Project Willow
To ask the Scottish Government what its response is to the project willow report.
I thank the member for this opportunity to address the issue. I confirm that the Government was intending to bring a statement on the matter to Parliament.
The publication of the project willow report, which sets out a transformative future for Grangemouth, is to be welcomed. It marks an important milestone in our ambition to secure a long-term and sustainable future for Grangemouth that enshrines the industrial cluster’s contribution to Scotland’s economy and makes it a source of high-quality jobs on an on-going basis.
On the next steps, Scottish Enterprise and the UK Government Office for Investment will now lead work to bring the suggestions and other projects to fruition by working collaboratively across the private and public sectors to ensure the necessary investment to take them forward.
I agree with the Deputy First Minister that we need to have as much parliamentary time as possible to discuss and debate the matter.
I welcome the publication of the project willow report, but let us be absolutely clear that serious uncertainties remain, the biggest of which, after all this time, is the position of Petroineos. The success of project willow and any real chance of attracting private investment hinge entirely on the availability of the Grangemouth site. If that site is not available, the proposed projects simply will not happen. When will Petroineos finally provide clarity on its intentions? More crucially, has it given the Scottish Government any indication at all that it is actually willing to invest in any of the proposed projects?
I agree with the principle of Stephen Kerr’s question, which is that, now that we have received the project willow report, there is an opportunity, using UK and Scottish Government funding, to work with the private sector to make those investments, and Petroineos remains critical to the success of that process.
Mr Kerr will appreciate that Petroineos commissioned the work and has acted as the lead partner, which reflects its role as the owner and operator of the Grangemouth refinery, with UK and Scottish Government funding. We have committed to working with it throughout the next stage, recognising its strategic importance to securing a long-term and sustainable future for the cluster. In short, we recognise the important role that Petroineos plays. Funding is now available through both Governments, and we will continue to work with Petroineos to secure the opportunities that the report highlights for its site.
The Deputy First Minister was very careful in what she said. I respect that, but she did not really answer my direct questions, and that will be a cause of serious concern to the people of Grangemouth. The reality is that Petroineos has seen project willow throughout its journey. As the Deputy First Minister rightly says, the Scottish and UK Governments invested £1.5 million in the report, and the very least that many of us would have expected is that Petroineos would have declared or shown its hand by now.
Right now, there are more than 400 highly skilled jobs at Grangemouth that are set to vanish in the coming months. Those are real, well-paid jobs that are set to disappear. Meanwhile, the project willow report talks about jobs that might appear in 10 or 15 years’ time. Let us be absolutely clear. Which of the nine proposed projects is likely to secure investment first? What is the realistic timescale for getting that project up and running? When exactly will the people of Grangemouth get the clarity that they deserve on their futures?
Those are all very important questions. The member will appreciate that I cannot speak for Petroineos, but I can speak for how the Scottish Government will work with it, and we recognise its strategic role. The projects that are projected to be taken forward in the near term focus on the recycling of plastics, acetone-butanol-ethanol biorefining, anaerobic digestion and fuel switching. If all nine of the potential projects are taken forward, which represents the base case, project willow could create about 800 jobs over the next decade and a bit and contribute £600 million to £700 million in gross value added.
We have to break down the projects that are closest to being realised quickly in order to protect jobs, with an eye on the horizon for the projects that will be deliverable in the medium term. We are, of course, actively engaged in supporting the workforce, which I accept is under immense pressure right now, through the partnership action for continuing employment—PACE—initiative and so on, to consider other opportunities. The member will know that there are a number of high-growth opportunities in the wider Grangemouth site that are looking to attract skilled workers—and the Grangemouth workforce is extremely highly skilled.
The project willow study represents the art of the possible, but funding and business appetite will always be the drivers. The £200 million that may be available to draw down depends on projects being investable solutions according to the National Wealth Fund’s criteria, not the UK Government. Business will take a risk only if there is policy and regulatory certainty, which there is not. How confident is the cabinet secretary that anything will come of the report? Does she recognise that the matter is, quite frankly, another of UK Labour’s failures for Scotland?
The member is absolutely right to say that the value of any report is in how quickly its recommendations can be delivered on. The nine technologies that have been shortlisted from more than 300 technologies, following 120 stakeholder interviews, represent the greatest opportunities for Grangemouth. The key now will be in ensuring that the funding, which includes £200 million from the UK Government’s National Wealth Fund plus the Scottish Government’s £25 million, is invested in propositions and leverages private sector investment.
