 Good morning, and welcome to the 32nd meeting of 2023 of the Economy and Fair Work Committee. Myrddo Fraser is joining us remotely this morning, and we have been joined by Stephen Kerr MSP and I expect Jackie Dunbar MSP to also be coming to committee this morning. Although they are not members of the committee, they will be attending the Grangemouth evidence session, and I welcome them to the Economy and Fair Work Committee. Our first item of business is a decision to take item 3 in private. Our members are content to do so. Our next item of business is an evidence session. On 22 November, it was reported that the oil refinery at Grangemouth would be transitioned into a fuel's import terminal, possibly by as early as spring 2025, with media reports suggesting a net loss of up to 400 jobs. This raises questions about the site's future as a key employer and driver of economic activity in the area, as well as Scotland and the UK's energy and industrial strategy. Earlier this year, the committee heard an inquiry looking at a just transition for the Grangemouth area, and we visited the Ineos site, and at the time we were not made aware of those plans. This morning is an opportunity to discuss issues, including the impact on jobs, the support for workers, the impact on the Scottish cluster and the fourth green freeport. We will hear evidence from two panels this morning. First, I welcome Ian Hardy, head of legal and external affairs, Petra Ineos Manufacturing Scotland Ltd, and Colin Pritchard, sustainability director in Eos Grangemouth. I thank you for attending committee this morning. The committee was in session when the announcement and the news broke on 22 November about changes to the refinery, and committee members were all very concerned by the news, given that we had conducted an inquiry in the summer. First of all, when the workers were made aware of the plans, and what consultation, if any, has taken place with the workers at the site? The announcement was made on 21 November, as you have correctly identified, and the first people to hear of it were the workforce. As a shareholder group and as a management team, we were determined that they would hear first from the refinery, and, as a result, we began a process that morning of informing the workforce of 500 heads across three operating bases of the news that we were announcing, of putting in place the enabling works for the future transition to import operations. Would you say that this was an unplanned announcement for workers? Were they aware that this was likely to be coming along, or were they aware of the specifics of the announcement on that day? No, but, as a workforce, they are well aware of the macroeconomic environment within which the Grangemouth refinery operates. In fact, we do, as a management team, keep them regularly updated on the financial performance. Whilst on that specific day no-one was prepared for that news, I think that, in the round, it is well understood that Grangemouth being an older asset, an energy and efficient asset that, as we move forward through the energy transition, inevitably would transition from our refinery business into an operating business at some point. Really, all the announcement was indicating was the start of that process. What it definitely didn't do was anything related to refinery closure. We don't know when that will be, but what we do know is that we have to put in place the enabling works necessary to allow us to move to an important terminal at a point in future. The announcement said that the closure would be spring 25. The announcement didn't say that the closure would be 2025. The announcement said that the process of enabling works will take up to 18 months, and we anticipate currently that we will operate through to at least May 2025. Beyond that, we don't know because we don't know what the prevailing margin environment of the refinery business will be, but what we do know is that we have to act now to put in place the physical infrastructure to allow us to transition. On the basis that we do reasonably expect that over the medium to longer term, refinery margins will fall away and revert to lost making. Considering that the Grangemouth refinery business has, in the last decade plus, incurred losses of over $1 billion, it's entirely reasonable and prudent for us to put in place those physical mitigations so that we don't reverse back to that lost making environment. So you're saying that the timescale isn't as clear that the work is starting, but the timescale for the closure of work there isn't clear, and that leaves the people who work there in quite a suspended situation because they don't know... I'd flip it around and say, we know what do we know. We know that the works will take at least 18 months, and what we wanted to do was make sure that the workforce were not surprised by suddenly seeing contractors on site at Finner on the west coast and at Grangemouth on the east coast looking at modifications which they would clearly identify as being terminal enabling works. So we took the proactive decision to tell staff now. In the alternate, we could have waited until the very end of the process and when a decision to cut over had been made and just tell them at that point. But that goes against everything that we as a management team and as our shareholders wanted to do, which is honesty, openness and transparency. And that's what I think was inherent in our announcement. So why did the newspapers report it in spring 2025? Where did that come from if it wasn't