Article: ‘Sickening’: Grangemouth owners set for £6m closure windfall Image description: Grangemouth refinery at night

‘Sickening’: Grangemouth owners set for £6m closure windfall

‘Sickening’: Grangemouth owners set for £6m closure windfall 3

The owners of the Grangemouth oil refinery are set to earn a multimillion pound windfall when the plant closes next year due to a loophole in a key climate scheme.

The closure of the refinery will cost 400 jobs and has been described as a “hammer blow” to workers and the local community. 

But it could prove lucrative for Petroineos — the joint venture between Sir Jim Ratcliffe’s petrochemical giant Ineos and Chinese state oil company Petrochina — which owns Grangemouth.

An investigation by The Ferret and the Democracy for Sale newsletter has found Petroineos could earn around £6m from the sale of thousands of free pollution permits it will be given by the UK Government in 2025.

Because the plant is expected to shut down between April and June next year many of these permits will never be used and can be sold on to other polluting companies for a profit.

Critics said it was “sickening” to learn that Petroineos could pocket the money while Grangemouth staff are being “forgotten”.

Ineos said it had “fully complied with the rules and reporting requirements” of the permit scheme.

It is workers who need to see the benefit of any windfall rather than it being used to line the pockets of a greedy billionaire who has done enough damage.

Gillian Mackay MSP, Scottish Greens

Petroineos was granted the permits under the UK Government’s Emissions Trading Scheme (ETS), considered the “cornerstone” of the country’s decarbonisation efforts. 

Under the ETS, major polluters must buy a government permit for each tonne of polluting carbon dioxide they produce. The policy is aimed at putting a price on climate pollution to incentivise companies to bring their emissions down over time.

Some companies are given a batch of the permits for free, however, to protect them from competition from firms in other countries with weaker climate laws.

Grangemouth will receive a full year’s worth of these free permits in 2025, which could leave Petroineos with a surplus of around 180,000 unused permits when the plant closes, according to experts. 

Each permit is currently worth around £37 so these permits could be sold for around £6m at today’s prices.

Tata Steel was in line to receive a similar windfall after it closed its Port Talbot steelworks in Wales at the start of this month, leaving it with a surplus of unused permits.

Since the ETS launched in 2021, companies across the UK which are part of the wider Ineos Group have received nearly seven million free pollution permits calculated to be worth a combined £350m based on average prices over the past four years.

Some of these were never used because emissions at some sites were lower than expected. These could also be sold on for a profit. 

Among the Ineos businesses which received more permits than they needed was its Forties pipeline which brings oil onshore from the North Sea. It received 50,000 excess permits in 2021 and had a surplus of 17,500 in 2023. 

‘Sickening’: Grangemouth owners set for £6m closure windfall 4

The company’s Grangemouth chemicals plant – which is separate to its refinery – was allocated 25,000 unused permits in 2023. 

Last year an investigation by the Financial Times found that Jim Ratcliffe’s firm was allocated 148,000 permits for a chemicals plant in the north east of England that it had already started to decommission.

The Scottish Greens MSP, Gillian Mackay, who grew up near the refinery, said Grangemouth’s closure will be “devastating for the workers who will lose their livelihoods and the community”.

“Ineos should not be allowed to profiteer from any free permits, and the UK Government must do everything it can to stop this from happening,” Mackay said. 

“To hear that Ineos could potentially pocket £6m profit while its talented, skilled hard-working staff are forgotten is sickening.

“It is workers who need to see the benefit of any windfall rather than it being used to line the pockets of a greedy billionaire who has done enough damage.”

The former leader of Scottish Labour, Richard Leonard MSP, said there was a “history of Ineos and Jim Ratcliffe” taking public money to “help generate vast profits at the expense of the workers and their communities”. Leonard called for the loophole in the ETS to be closed.

Grangemouth will receive its free permits for 2025 at the end of February next year. The UK Government department for energy security and net zero is considering a move to prevent windfalls from free permits for companies who close their industrial sites.

But these changes are yet to be confirmed and there is no public timeline for their implementation. 

The department spokesperson said: “While we cannot comment on the credits of individual operators, the UK Emission Trading Scheme is helping us deliver our mission for clean power by 2030. We are reviewing free allocation rules to make the system as robust as it can be, while continuing to support UK businesses through the transition to net zero.”
A spokesperson for Ineos said: “Ineos fully complied with the rules of and reporting requirements of the UK ETS scheme.”

Main image: iStock/munro1

1 comment
  1. These billionaires have lost considerable about of money over several years running that plant. This £6m is a tiny compensation for their lost investment.
    The workers were paid their agreed wages so calm everyone

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