Grangemouth closure is serious threat to Scotland’s energy security

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Written by Niamh McGhee

Yesterday energy firm PetroIneos announced the closure of the Grangemouth oil refinery and a transition to operations as an imports centre within the next 18 months. Grangemouth is Scotland’s only oil refinery, producing over 70% of all of Scotland’s petrol and diesel. The closure is a worrying development, leaving Scotland without a centre to refine its own oil and making us more vulnerable to dependency on foreign imports for fuel.

The refinery, which is near Falkirk, is one of six major facilities of its kind in the UK, with the other five being in England and a refinery has been located on that site for nearly 100 years. In 2011, Ineos, run by Brexiteer Jim Ratcliffe, entered a deal with Chinese oil company PetroChina to form PetroIneos – the current managers of the refinery. Currently, around 70% of Scotland’s petrol and diesel is produced in Grangemouth and it also supplies fuel to Northern Ireland and North East England. Yesterday, PetroIneos announced that the refinery would be closed in 18 months, due to concerns about meeting profits, transitions to electric vehicles, the UK’s high manufacturing costs and ‘over-capacity’ of oil production in Western Europe. Notably, their other refinery project in Lavera in the South of France, continues to operate, with Ineos acquiring 100% of shares in the site this July. The current proposals mean that after the refinery is closed, Grangemouth would continue to operate as an import and export terminal only  – while remaining part of the new Forth Green Freeport.

The most direct impact of the refinery’s closure is the potential loss of around 500 jobs at the plant itself. The local economy will therefore take a major hit as a result – Grangemouth and Falkirk, which have several areas scoring highly on the Scottish Index of Multiple Deprivation (SIMD) will bear the brunt of the impact.

But the issue runs deeper than this. The situation begs the question – why is it that Scotland has such a wealth of energy resources but does not have control over their extraction, nor how the profits from said resources are spent, nor even it seems the ability to process them? In future, any oil extracted in Scottish waters will have to be transported to England or further abroad to be refined, then transported back to Scotland to be used here. In contrast, Norway, an independent nation with a similar population to Scotland and extensive oil reserves, has two refineries.

In 2021, the UK imported £12.4 billion refined oil, the largest proportion of which was from Russia. While Russian oil imports have decreased following the invasion of Ukraine, the UK still relies on other countries such as the United Arab Emirates, the Netherlands and Saudi Arabia for refined oil imports. Closing one of the six remaining refineries only increases that dependency.

Not only is this additional transportation even worse in terms of environmental sustainability, it also makes Scotland more reliant on other countries to handle vital energy assets at a time when that power is absolutely essential. There will be no meaningful reduction in global carbon emissions due to the closure of this plant as demand for fuel will not be affected. In their response to the closure, GMB General Secretary Garry Smith said: ‘The intention to transition from domestic production to a fuel import terminal poses serious questions about the UK’s energy security’. Yet the UK Government has been happy to hand out hundreds of new oil licences (without plans for a transition to renewables) while it stands by as vital centres to process them are closed. An oil rich nation without its own oil refinery is madness.

The closure has come under fire from representatives from across the political spectrum, including surprisingly, both the Scottish Greens and Scottish Conservatives. Even Mid Scotland Tory MSP Murdo Fraser described the closure as ‘a huge blow’, calling for an urgent UK ministerial statement, while Scottish Greens MSP Gillian Mackay, who grew up in Grangemouth, described it as ‘the opposite of a just transition’. The decision is unpopular with almost everyone but unfortunately there is not much that the Scottish Government is able to do. PetroIneos is run as a private partnership between Ineos, a British company with Monaco-based ownership and PetroChina, a Chinese oil and gas company. An independent Scotland, with greater control over its own energy industry, may have been able to organise a just transition which minimises the loss of jobs and detrimental impacts to the economy caused by closures such as these.

The closure of Scotland’s only oil refinery does not hasten our transition to renewables nor make us more sustainable. It only threatens jobs, both the local and national economy, decreases our energy security and massively increases our dependence on the rest of the UK to manage our own resources and to provide us with a supply of fuel. Grangemouth has sadly become an example of how control of its own energy assets and natural resources has been wrested away from Scotland.


Energy UK: EU carbon tax ‘detrimental’ to UK renewables unless emission trading systems linked

The UK’s ETS prices have been decreasing, which will cause UK low carbon power to be penalised under new EU carbon tax legislations, says Energy UK. Image: Pixabay.

Energy UK has called for a UK/EU emission trading system link to stop the “detrimental effect” the EU’s looming carbon tax will have on the nation’s renewable sector.

