Dear Ms. Martin,

A just transition for Grangemouth

Thank you for joining the Commission’s roundtable discussion in Falkirk last month. We are writing following our visit to Grangemouth to share high-level findings as we understand officials are actively taking forward work on the Grangemouth Industrial Just Transition Plan through the Grangemouth Future Industry Board. The Commission’s full policy briefing will be published in the coming weeks and we would welcome the opportunity to discuss this in detail once finalised.

During the Commission’s visit we met with students and educators at Forth Valley College, local community members, INEOS, Petroineos, as well as other industrial operators, local government officials and representatives from all groups involved in the Grangemouth Future Industry Board, with the exception of the UK Government.

Following the announcement last November of plans to close the refinery at Grangemouth, the Commission expressed deep concern that we will see a repeat of previous unmanaged industrial transitions in coal and steel. Our annual report for 2023 identifies potential redundancies in our fossil fuel sector, including at Grangemouth, as an early litmus test for Scotland’s approach to achieving a just transition.

Five years of policymaking on this agenda has not developed sufficiently to require high carbon emitters to deliver a just transition as standard practice. As we stated in our annual report: the current path will not deliver.

The limitations of collective efforts to date are nowhere more clearly in evidence than at Grangemouth, which presents an acute challenge for applying a just transition approach, given the central role of a privately owned company and foreign state-owned enterprise, and the associated difficulties in setting conditions and implementing effective mechanisms for open dialogue about the site’s future.

It is the Commission’s view that, provided efforts in this area are adequately resourced and approached as an urgent priority of national importance from now on, the Scottish Government can still play a positive role in reshaping Grangemouth’s economy, using its capacity and leverage strategically to support workers and community to experience a measure of justice through the transition.

The following are some key considerations we hope will be helpful in informing further work in this area. We will be pleased to meet with you or your officials to discuss these matters.

1. The just transition plan for Grangemouth must earn the trust of workers and the local community – Clear, measurable actions owned by each institution involved in the Grangemouth Future Industries Board should be expressly aimed at restoring the trust of the local community that a just transition approach will deliver where previous initiatives over recent years have fallen short. The strategy needs to be very clear in terms of the timescales associated with each action, so that the plan can provide specific reassurance for the short, medium and long term. To make the vision credible, the plan must set out how progress will be monitored and evaluated against specific metrics and indicators, supported by a robust critical path analysis that maps contingencies and takes seriously the possibility of failure or underperformance across key elements of the strategy proposed, including those associated with specific technologies, fuels and regulations (such as the cap on the use of Hydrotreated Esters and Fatty Acids (HEFA) for sustainable aviation fuel). By the end of Q2 2024, we expect to see a draft plan to be agreed through social dialogue with workers and meaningful participation of the community and other stakeholders. This will require an intensive sequence of meetings, including in-person, to support constructive dialogue, shared understanding and tangible new commitments. The value of the plan will depend on the level of assurance and security it provides to workers whose livelihoods are on the line, as well as to the local community in Grangemouth. The needs of workers and community around Finnart also needs to come into the scope of this plan, since the refinery’s closure could have a particularly severe impact here.
2. The Grangemouth plan must be the first in a rapidly developed series of just transition plans for Scotland’s highest emitting sites – The Scottish Government should set out clear fair work and community involvement provisions for the closure of high carbon assets (clearly foreseeable given long term trends) and scale up of clean energy. A sign of the just transition is anticipating the inevitable phase out of fossil fuels in ways that involve workers and communities so that closure and greening is shaped in a socially positive way. The Scottish Government should now ensure that those with responsibility for each of the top 20 industrial emission sites in Scotland, including operations at Peterhead, Mossmorran, Dunbar, St Fergus, Markinch, Lockerbie, Shetland, Irvine, Alloa, Dalkeith, Stirling and Girvan, are required to consult, negotiate and publish a just transition plan to show how the social dimension of transition will be managed. This process should begin as a matter of urgency. We would underline the recommendation made by the first Just Transition Commission in its March 2021 report regarding planning for industrial emitters (see excerpt in Annex A).
3. A new intergenerational social contract is needed to safeguard local young people and their community’s future – Concern for the prospects and livelihoods of young people and future generations was the major theme across our engagement activities at Grangemouth. The retention of jobs and the local skills base on an intergenerational basis must be the core strategic aim of Grangemouth’s just transition plan, with concrete and measurable actions for delivery. As was clear from our discussions with educators and students at Forth Valley College, our colleges are of critical importance in achieving this, and their key strategic role needs to be reflected through greater levels of investment to truly maximise their value as a bulwark of just transition. Existing age restrictions on eligibility for modern apprenticeship funding should be widened as far as possible, given the obvious long-term strategic economic benefit of highly skilled people that we need across all sectors for this transition. Clear and measurable actions to guarantee access to high quality learning in STEM subjects will be crucial for Grangemouth’s young people, and the approach to careers advisement should be reviewed to ensure learners are not taught to privilege university education over college by default. This new social contract must also apply to those living within “the shadow of the complex” (as one lady put it to us) in the hazard consultation zone, enduring heavy traffic, dealing with emergencies and environmental risk and the continued lack of official lorry parks. More should be done by industrial owners and operators to mitigate the impact on residents and rebuild community relationships (historically sports and social clubs supported by employers have proven effective mechanisms here).
4. Grangemouth needs a new economic model that goes well beyond the refinery, leveraged to deliver enduring community benefit – All public money/subsidy deployed to support the transition at Grangemouth must come with conditionalities linked to just transition, whether in terms of fair work, community benefit, equity stakes, profit-sharing mechanisms, environmental needs (e.g. flood prevention), etc. The refinery is an important industrial facility and source of livelihoods but it does not define the Grangemouth economy. Given the failure to avoid a disorderly exit from oil refining, a strategic focus needs to be placed on the defossilisation of the petrochemicals plant and the rest of the chemicals cluster both in terms of energy inputs and feedstocks. The social performance and potential of the Forth Greenport needs to be examined so that it delivers fair work, shares value with the community and achieves positive environmental impact. New businesses should also be attracted, including social enterprises and community energy initiatives. The Just Transition Plan for Grangemouth needs to stress transformation and diversification both in terms of sector and business model and show how the community living within the hazard consultation zone will meaningfully benefit. An investment plan for the Grangemouth ecosystem including public, private and social investment, ownership and stakes, and a smart use of public money tied to just transition outcomes and deploying equity, debt, guarantee and grant dimensions and attracting investment from Scotland’s citizen investors through ISAs and pension funds. The Scottish Government needs to develop a compelling case with limited fiscal resources to secure the right type of investment that will deliver long-term economic, social and environmental benefit. It also needs to negotiate more strategically with the UK to secure all-UK deals for nationally significant clusters such as Grangemouth and make sure that labour rights and human rights are at the heart of the UK equivalent to the EU’s CBAM for the import of all carbon intensive products (including oil, gas and petrochemicals).

