Grangemouth Industrial Just Transition Plan: Business and Regulatory Impact Assessment

Section 3: Costs, impacts and benefits

Positive Impacts for Businesses

A broad range of impacts to businesses have been identified. The following section will focus on the impacts from actions within the JTP which are most relevant to businesses. These actions include the funding and delivery of Project Willow, establishing the Grangemouth Regulatory Hub, and producing an evidence-based plan to improve public transport links.

Project Willow is a Government funded study to identify viable technical and commercial transition options for the Grangemouth refinery site, alongside a series of policy and regulatory recommendations to support their realisation. Project Willow makes a significant contribution to research and development for critical transition projects aligned to the JTP’s Transition Pillars. Likely impacts to businesses from Project Willow include:

• As Project Willow progresses there may be more investment opportunities, and this could attract more businesses to the area of Grangemouth. As outlined in the report published in May 2025 it is estimated that in the ‘base’ case scenario Project Willow could contribute an annual GVA of £600-700m by 2040 and this figure is estimated to be £1-2bn in the ‘growth’ scenario. More businesses and R&D opportunities may create more jobs, provided there is demand and workforce capacity to support new business activities. The Project Willow report highlights that between 800 and 1,200 direct operational jobs (1200 is based on the ‘growth’ scenario) could be supported once Project Willow is fully active by 2040.
• Project Willow's nine programmes aim to promote the Net Zero transition, particularly through increased R&D and innovation. This could support businesses to contribute towards the Scottish Government’s Net Zero targets for 2045 particularly in reduce greenhouse gas (‘GHG’) emissions. This is evidenced in the Project Willow report which estimates a reduction of GHG emissions of between 3.5Mtpa and 6Mtpa (base to growth scenario).

The creation of a Regulatory Hub could also support sustainable growth for businesses in Grangemouth by improving collaboration and access to guidance on regulatory requirements. This may improve efficiency for businesses in Grangemouth as project delivery and operations may improve given a better understanding of regulatory requirements (e.g. Health and Safey or environmental requirements) and reduced administrative burdens. Impacts to businesses from establishing the Grangemouth Regulatory Hub include:

• Providing clear requirements for businesses to operate efficiently may lead to successful adoption of best practices and technology upgrades that may help reduce carbon emissions. This would support Grangemouth in achieving the JTP outcome to become a carbon-neutral hub.
• If businesses become more efficient from reduced administrative burdens, it could lead to growth. This may allow existing businesses to innovate and expand and increase job creation.
• If businesses experience lower costs from reduced administrative burdens, the market in which they operate may be perceived as more attractive. This could lead to new entrants to the market which could increase market competition and innovation.

The funding of a Community Engagement and Participation Manager is likely to deliver positive impacts to businesses as better social cohesion through effective communication between the community, local businesses (including SMEs), Falkirk Council, and the Scottish Government may support business development and growth. This growth could also support job creation as businesses may expand operations and require a larger workforce

A comprehensive approach to the skills and workforce landscape for Grangemouth, outlined in the plan, with a focus on both the existing and future workforce could be anticipated to have a positive impact on business, by working to ensure a sufficiently skilled and numbered workforce is in place at Grangemouth in the future. This includes:

• Strengthening of existing links between operators and local skills providers such as Forth Valley College
• Additional insight into skills requirements aligned to clearer articulation of future operations
• A more diverse workforce bringing new insights and innovations
• Access to a skilled workforce who see the Grangemouth industrial cluster as a viable long term career destination.

The JTP’s action to improve public transport links could increase mobility and connectivity around the Grangemouth Cluster. This may lead to increased attractiveness for investment in the Grangemouth area, as well as a stronger supply chain and improved mobility (i.e lower barriers to employment). Impacts to businesses from producing an evidence-based plan to improve public transport links include:

• Increased footfall through the Grangemouth town centre may attract businesses as a prosperous area to locate, increasing market and trade competitiveness in the area.
• Businesses may experience wider access to a better skilled pool of labour if connectivity to Grangemouth is improved, leading to increases in productivity and output for businesses.
• Businesses may also have opportunities to access new markets if they are better connected with other regions or business outside of the local area and this could improve competitiveness of businesses.

