, reducing carbon emissions and increasing productivity, helping to secure the site’s long-term competitiveness and sustainability,” the government said.
The government said the Grangemouth plant is vital for the whole UK economy because it produces ethylene, essential in the chemical supply chain and for manufacturing supply chains. The plant also links to the Forties Pipeline System, which is key for transporting North Sea oil and gas to onshore facilities.
“Without government intervention, the plant’s closure would have seriously affected hundreds of onsite workers, impacted thousands of jobs regionally, and devastated supply chains,” the government said.
Ineos said the investment will upgrade key production units, improve energy efficiency, and reduce emissions, and said it has already spent over £100 million over the last year maintaining operations at the site.
Ineos chief executive Sir Jim Ratcliffe said the support of the UK government is welcome. "However, we need to continue to work together to deliver competitive and efficient low-carbon manufacturing for the UK, long term. The answer is NOT decarbonisation by deindustrialisation.
"Without a strong manufacturing base, the economy will continue to decline. High energy costs and punitive carbon charges are driving industry out of the UK at an alarming rate. If politicians want jobs, investment and energy security, then they must create a competitive environment.”
The government said the agreement includes strict assurances that the funding - including a £75m government loan guarantee and £50m grant - can only be used to improve the site, and also gives the UK government the right to share in future profits. The support will be funded from within the Department for Business and Trade’s existing budgets.
The chemicals sector across Europe has faced significant challenges in recent years, including high energy costs, with around 40 percent of remaining European ethylene capacity either recently closed or currently at risk.
SCI chief executive Sharon Todd said: "It is good to see the Grangemouth ethylene plant, with the critical capability it brings to the UK, being supported today by the government. Going forward we need a systemic approach to building industrial resilience and safeguarding capabilities like these before the closure of plants becomes a risk.
"Ethylene a critical building block for making everyday products such as clothing, detergents, medical protection, pipes, and countless others, and this action will also support 500 jobs," she said.
More news on the European chemical industry
- Leader: Chemical industry at the crossroads
- Why Europe's chemicals industry has had a 'disappointing' year so far
- 'Difficult market dynamics' in Europe as Dow plans ethylene cracker closure
- Flue2Chem points the way towards a low-carbon, circular economy
- Europe's chemical companies are finding it tough to compete
Visit Blog