Community energy and community benefit – Energy Strategy and Just Transition Plan

Members of the Commission also met with officials recently to discuss a summary of community energy and community benefit dimensions of the forthcoming revised Energy Strategy and Just Transition Plan. We wish to highlight the following considerations both for the purpose of supporting the finalisation of this plan and for the further work that will be required thereafter.

• Actions to deliver on this opportunity matter more than targets – there is concern that without rapid progress community energy may soon represent a significant missed opportunity to deliver just transition outcomes. The focus now needs to be on strategic and measurable actions to unlock the potential benefits rather than positive targets unless these are supported by a realistic and achievable policy program. The successful community energy projects we have engaged so far have succeeded despite the policy context and environment in which they have been developed rather than because of it. We are looking for indications of a transformational approach that enables a major expansion of community activity in this area.
• Access to finance – As set out in our detailed advice on the draft ESJTP, we hope to see further meaningful progress in delivering access to finance as well as technical support for those developing community energy projects. A clear model should be developed for how funding to support communities on shared ownership would be deployed under a favourable UK policy context. The strategy should also clearly set out the role of the Scottish National Investment Bank and Scottish Enterprise in supporting communities in financing energy projects, as well as what connections will be developed between the community sector and funds raised via leasing by Crown Estate Scotland.
• Local authorities – councils can play a critical role in maximising the significant potential benefits of a successful community energy strategy Scotland-wide, including as partners in joint ventures and as bodies that can borrow at decent rates. Local authorities should therefore be a key part of the strategy, with the Scottish Government pro-actively leading and co-ordinating planning, collaboration and delivery.
• Repowering – Repowering presents a major opportunity for community energy and benefit. We are keen to understand how the strategy will assess and maximise this opportunity in practice. It will be important to grasp repowering opportunities for existing community energy generators and tackle barriers in this area at an early stage.
• Mapping distributional impacts – To strategically address current disparities, work is required to map out where community benefits are or are not landing to ensure that those areas that are currently underserved receive an equitable share of benefits, to avoid the negative perceptions and impacts of a “postcode lottery” approach.
• Community benefit from offshore renewables development – we would welcome a specific date by which consultation will begin following the Scottish Government’s review of the Good Practice Principles for Offshore Renewables.

Sincerely,

Professor Dave Reay and Satwat Rehman

Co-Chairs of the Just Transition Commission

Annex A

Previous advice on just transition planning for industrial emitters

The following are relevant excerpts from the Just Transition Commission’s report of March 23 2021, “A National Mission for a Fairer, Greener Scotland”

Recommendation 5 (pg 46-47)

5. Just Transition plans for high-emitting industrial sectors of the Scottish economy must be created at the earliest possible date with clearly measurable milestones and decision points that align with the Climate Change Plan out to 2045

• a. Scottish Government must require, and help facilitate, the development of a shared vision for individual high-emitting industrial sectors out to 2045, identifying the key technology options and infrastructure needed to deliver this (building on recommendation 1). Existing forums such as NECCUS could be effective in driving forward progress, if supplemented by engagement with trade unions. Priority for this action should be attached to those sectors making the most significant contributions to emissions and employment, or offer the most significant opportunities in a net-zero economy.
• b. Build on this vision to develop phased, sequenced action plan that gives sufficient direction to public and private investment. This should identify key decision points that will enable the transition. Where possible, make public funding sufficiently long-term to provide certainty and clarity.
• c. Commit to co-ordinated action across the public sector in Scotland to support transition planning, including through enablers such as the skills and planning systems, enterprise and infrastructure spending. In recognition of the vital role of UK Government in this space, engage proactively to ensure policy is suited to the unique characteristics of Scottish industry (in line with recommendation 6).
• d. For sectors that make particularly strong contributions to their regional economy, build links between transition planning and place-based economic development programmes. For example, this should include funding aimed at diversification and strengthening of local economies, with communities engaged as partners for change.
• e. Outline what commitments will be made by the public sector to people and places at risk of being left behind, should just transition planning fail to achieve a managed transition that protects and grows employment (recommendation for this is in the next section).