The member is also right to say that the UK Government money will support only investable propositions and will not take the form of grants. Therefore, we will push the UK Government, as I have done already, to ensure that its funding is as flexible as possible, that it is available now and that it will meet the needs of business. Alongside business, we are working with the unions and the workforce as we take the next steps, recognising the highly skilled workforce at Grangemouth.
All of that having been set out, it is now key that the money is made available as soon as possible, to be invested in the most investable propositions, in collaboration with business.
I remind members of my voluntary register of trade union interests.
Many of project willow’s outcomes are set in the medium term and even the long term, but, as Keynes said,
“In the long run, we are all dead.”
Four hundred and thirty-five refinery workers face immediate redundancy, and nearly 3,000 workers in the supply chain are at risk. Will the Scottish Government be prepared to start investing to save these jobs now, and will it work with others to convert the existing refinery to a sustainable aviation fuel and biofuel site now rather than wait to build from scratch? These workers, this community and our economy cannot wait—we need decisive action now.
At the risk of agreeing with too many people, I agree with Richard Leonard that the challenges are being faced now. Although the project willow report sets out some technologies that will take a little longer to develop, there is an opportunity now, and I repeat that the Scottish Government’s £25 million is there to be invested as quickly as possible. We have been pressing the UK Government to ensure that its £200 million is also made available as quickly as possible. Clearly, there are some projects that are near term, some of which I listed in my answer to Stephen Kerr.
The UK Government has indicated its intention to bring forward a price certainty mechanism for the development of sustainable aviation fuel, which needs to be done with urgency. It is not just funding that needs to be made available as a matter of urgency; some policy changes also need to be made and can be made quickly. We know that the UK Government has invested more than £50 million in Teesside through its advanced fuels fund. With sustainable aviation fuel being a clear recommendation in the project willow report, and with the support of Richard Leonard, I think that the UK Government needs to ensure that Scotland has the resources to manufacture SAF in Scotland. A couple of weeks ago, I was in London speaking to Michael Shanks precisely about policy changes that can be made in short order to accompany the funding that is being made available in short order.
Agreement of the operating principles of the delivery vehicle is one of the key issues in the next steps portion of the paper, to avoid a situation in which a project is set up, benefits from public investment, extracts profit and then leaves workers in the lurch when conditions change. What is the timescale for agreeing the operating principles? How will unions and workers be involved in agreeing those principles? What will the Scottish Government do to ensure that any funding comes with the appropriate strings, so that we see the projects that we want to see, with terms and conditions for workers that will last?
Gillian Mackay has set out some of the criteria for making the investments. I reassure her and others that we are keen to make those investments as quickly as possible, to support businesses but also with an eye on retaining the jobs and supporting growth in the workforce according to our fair work conditions.
We will work with the unions and the workforce as we take the next steps. We recognise the highly skilled workforce at Grangemouth. Their expertise is critical to securing a long-term and sustainable future for the site, and we will work as quickly as possible. We have ensured that Unite the union has been well integrated into project willow at the regular standing committee meetings, and we have been engaging with it on an on-going basis on some of the issues.
We have heard from the Deputy First Minister that delivering the 800 jobs will require a huge amount of private investment—I think that it is £3.5 billion between now and 2040. What engagement has the Deputy First Minister had with various businesses to gauge the appetite for such huge levels of investment from Petroineos and other companies?
My colleague Gillian Martin engages regularly with Petroineos through the industry board. I, too, have engaged directly with a number of businesses that have expressed some interest in working in and around Grangemouth. The member will forgive me for not naming them, because that would be unfair and a conflict—a commercial issue. I reassure him that, although there is Scottish and UK Government funding available to progress the nine projects, that funding is to leverage private sector investment, and I think that there is interest. We need to put in place the policy circumstances and the environment to make the projects attractive, and we must work with Petroineos, which, as Stephen Kerr said, has a strategic relationship to the site.
The report highlights the need for an urgent decision on Acorn, because carbon capture and storage, which is of enormous importance to the north-east, could have a vital role to play in securing Grangemouth’s future. In the light of that, many people will rightly be frustrated that the UK Government has repeatedly failed to prioritise investment in carbon capture and storage in Scotland. Does the cabinet secretary agree that a green light for Acorn is long overdue, both for Grangemouth and for industries in the north-east?
Yes is the short answer. We have been waiting far too long for progress on Acorn. The Acorn project is a stand-alone industrial transportation and storage project. It was committed to by the previous UK Government, and we are urgently looking for a meaningful update from the current UK Government, so that we can maintain momentum and provide investors with confidence.
It is vital that we support the decarbonisation of Scotland’s industry and the future of Grangemouth. That will protect and create jobs, and, as was pointed out by business leaders last week, it will make a significant contribution to Scotland’s economy.
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Decision Time