In a report released this week (30 October), Energy UK warned that “weak and volatile” carbon prices within the UK’s Emissions Trading Scheme (ETS) would have a “detrimental” effect on clean energy investment, especially if planned EU carbon tax legislations move forward.

An overall cap on emissions and auctioning allowances (which grant permission to pollute), the ETS was a key policy in enabling the UK to decarbonise almost 50% of its greenhouse gas (GHG) emissions since 1990. The report pointed out that this success was due to the scheme’s structure which sees the cap shrink and fewer allowances auctioned annually.

Implemented by the UK in 2002, the ETS pilot became the basis for the EU’s own ETS, in which the UK participated for 15 years before it left the EU.

In short, as the carbon market tightens, ETS prices increase and emissions decrease; however, the UK’s ETS prices have been decreasing, which will cause UK low carbon power to be penalised under new EU carbon tax legislations.

Concerning a “weak and volatile” carbon price

Although a success in the past, the trade association expressed concern that the UK ETS price had become “weak and volatile”, crashing to historic lows in recent months.

Figure 1: UK ETS prices

Graph: Energy UK.

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Electricity prices ‘must rise by 70pc to pay for more wind farms’

Warning from UK's biggest energy generator comes after latest bidding round received no offers to build new farms

Tom Glover
RWE's Tom Glover: 'No new wind farms will be built off UK shores until the Government budges on price' CREDIT: Andre Laaks

No new wind farms will be built off Britain’s shores unless the Government lets operators earn more money from the electricity they produce, the chief of the nation’s biggest generator has said.

Tom Glover, country chair of RWE’s UK arm, said the price offered by the Government to wind farm operators must rise by as much as 70pc to entice companies to build.

Developers must be offered between £65 and £75 per megawatt hour (MWh) for the power generated from wind farms, Mr Glover said.

That compares to the £44 offered in the most recent government-run auction.

His warning follows the disastrous result of the last offshore wind allocation round in September, which ended in a humiliation for ministers with not one company offering to build new offshore wind farms.

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UK tax on renewable energy generators has made investment less attractive - broker

Published: 16:00 12 Sep 2023

 

renewble energy

The UK's tax on renewable energy generators, which seemed badly thought out from the start, is failing in a number of ways, analysts say, and there will be hopes that there can be a U-turn at the upcoming autumn statement.

Chancellor Jeremy Hunt unveiled the electricity generator levy (EGL) this time last year, implementing the 45% tax from the start of 2023.

But both the renewable energy sector and City analysts have criticised the structure of the levy, saying it is blocking the development of renewable energy and could see the government miss its net zero goals, with investor confidence damaged and scope for further new investment reduced.

"We think the UK'S EGL is a good example of state meddling in the investment landscape, with the end result being that investor confidence has been damaged and scope for further new investment has been reduced," said analysts at broker Stifel.

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UK Infrastructure Bank helps crowd-in investment in Cornish Lithium

The UK Infrastructure Bank has announced a £24 million equity investment in Cornish Lithium to support development of the UK’s critical minerals supply chain.
The investment, the Bank’s first equity deal, facilitated matched funding by The Energy & Minerals Group (EMG), a US-based private equity fund focused on the energy and minerals sectors. Cornish Lithium’s existing institutional shareholder, TechMet, the energy-metals investment company, whose major backers include the US Government, is investing a further £5.6 million, bringing their total investment into Cornish Lithium to $30m.
The initial investment is part of a larger funding package of up to an additional £168 million potential second-stage financing, which is expected to provide the equity foundation necessary for the mineral exploration and development company to achieve commercial production.
In commercial production, Cornish Lithium aims to build its 70-strong Cornwall-based workforce to over 300. The mine is expected to have a 20-year life, plans for geothermal waters alongside.

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ESG investment funds unlikely to comply with sustainable investing rules

A lack of standardized regulatory regimes for non-financial disclosures and the naming of environmental, social, and governance (ESG) funds across the US, UK and Europe will mean that a lot of self-proclaimed “sustainable” funds will be unable to comply with proposed legislati

Published 15th May 2023


ESG investment funds unlikely to comply with sustainable investing rules

The analysis explored compliance with the EU's naming laws

Analysis of more than 18,000 investment funds across Europe has found that less than 4% would be able to comply with naming laws for ESG funds across key markets.

The research, from technology platform Clarity AI, found that many would have to rename their ESG funds if they wanted to sell across the UK, US and Europe, all of which have different definitions and naming laws for non-financial disclosures and sustainability funds.

“When looking at funds with all three investment fund regimes – the US’, UK’s, and EU’s – we found that over 95% of funds with the word ‘sustainable’, or similar term, would require renaming or restructuring in order to be sold across all three markets,” Clarity AI’s head of product research and innovation Patricia Pina.

