The UK government has pledged £200mn for investment into projects at Grangemouth as workers face redundancy with the planned closure of Scotland’s only oil refinery in the coming months.
Sir Keir Starmer said he hoped the funding, to be managed by the £27.8bn state-backed National Wealth Fund, would attract three times as much private sector money for a post-oil industrial future in central Scotland.
“That is a huge investment in Grangemouth, an important part of Scotland for generations to come,” he told reporters after addressing the Scottish Labour party conference on Sunday.
The move comes after the Scottish government last week allocated £25mn for investments into Grangemouth. Officials called for “greater urgency” from UK ministers in addressing this pivotal test as the country navigates the political and economic costs of transitioning to renewable energy.
Petroineos, a joint venture between Sir Jim Ratcliffe’s Ineos and PetroChina, is to close the Grangemouth refinery in April or May with the loss of more than 400 jobs and fears of broader economic damage across related supply chains in Scotland.
Starmer described the potential for biofuels refining and hydrogen production at the sprawling site near Falkirk as a “generational opportunity”.
“It is so important to work up the viable options here, we don’t want something to tide people over for the next three to four years,” he said. “It’s a generational opportunity for Grangemouth — that took time, but it was the right thing to do.”
The UK and Scottish governments have funded a research project into longer-term clean fuel manufacturing options at the Grangemouth site, known as Project Willow, which is expected to report recommendations in the coming weeks.
Project Willow has mapped out nine potential technologies to produce green fuels at Grangemouth, using bio feedstocks, including trees and crops, as well as waste products and green hydrogen.
Iain Hardie, Petroineos’ regional head of legal and external affairs, welcomed the financial commitment.
“We look forward to continuing to support both governments in the next phase as the project develops to bring together a collation of parties interested in the development of a new low-carbon future for Scotland’s largest industrial cluster,” he said.
Starmer addressed the Labour conference as the party’s Scottish leader, Anas Sarwar, faces negative polling ahead of the Holyrood parliamentary election in May 2026.
The Scottish National party has developed a commanding 17 percentage point lead over Labour in the most recent opinion poll, despite its drubbing in the general election last year, largely because of Labour’s shaky start at Westminster.
The SNP has criticised the UK government’s allocation of funding for major industrial projects, such as carbon capture and storage, in England while “ignoring” similar developments north of the border.
Starmer said he did not worry about opinion polls or “what the punters are saying”, focusing instead on working with Sarwar to draw up the investment plan for Grangemouth.
“The announcement today answers how important Scotland is to me and my government,” he said, as well as demonstrating the strength of his relationship with Sarwar.
“Imagine what a difference it would make to Scotland if we had a Labour government in Scotland, working with a Labour government in Westminster,” he said.