The JTP includes an action to develop a Grangemouth Regulatory Hub, which would support businesses in the Grangemouth Cluster with access to regulatory data and advice. The impacts of this action are expected to increase the efficiency of businesses by providing better regulation information and fewer restrictive barriers for business to enter domestic and international markets. The Regulatory Hub could also impact existing businesses in attracting more investment by supporting collaborative regulation. This could allow businesses to adopt best practices and technology upgrades successfully and at a quicker rate.

Unintended consequences identified during the consultation

In their consultation responses some businesses highlighted the potential health and safety risks to employees from the production of transition commodities, including hydrogen and biofuels. Going forward these concerns will be accounted for as a matter of process in collaboration with the Health & Safety Executive, as any developments related to specific technologies are progressed at scale. Given the outcomes relating to worker safety and fairness are embedded in the JTP, these aspects will also be given due consideration in any decision making.

Businesses also provided feedback that the potential high cost and complex processes inherent to delivering some of the projects within the JTP, as well as the complexity of doing so. It is therefore implicit that the appropriate regulatory and policy mechanisms are in place to ensure that the ambitions outlined in the plan are achievable – this was a point that was raised frequently in consultation feedback as critical to allowing business to transition in a way that maintained commercial viability. Governments will continue working together to ensure appropriate decisions are made in good time.

Scottish firms’ international competitiveness

The JTP includes actions that are aimed toward supporting Scottish businesses’ to compete internationally and enhance attractiveness for global capital investment. The following section will focus on the impacts to business from actions that are defined in the JTP. These actions include the funding and delivery of Project Willow and establishing the Grangemouth Regulatory Hub.

The deployment of the nine projects under Project Willow may deliver enhanced and better coordination of research and development (R&D) across sites at Grangemouth. This could lead to allocative efficiency of investments and increased attractiveness of the area to investors. Potential impacts to businesses from Project Willow include:

• Increased competition on a global scale as Project Willow could promote business innovation from R&D, supported by public (e.g. the National Wealth Fund committed at least £5.8bn to invest in sectors such as green hydrogen and carbon capture) and private sector funding from global capital investors.
• There may be an increase in the quantity of capital investment in the industrial cluster. Evidence from the Project Willow report highlights that the Cluster was responsible for 6% of Scotland’s net greenhouse gas emissions and 27% of Scotland’s total industrial emissions in 2023. It also includes a projection for how UK road transport energy could fall by 64% with shift from oil products to electricity. The report also estimates that UK emissions could fall by between 0.4% and 0.7%, compared to 1990 emission levels. This indicated that if Project Willow were to be successfully deployed, it could not only mitigate environmental impacts but also demonstrate the value of Grangemouth to potential investors in contributing to Scotland’s Net Zero ambitions and could establish it as a prime location for green investment.

The action to develop a Regulatory Hub outlined within the JTC could support sustainable growth for businesses in Grangemouth by improving business collaboration and businesses access to regulatory information and guidance. A better understanding of the regulation process and requirements (e.g. Health and Safey or environmental requirements) could help improve business’ project delivery efficiency as well as reduce existing administrative burdens. Increased efficiencies could make businesses better positioned to compete internationally and there could attract greater capital investment.

Benefits to business

In addition to benefits outlined elsewhere within this assessment, further benefits to businesses resulting from the JTP are expected to be:

• Enhanced efficiency by reducing restrictive barriers for businesses (i.e. by improving access to regulatory information) may boost their productivity capacity. This improvement could facilitate the operational growth of existing enterprises and possibly attract new businesses to the market.
• Offering clear regulatory guidance to businesses to help them operate effectively while aligning with Net Zero regulations and targets may encourage the successful implementation of best practices and technological upgrades within business operations.
• Increased footfall through Grangemouth town centre may attract businesses to the area, potentially increasing the size of the local market and in turn could increase market competitiveness.
• Businesses may experience wider access to a better skilled pool of labour if connectivity to Grangemouth is improved, which could lead to increased productivity and output for businesses.
• Businesses may also have opportunities to access new markets if they are better connected with other regions or business outside of the local area and this could improve competitiveness of businesses and the sustainability of the supply chain.
• Improving social cohesion between business, the public sector and businesses via the funding of a Community Engagement and Participation Manager could support business growth as challenges or needs for businesses or employees could be more clearly communicated. Ensuring that views from the community are taken into consideration during the decision-making processes has the potential to improve trust and collaboration in Grangemouth, thereby making the cluster a more appealing site for investment.
• Establishing a Local Procurement Framework may support local supply chains, by increasing the likelihood that wealth and economic activity will remain within the community. Consequently, businesses might benefit from more sustainable and resilient local supply networks which is expected to generate employment opportunities and keep financial resources circulating within the area. It could also stimulate the growth of local enterprises and attract additional economic activity.
• If each of the actions within the JTP are realised the Cluster could gain recognition as a Centre of Excellence in industrial decarbonisation, driven by increased investment, improved productivity and opportunities within a diverse and sustainable supply chain. This development might attract new businesses to the area and offer expansion opportunities for existing enterprises, potentially leading to heightened competition. This may attract new businesses to the area and existing businesses may have a greater potential to expand, both of which may lead to increased competition.