“This is not only an added cost in terms of compliance, but also underscores how different actors – in this case regulators – are interpreting the meaning of core concepts like ESG and sustainability.”

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Shell bids farewell to large carbon capture plan in Northern England

Shell will reportedly withdraw from the Northern Endurance Partnership (NEP), one of the largest carbon capture and storage (CCS) projects in the UK.

The project aimed to decarbonise industrial clusters in Northern England, but after a review of its strategy and portfolio, Shell has decided to refocus its efforts on the Acorn CCS project in Scotland, for which it is the technical developer.

ELN understands that the company aims to exit the project smoothly to prevent or minimise any potential impact on project timelines, believing that its withdrawal will bring greater simplicity and clarity to the initiative.

A few days ago, it was reported that National Grid Ventures (NGV), a subsidiary of National Grid, would withdraw from the NEP.

NGV is currently in talks with potential partners to sell the onshore pipeline project, having already stepped back from an earlier stage of the initiative.

ELN has reached out to Shell for comment.


£20bn over 20 years: UK Government confirms unprecedented carbon capture investment

The Treasury has confirmed that, at the Budget next week, Chancellor Jeremy Hunt will confirm a £20bn investment plan to scale up the UK’s carbon capture sector, to be spent over a 20-year period.

by Published 10th March 2023


£20bn over 20 years: UK Government confirms unprecedented carbon capture investment

Pictured: Chancellor Jeremy Hunt. Image: HM Treasury, CC BY-NC-ND 2.0. https://www.flickr.com/photos/hmtreasury/52709204360/

The Budget speech is not due until Wednesday (15 March) but, this evening (10 March), the Treasury has confirmed some of the key inclusions on finance for the energy sector – including a globally unprecedented commitment of public funding to man-made carbon capture technologies.

Hunt will lay out plans for a two-decade investment plan in the carbon capture space and pledge to ensure that “shovels are in the ground” on the first tranche of projects by the end of 2024. The Government is notably aiming for at least one low-carbon industrial cluster with carbon capture to come online this decade and is also assessing opportunities for smaller, dispersed carbon capture sites.

The Government is claiming that, with the investment set to be outlined by Hunt, the UK can expect to capture between 20 million and 30 million tonnes of CO2 per year by 2030.

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Industry warns UK to strengthen carbon capture commitments or see lead fade away

Capital flight: panellists at IE Week 2023 this week said the UK is lagging behind faster progress to support carbon capture developments in US and Europe. Photo: DAVIDE GHILOTTI

Nation has made much of the potential advantages of being a first mover on big carbon capture and storage projects, but this status is waning

6 March 2023 5:00 GMT UPDATED  6 March 2023 15:37 GMT

By Davide Ghilotti   in    London 

Industrial operators active in carbon capture and storage (CCS) have urged the UK government to take bolder action in support of such projects, warning that rival destinations for CCS investment look increasingly attractive.

Delegates at the recent International Energy Week conference in London spoke of frustratingly slow progress with CCS cluster projects in the UK and warned of the risk of being left behind in the quest to decarbonise heavy industry.

“We don’t want [developers] moving from one jurisdiction to another. Government has to lead, has to respond swiftly and with bold action,” Ruth Herbert, chief executive of Britain’s Carbon Capture and Storage Association trade group, said in a panel discussion on Wednesday.

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Mega carbon capture project in Canada gains new momentum

Big plans: Pathway Alliance member Suncor Energy aims to capture CO2 from its Syncrude oil sands facility in Alberta, Canada.Photo: AFP/SCANPIX

Sub-surface studies start on CCS project with potential 22 million tonnes per annum capacity

4 January 2023 17:15 GMT UPDATED  9 January 2023 15:34 GMT

By Iain Esau   in    London 

An alliance of Canada’s dominant oil sands producers has struck a deal to begin evaluating one of the world’s biggest proposed carbon capture and storage projects in Alberta, targeting initial capacity of 22 million tonnes per annum.

Launched in 2021, the Pathways Alliance brings together Canadian Natural, Cenovus Energy, ConocoPhillips, Imperial, MEG Energy and Suncor Energy, which together operate some 95% of Canada’s oil sands production.

This CCS project proposed for Alberta’s Cold Lake region is critical to meet the alliance’s objective of cutting carbon dioxide emissions from its member companies’ oil sands operations by 22 million tpa by 2030 and enabling the goal of net zero by 2050, equivalent to about 30 million tpa.

If approved, the storage complex could begin injecting CO2 into a saline aquifer from a number of oil sands facilities by late 2026.

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