Grangemouth Industrial Just Transition Plan: Business and Regulatory Impact Assessment

Section 1: Background, aims and options

Background to policy issue

The Grangemouth Industrial Cluster is one of Scotland’s largest manufacturing hubs consisting of multiple large operators focused on fuel production, port operations and logistics as well as chemicals and pharmaceuticals manufacturing, with a cohort of many smaller businesses co-located nearby. The JTP includes evidence to suggest that the Grangemouth Industrial Cluster contributed a total of £644m of GVA to the Scottish economy and supported a total of 6,350 jobs in 2025. The largest four manufacturers (Biomar, Versalis, Syngenta, INEOS O&P) located at the Cluster, had a combined turn over c.£892m in 2024, consisting of c.£472m (53%) from UK sales and c. £419m (47%) from international sales. In addition, it has been estimated that the Cluster was responsible for 7.2% of Scotland’s territorial emissions (equivalent to 2.92MtCO2e), in 2022.

The Grangemouth industrial cluster has faced challenges in recent years, with Fujifilm (dye manufacturing), Petroineos (oil refinery), and Versalis all announced site closures between 2023 and 2025.These combined closures have directly impacted over 700 jobs. Petroineos ceased refining operations in the second quarter of 2025, which will lead to approximately 400 redundancies. In a ‘do-nothing’ scenario, it is the Scottish Government’s understanding that the cluster may struggle to maintain a competitive level of operation. This scenario is outlined in more detail within the ‘What Would Happen if the Scottish Government and/or Other Stakeholders Took No Action?’ section of this BRIA.

Our ambition for Grangemouth is to preserve and grow the significant economic role of the cluster, whilst ensuing it transitions to a vibrant, low carbon facility which in turn will unlock wider net-zero opportunities for Scotland. Currently, as Scotland’s most carbon intensive manufacturing cluster, we anticipate significant structural changes will be required on the path to achieving this ambition. Without the development of this plan, we have identified significant potential risks to future development including; a lack of co-ordination across various cluster actors creating unintended consequences; lack of commercial appeal and appropriate incentivisation of decarbonisation measures; insignificant workforce volume and skill to support the transition and; lack of appropriate engagement and support for the surrounding communities of Grangemouth.

The JTP seeks to influence an approach that will avert this scenario whilst working to promote positive benefits on current and future workers as well as the surrounding community.

Purpose/aim of action and desired effect

The JTP’s overall purpose is to provide a strategic framework to guide decision making for the cluster on the path to reach Net Zero by 2045.

To do this, the JTP outlines a vision for the future, illustrating the Scottish Government’s ambition for Grangemouth and a target for Grangemouth to become a carbon-neutral hub by 2045. The cluster aims to become a Net Zero chemicals centre, supporting the development of biofuels and hydrogen sectors that play a key role in driving Scotland’s energy security and economic prosperity. To achieve this, the Scottish Government has set out five key transition pillars that it aims to address:

1) A thriving industrial cluster, leveraging existing strengths;

2) A low-carbon fuel and energy hub for the future;

3) An industrial carbon capture point for central Scotland;

4) Scotland’s central bio-manufacturing location; and

5) An innovative cluster leading new and advanced industrial processes and manufacturing.

These pillars are intended to help bridge the technical and commercial actions required, which is expected to result in a series of outcomes that the plan aims to improve.

In support of this, the Plan also provides a set of Just Transition Outcomes that are guided by the Scottish Government’s National Just Transition Planning Framework, outlining four outcome areas that the plan should achieve. The four outcome areas the JTP aims to improve are:

• Jobs, Skills, and Economic Opportunities
• Communities and Places
• People and Equity
• Adaptation, Biodiversity and Environment

These outcomes are designed to ensure that communities and workers are given due consideration and input into decision making that supports the economic growth of Grangemouth as it transitions to net zero To achieve this, the plan also includes a series of 21 actions that will enable a just transition for Grangemouth. These actions have been divided into near, medium, and longer-term activities. Broadly, the actions pertain to improving a range of areas and themes across the cluster, including aligning strategy and governance, improving access to jobs and skills, regulatory changes, enhanced engagement between community and industry, and increased access to Scottish and UK Government funding. The efficacy of these actions will be measured against a robust monitoring and evaluation framework, which is also set out within the JTP.

The JTP aligns with wider Scottish Government strategic aims including the 2045 Net Zero target as well as aligning with the UK Government’s energy security objectives to achieve energy independence by aiming to double Britain’s electricity generation capacity by the late 2030s. Finally, the JTP aligns with objectives outlined in the Programme for Government 2024-25 with four key priorities in eradicating child poverty, growing the economy, tackling the climate emergency, and ensuring high quality and sustainable public services. Scotland has a wide array of national and local strategies, policies, plans, and agreements to support the transition to net zero and promote economic growth which the JTP will support. These include:

• National Planning Framework 4 (‘NPF4’)
• National Strategy for Economic Transformation (‘NSET’)
• Hydrogen Action Plan
• Scottish National Adaptation Plan 2024-2029 (‘SNAP’)
• The Climate Emergency Skills Action Plan 2020-2025
• Supply Chain Development Programme (‘SDP’)
• Inward Investment Plan
• Global Capital Investment Plan

What Would Happen if the Scottish Government and/or Other Stakeholders Took No Action?