Benefits derived from consultation feedback

Feedback from the public consultation on the draft JTP suggests that businesses anticipate long-term benefits to arise from the Plan. Conversely, consultation feedback has also highlighted that businesses recognise that the degree of success is contingent on the successful delivery of actions within the JTP. The potential development of a sustainable and green energy sector was a repeatedly mentioned benefit by businesses in the consultation. Other benefits that were provided by businesses from the consultation includes:

• The Grangemouth Cluster could have the potential to safeguard Scotland’s future energy security and the JTP could successfully drive this potential. This suggests that there could be benefits to the energy sector if the JTP achieves the outcomes outlined in the plan.
• Businesses noted that a large portion of the JTP’s outcomes could be achieved through Project Willow.
• One business stated that there have been many other use-cases (outside the UK) where producing biofuels has been successful in recent years, and that the UK will need to move at pace if it is to keep up in this sector. The JTP could support Grangemouth in maintaining its competitive position, especially in light of the decarbonisation projects (three bioresource projects; 2^nd generation bioethanol, Anaerobic Digestion, and HEFA) that Project Willow includes t.

Small business impacts

In 2023 GFIB funded the Net Zero Nation Grangemouth Pilot Accelerator programme, a scheme providing carbon accountancy software and SECR-compliant carbon reporting to ten Grangemouth-based SMEs. In 2024 the programme entered its second iteration and has signed up a further 10 small businesses across the cluster. In March 2024 the company were awarded the CeeD Net Zero Heroes Award for their work on the GFIB-funded Accelerator Programme.

Mitigation of potential adverse impacts on small businesses:

The Federation of Small Businesses represents SMEs across Grangemouth on GFIB and were consulted on the development of the JTP. Feedback from the public consultation on the plan highlighted that one challenge for SMEs is the need for adequate support and guidance to facilitate easier and more efficient access to funding. To this end, establishing a Grangemouth Regulatory Hub has the potential to enhance the speed and quality of decision-making in the context of investing in viable projects. This could be especially beneficial for SMES, which often encounter limitations in resources, including time and costs.

Investment

Please see the “Scottish firms’ international competitiveness” and “Benefits to business” sections of this BRIA for information on how the JTP may impact investment in Grangemouth.

Alignment with the recommendations from the First Minister’s Investor Panel, aimed at making Scotland a globally competitive investment destination, have been considered. The Investor Panel provided 31 recommendations and the below outlines an initial view of where the JTP aligns particularly well with the recommendations:

• Recommendation 4: Net Zero and sector priorities need to be clearly articulated in Government strategies in a way which shows they can be delivered.
  • The JTP has fully considered sector priorities, risks and challenges and articulates this across the Baseline and Vision section of the document. It could further align with this recommendation by prioritising the successful and efficient implementation of its actions, aiming to transform Grangemouth into a carbon-neutral hub.
• Recommendation 9: The most appropriate providers of finance and expertise need to be identified and segmented. A serious, professional and consistent relationship management approach needs to be taken to these institutions.
  • The JTP would align with this recommendation if Project Willow is successfully progressed. Work is actively underway to achieve this through the Investor Taskforce, led by Scottish Enterprise.
• Recommendation 12: Investors and market participants are concerned that the Scottish Government and the Crown Estate Scotland may find it difficult to secure all of the published commitments from developers and a continued focus will be required to ensure commitments are realised.
  • The JTP will align with this recommendation if the monitoring and evaluation stage of the JTP is delivered successfully.
• Recommendation 21: Public financial resources and policy should focus on the use of green hydrogen as an enabler for industrial decarbonisation.
  • The JTP outlines low carbon hydrogen as a key transition pillar, work underway to secure this for Grangemouth. From an operational perspective, commencement of Project Willow, particularly project 7 of ‘Fuel switching’, could align with this recommendation.

