Grangemouth, Scotland, the UK’s largest chemical plant, is at risk of closure, its owner Ineos has warned, as rising energy prices and carbon taxes continue to batter the site’s profitability.
The Olefins and Polymers (O\&P) facility at Grangemouth, which produces essential materials used by hundreds of UK plastics manufacturers, has operated at a loss for several years. Stuart Collings, CEO of the plant, said Ineos has had to subsidize the site using profits from its global operations to keep it afloat.
“Unless there is a significant turnaround in the next couple of years, Ineos will have to make a very difficult decision about the future of Grangemouth,” Collings said “We’re at the point where this can’t continue indefinitely.”
The plant, which employs 900 people directly and supports thousands more through its supply chain, plays a vital role in the UK’s chemical and manufacturing industries. Its potential closure would follow the shutdown of Ineos’ nearby oil refinery earlier this year, which resulted in the loss of 400 direct jobs and potentially 5,000 across the region.
Grangemouth relies on gas
Grangemouth’s operations are heavily reliant on gas to produce ethylene, a process that emits around one million tonnes of CO₂ annually. This makes the plant particularly vulnerable to energy prices and carbon taxation.
Ineos reports that the site paid €100 million (£86 million) more in annual energy costs compared to its US counterparts and up to €30 million in carbon taxes in the past year alone.
“The impact on the Falkirk region would be devastating comparable to the collapse of coal mining communities,” said Collings. “We also supply raw materials to other chemical plants in the UK, so the knock-on effects would be significant.”
A June report by the Office for National Statistics (ONS) showed UK industrial electricity prices rose by 75% between January 2021 and the end of 2024, while gas prices more than doubled. As a result, output in energy-intensive industries has dropped by 33%. its lowest since records began in 1990.
The Chemical Industries Association warned that uncompetitive energy costs are pushing the UK industry to the brink. “Energy costs double those in Europe and quadruple those in the US will drive manufacturers abroad,” a spokesperson said. “The carbon tax must be paused until its consequences are better understood.”
Andrew Bowie, the Shadow Secretary of State for Scotland, called the potential closure a catastrophe for both Scotland and the UK. “High energy prices and excessive levies are wiping out British industry,” he said, pledging to raise the issue with Energy Secretary Ed Miliband.
Richard Tice, deputy leader of the Reform Party, blamed the UK’s net zero policies for the crisis. “Thousands of skilled jobs are at risk due to the obscene costs of net zero. This can all be avoided by scrapping it.”
A spokesperson for the Depar7tment for Business and Trade said Ineos will benefit from the government’s Supercharger initiative, which exempts energy-intensive businesses from certain renewable energy charges. However, since Grangemouth’s primary costs are gas-related, not electricity, the relief may be limited.
“We are engaging with Ineos and the wider sector on the other challenges they are facing,” the spokesperson added, declining to give further details.
Ineos, founded by billionaire Sir Jim Ratcliffe, who also owns Manchester United, has grown into one of the world’s largest petrochemical companies. However, its European operations are increasingly strained under high operating costs, prompting a rare public warning from the company’s top leadership.
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