In the case of a ‘do nothing’ scenario, it is the understanding of the Scottish Government that the cluster would struggle to maintain a competitive operating standard. The ‘do nothing’ scenario in this case assumes SG or relevant stakeholders does not progress the actions set out in the JTP as such the plan does not go as planned. Specifically, responses from the public consultation on the draft JTP suggested that it will become increasingly challenging for businesses to attract the investment necessary to achieve Scottish Government Net Zero and other targets if the JTP without additional intervention to support. See the ‘Options’ section below for a detailed description of the ‘do nothing’ scenario.

What is the ideal outcome/result and what would be a ‘necessary minimum’ acceptable outcome?

A necessary minimum for success is that businesses in Grangemouth continue to operate while taking proportionate action to decarbonise, and that they are capable of maximising economic opportunities as a result of transitioning to net zero. This must equate to improved outcomes for both the workforce and surrounding community of Grangemouth, as articulated in the JTP.

How will Outcomes be Measured?

The JTP outlines a robust Monitoring and Evaluation Framework with an initial identification of measurement indicators (e.g. average salary, Green House Gas (GHG) emissions) across the four outcome groups of the JTP. The Grangemouth Future Industry Board will be responsible for ensuring that reporting for this framework is conducted proportionately while each action within the JTP is progressed. A full consideration of the JTP’s monitoring and evaluation framework is outlined in section 5 of this BRIA.

Options Considered so far

This BRIA is based on the actions outlined within the JTP as currently proposed, which was published by the Scottish Government on 18 June 2025.

‘Do Nothing’ Scenario

Under this option the JTP would not be developed and industrial operators at Grangemouth would continue to operate as has been as defined in the baseline outlined in the JTP. It is likely that some activity in Grangemouth would continue but it is likely that there would be less benefit to businesses compared to a scenario in which actions within the JTP are delivered, as the Grangemouth Industrial Cluster currently lacks the level of co-ordination and planning that the JTP aims to instruct. Therefore, in a ‘do nothing’ scenario, the wider area of Grangemouth may continue to decline as businesses could face challenges in attracting the necessary level of investment required to achieve the Scottish Government’s Net Zero target.

In this ‘do nothing’ scenario, sector-specific, local and national policies would continue to operate, however, there would be no coordinated, whole-systems approach, and the integration of the JTP would not be achieved.

The Scottish Government will continue to review if alternative options should be considered as actions within the JTP are developed.

Sectors/Groups affected

The Net Zero transition, underpinned by the vision and actions plan sections within the JTP, is likely to have an impact on people and businesses across Scotland. It will require large scale investment and development in Grangemouth for the area to become a carbon-neutral hub by 2045.

This section will look in more detail at how individual groups in Grangemouth as well as wider national sectors will be impacted by the JTP.

Businesses:

Businesses that sit exclusively in the Grangemouth Industrial Cluster can be broken into the following sectors:

• INEOS Cluster: INEOS Chemical Polymer Production, INEOS Chemicals Ethylene Cracker KG, INEOS Forties pipeline system (Kinneil Complex), Petroineos, INEOS Forties pipeline system (jetty area for seaborne imports and exports)
• Forth Ports
• Energy Providers: Earls Gate Energy Centre, Scottish Power Substation, INEOS Combined Heat and Power, INEOS Infrastructure
• Other Industry: Safequip, Feraico, Sportex, BioMar
• Waste Processing: KDC Contractors, Foundry Steels, Green Circle Polymers
• Storage Services: ED&F Man, NuStar Grangemouth Ltd., Exolum
• Chemicals: Celtic Renewables, Piramal, Syngenta

An assessment of the current baseline of employment at Grangemouth has been included in the JTP and within this direct, indirect, and induced impacts for both GVA and employment have been estimated. The current assumption – based on the ToC exercise outlined within the introduction section of this BRIA - is that carrying out the actions within the JTP will increase employment in Grangemouth. Most immediately, the roll-out of Project Willow is estimated to create between c.800 total jobs. The jobs outlined in the recent Project Willow report include the requirement of the following occupations: operators, maintenance technicians, engineers, scientists, and laboratory workers.

As the core sectors that make up the Grangemouth Industrial Cluster, it is likely that the energy, waste processing, distribution, pharmaceuticals, manufacturing, agriculture, education, and petrochemical and chemical production sectors will be impacted at a national level by the actions set out within the JTP.

There are many smaller businesses that could be impacted by the JTP, given the diverse supply chain for businesses in the area of Grangemouth. An overview of these businesses is outlined in Annex A. The impact of the JTP on the current supply chain across the cluster has also been considered and results can be found in the JTP. The number and scale of supply chain businesses across Grangemouth would ccbe expected to grow as a result of the actions set out within the JTP.

An assessment of the impact of the JTP on consumers will be set out within a Consumer Duty Impact Assessment separate to this BRIA.