Workforce and Fair Work

The Fair Work First Guidance is designed to encourage and support employers to adopt fair work practices. In the JTP there are several actions that could lead to a more inclusive recruitment or increased job satisfaction, with the JTP seeking to increase fairness and equity in the process of reaching Net Zero by 2045.

Unite the Union, GMB, and the STUC are members of the GFIB and as such have been involved closely in the development of the plan and will have continual engagement with the JTP as its actions are developed.

Whilst businesses have highlighted a risk that transition to net-zero could increase their operating costs, they have not indicated any impact on their ability to pay workers at least the real Living Wage. Maintenance of fairness is inherent to many of the outcomes in the Just Transition Plan, and as far as it can influence, these principles will be upheld. For example, funding administered through our £25m Grangemouth Just Transition Fund will provide standard conditions that recipients align to Fair Work First Guidance.

Climate change/ Circular Economy

The Scottish Government is committed to achieving Net Zero by 2045 and is actively promoting a circular economy as part of its strategy to reach this goal.

Supporting Scotland’s overall climate ambitions is a critical ambition of the JTP document, by fostering an environment for industry to achieve significant carbon emissions at Grangemouth. Given the strategic nature of the JTP document, and a core focus on industrial emissions reduction, we anticipate that this document will have a broadly positive impact on business’ ability to support climate targets and embed circular economy principles to this effort. This will be maximised by successful delivery of the actions within the plan.

In pursuit of climate objectives, the Project Willow report identifies the Grangemouth Industrial Cluster as accountable for 6% of Scotland’s net greenhouse gas emissions and 27% of the nation's total industrial emissions Preliminary quantitative analysis indicates that Project Willow holds the potential to decrease UK emissions by between 0.4% and 1.2% relative to 1990 levels.

The JTP outlines takes cognisance of several existing Scottish Government plans that are anticipated to positively affect businesses' capacity to contribute towards climate and circular economy objectives by advancing climate change targets and circular economy efforts. This includes:

• The Hydrogen Action Plan
• The Climate Change Plan
• Scottish National Adaptation Plan 2024-2029 (‘SNAP’)
• The Climate Emergency Skills Action Plan 2020-2025

Impact of the JTP on Scotland’s Circular Economy and Waste Route Map

Scotland’s Circular Economy and Waste Route Map outlines the Scottish Government’s priority actions to be implement up until 2030 to drive sustainable use and management of resources.

The JTP vision outlines SG’s ambition to ensure that Circular Economy principles are embedded into the activity of Grangemouth businesses. We anticipate this will have a broadly positive impact given the underlying ambition informing the JTP as a decision making framework. Our overall ambition is for an interconnected cluster that maximises the shared use of resources, embedding circularity where possible. For example, three of the projects outlined within Project Willow (Hydrothermal plastics recycling, dissolution plastics recycling, and ABE biorefining) have the potential to contribute to the strategic aims of modernise recycling (i.e. to co-design measures to improve commercial waste service provisions) and decarbonise disposal waste (i.e. to develop a Sector-Led Plan to minimise the carbon impacts of the Energy from Waste Sector). These projects also have the capacity to contribute to the reduction, reuse or recycling of resources by businesses and contribute to the broader target of contributing to the circular economy.

Competition Assessment

The extensive scope of the JTP is anticipated to directly and indirectly impact a variety of sectors which are considered crucial for achieving a fair and equitable transition to a low-carbon economy. As the plan itself is a strategic level document, we do not anticipate any impacts on competitiveness. Given that a number of actions are either in early development or are not yet underway, a full competition assessment cannot be conducted. Consequently, this section presents a preliminary analysis of the JTP's potential competitive impacts.

Where required further consideration of competitive impact will be assessed upon individual actions within the plan.

The below provides a high-level commentary on competition from delivering the JTP using the five Competition and Markets Authority (CMA) competition assessment questions:

Will the measure directly or indirectly limit the number or range of suppliers?

The JTP includes initiatives designed to encourage participation from businesses of all sizes and specialties within the supply chain. These initiatives include consideration of a local procurement framework and a supplier development program. While we recognise that the transition might lead some businesses and supply chain companies to adjust the scope and scale of their operations or to explore diversification, such changes are anticipated given the national Net Zero targets and ambitions set for the UK and Scotland.

Will the measure limit the ability of suppliers to compete?

