Prime Minister Sir Keir Starmer has unveiled a £200m investment to support the future of the Grangemouth site, calling it an "investment in Scotland's industrial future." Speaking at the
Scottish Labour conference in Glasgow, he emphasized the importance of transforming the site for new industrial use.
The Grangemouth oil refinery, owned by Petroineos, is set to close by summer, leading to over 400 job losses. Last week, Scotland's First Minister John Swinney pledged £25m in new funding, urging the UK government to contribute more.
A transition for Grangemouth
Petroineos previously announced that the refinery would shut down and transition into an import terminal following significant financial losses. Earlier this month, redundancy letters were issued to employees, with only 65 of the 500 refinery jobs expected to remain.
Currently, around 2,000 people work at the Grangemouth site, including 500 refinery staff, 450 employees managing the Forties pipeline from the North Sea, and 1,000 working in the Ineos petrochemicals sector.
A £1.5m feasibility study, Project Willow, exploring the site's potential as a low-carbon energy hub, is set for release by the end of the month.
Opportunities for renewal
During his speech, Sir Keir reaffirmed that oil and gas would remain part of Scotland’s energy landscape for decades but stressed the need for clean energy innovation. He described Grangemouth as a "huge opportunity for renewal," highlighting potential new industries, including bioengineering, biofuels, and hydrogen energy.
"We will seize the opportunities at Grangemouth, working alongside partners to develop viable proposals, collaborating with businesses to establish new industries," he said.
To attract private investment, £200m from the National Wealth Fund will be allocated to Grangemouth, reinforcing Labour’s commitment to Scotland’s industrial future.
Support for workers
Starmer also emphasized the importance of supporting affected workers. He announced that every redundant worker would receive 18 months of full pay and that a £10m skills and training initiative would be backed by the UK government.
Additionally, businesses in the Grangemouth Freeport area that hire displaced refinery workers will benefit from national insurance relief.
A £100m growth deal, jointly funded by the UK and Scottish governments, is already in place to support the region’s economic transition.
Labour's commitment to a just transition
Scottish Labour leader Anas Sarwar described the investment as a major step towards a clean and secure energy future. He acknowledged that past transition efforts had been inadequate but pledged that Labour was determined to deliver a fair and just transition for workers.
“We were promised the 'Saudi Arabia of renewables' by the SNP government, and a fair transition by the previous Tory government. But it hasn’t felt fair for Grangemouth workers,” he said. “This investment signals that a UK Labour government—and a Scottish Labour government after 2026—will deliver a real transition.”
He added that this approach would create thousands of jobs, bring in billions of pounds in investment, and secure the country’s clean energy future.
The role of the National Wealth Fund
The £200m investment will be drawn from the National Wealth Fund, a government-backed initiative designed to attract private sector investment into clean energy projects across the UK.
The fund, launched with an initial £5.8bn, aims to channel tens of billions of pounds into projects such as carbon capture, green hydrogen, ports, gigafactories, and green steel.
Scottish government's £25m pledge
On Tuesday, First Minister John Swinney committed £25m to a just transition fund for Grangemouth. This funding will accelerate Project Willow's proposals, exploring potential industries like plastics recycling, hydrogen production, and sustainable aviation fuel.
The new commitment brings Scotland’s total investment in the site to £87m, with Swinney urging the UK government to match this contribution.
“We need the UK government to step up and prevent significant economic disruption in central Scotland,” he said. “This Labour government must deliver on its pre-election promises.”
Union response: "devil in the detail"
Unite, the refinery’s sole trade union, welcomed the investment but stressed that details matter. The union has been campaigning for the site to transition into a sustainable aviation fuel (SAF) hub.
Unite’s general secretary, Sharon Graham, said the funding was “a step in the right direction” but warned that securing the facility’s future would require concrete action.
“This must be the start, not the end, of a real workers' transition for Grangemouth,” she said. “All stakeholders need to ensure this investment delivers real jobs and economic security. Clear timelines and job guarantees are crucial.”
Scottish Trades Union Congress (STUC) general secretary Roz Foyer echoed these sentiments, saying that securing workers' jobs and futures must be the priority.
“This funding cannot be dismissed, but it will only be truly transformative if it’s used effectively and backed by further investment from both governments,” she said. Photo by Grangemouth Refinery by Alex McGregor, Wikimedia commons.