The plan does not intend to limit the ability of suppliers to compete as per the reasons outlined above. There would be initiatives in place to help incentivise businesses to enter the market through increasing capital investment opportunities and providing businesses with the relevant capabilities/information to enter existing or new markets.

Will the measure limit suppliers’ incentives to compete?

At this stage, the JTP does not anticipate limiting suppliers’ incentives to compete. Through the aforementioned initiatives, the plan seeks to alleviate potential production limitations or competitive hurdles faced by both new and established businesses. In particular, the Regulatory Hub aims to further reduce these obstacles by offering businesses improved access to regulatory information and guidance.

Will the measure affect consumers’ ability to engage with the market and make choices that align with their preferences?

Actions within the JTP are not anticipated to prohibit consumers’ ability to engage with the market and make choices that align with their preferences, based on the following considerations:

• The initiatives outlined in the JTP aim to foster investment and innovation within relevant markets and businesses. This is anticipated to lead to improved outcomes for consumers, including access to safer, higher-quality, and more diverse products.
• The community engagement strategies as part of the JTP could enable local enterprises and small to medium-sized businesses in Grangemouth to cultivate trust with consumers, as they play an active role in the development process. Such involvement could enhance the flow of information, empowering consumers to make more informed decisions. This would help bolster the effectiveness of the JTP in addressing consumer needs.
• Actions within the JTP, particularly those focused on enhancing Grangemouth's infrastructure, such as improvements to public transport links, are intended to increase consumer mobility. This would allow individuals better access to a broader range of options that satisfy their preferences, thereby potentially boosting levels of consumption.

Will the measure affect suppliers’ ability and/or incentive to introduce new technologies, products or business models?

The JTP seeks to aid Grangemouth in achieving Net Zero by 2045 with the intention in encouraging the adoption of green technologies and innovative processes. The shift towards sustainable practices also has the potential to unlock new markets and opportunities for suppliers, particularly with the potential of increasing demand for environmentally friendly products and services in line with the UK's Net Zero ambitions

Consumer Duty

The Consumer Scotland Act 2020 defines a consumer as an individual, or a business no larger than a small business, that “purchases, uses or receives, in Scotland, goods or services which are supplied in the course of a business carried on by the person supplying them”. The 2020 Act also introduced a duty (“the consumer duty”) on ‘relevant public authorities’ in Scotland, when making decisions of a strategic nature about how to exercise their functions, to have regard to the impact of those decisions on consumers in Scotland, and the desirability of reducing harm to consumers in Scotland.

As of April 2024 the Consumer Duty Impact Assessment has replaced the consumer assessment section of the BRIA. It is anticipated that proposed actions within the JTP will be broadly positive and impact the following consumers:

• Local Individuals and Households (residents and commuters)
• Local Small Businesses (suppliers, operators, contractors, community organisations and business that depend on local infrastructure)
• Industrial and Commercial Users (buyers of Grangemouth’s industrial outputs)
• Wider Scottish and UK Consumers (consumers of Grangemouth’s industrial outputs)

Our initial assessment has found that, JTP itself, as a document that sets an overarching strategic vision for the future with supporting actions is unlikely to have a negative impact on consumers. The JTP outlines a series of outcomes for Grangemouth, aligned to SG’s wider Just Transition Planning framework. This includes one outcome that ‘Costs of industrial decarbonisation are shared fairly on the basis of ability to pay’. Protection of consumers and more broadly the equitable transition to net-zero for all parties is inherent to the JTP design, and as such a key purpose of the document is to ensure this is upheld through significant developments. It is expected that the JTP will influence the following outcomes for consumers:

• Improved transport links will improve access to goods, services, employment, and education opportunities for local consumers.
• Alignment and support of the Greener Grangemouth Programme within the Falkirk and Grangemouth Growth Deal outlined in the JTP is anticipated to improve quality of life for local consumers.
• Actions within the JTP designed to improve the attractiveness of Grangemouth for new investors are anticipated to increase business activity and competition across the cluster.
• The action within the JTP to develop a Regulatory Hub is anticipated to enable streamline decision-making between businesses and regulators, and as such could further increase the attractiveness of the cluster for future investors.

We understand that the cost required for industry to achieve net-zero targets will be significant and that there is a risk for a portion of these costs to be passed on to consumers. It will be important in the development and implementation of actions to consider further assessment and monitoring to ensure any negative impacts are identified and mitigated.

A full Consumer Duty Impact Assessment (‘CDIA’) for the JTP will be published in due course.