part of the... I think you'll be better versed than me on trying to understand why journalists do certain things. Grangemouth is a critical national infrastructure. It's big news in any context. As I say, our focus was on telling staff first and inevitably that message got out. You take the 18 month duration of the works from the November start date and you do get to spring 2025. And also as we've discussed with colleagues across Scottish and UK Government, there is a programme of turnarounds and CAPEX interventions that have to be made. And there is a big CAPEX hurdle in and around May 2025 where the refinery will have to spend... In order to get beyond May 2025, it will have to spend a very significant amount of money in the tune of £40 million in order to have a licence to operate beyond then. So there's two natural hurdles. One is the duration of the enabling works and the second is the turnaround that must be completed by May 2025 in order that the business can progress for another four to five year cycle. Can I ask if you can share with us when the decision was made? The meeting with the workers took place on the 21st November, but we had the inquiry in the summer and it might have been a recognition that there was a need for the plant to move towards net zero. And so plans like this were being discussed, but not on a timescale that's been presented to us. And the workers found out on the 21st November, so when was the decision made? The formal decision made to commence with the announcement was made only a number of days prior to it. It had been in discussion, as I'm sure you'll be aware, for a period of time, but my and our essential point was that the workers would hear from us first. So Scottish Government were briefed in advance and had been aware of the concept for a reasonable period, as had UK Government, and we were unapologetic about this. We didn't pre-brief media extensively. We didn't pre-brief members of the committee extensively because we were laser focused on the staff hearing the message from the refinery management team first. We owe it to them. Can I just ask one other question? I'm going to bring in Gordon MacDonald. On the Green Freeport, to move from closing down the refinery to an important export business, what incentives and what... It looks like the Green Freeport is costing jobs rather than creating jobs because we're looking at losing 400 jobs at any else. What factor does that play in this decision? Because it will be offering tax breaks and... So what factor did the Green Freeport make to answer your question so succinctly none? It offers no meaningful benefits for the refinery as an operating refinery where it may have... It would. As an importing, it would, wouldn't it? If we were closing down the refinery and moving to importing... Where we see a potential benefit for the Green Freeport is in the potential future development of a biorefinery on-site, and that's where the package of measures in and around the Scottish Green Freeport may be beneficial. I might just defer to follow up with anything else on Green Freeport from any perspective that might be helpful. The areas for the fourth Green Freeport that are identified, there are some areas within the refinery fence line, but those are areas currently undeveloped where, exactly as Ian says, there is the potential for incentives to promote biofuels and the future energy provision that we will have once we've gone through the energy transition. Okay, there might be further questions on Green Freeport, but I'll come to Gordon MacDonald to be followed by Evelyn Tweed. Thank you so much, convener. Good morning, panel. I want to continue this discussion about the background to the decision to move towards this closure whenever that may be May 25 or beyond. So you talked about macroeconomic challenges. Are there economic challenges that only impact on Grangemouth refinery, or is it the same issues that impact on the other five refineries in the UK and indeed across Europe? Thank you, Mr MacDonald. So there's both. So if I take the Grangemouth specific ones first, Grangemouth is one of Europe's oldest refinery. From its configuration, it is inherently inefficient, just by its nature of its construction based back from the 1950s and the 60s. With that configuration, there is a higher unit cost of production that we bear at Grangemouth than I think the other refineries bear. And if you look out with the immediacy of the refinery environment, the population that we serve are commercial hinterland. It's a large geographic space, but a relatively small population. And that does obviously have a bearing on the economics of Grangemouth when you compare it to other refineries down in England, which have a greater population density in and around them. So all of those factors combined, as well as a projection of margins in the future, mean that Grangemouth has been historically and will be in the future again a material loss-making business. And that's why we have to act now put in place the infrastructure so that we ensure that we do not revert to that at a later date. So you talked about the substantial losses that were made in 2020-21 due to lockdown, but rice dead energy highlighted that due to the Russian invasion of Ukraine and, I quote, catapulted refining from famine to feast in terms of margins. Was it a mistake for Petrie Oenais to cut the site's refining capacity by 30 per cent? So there's a couple of points there. The first to take the rice dead report, they are correct insofar as the Russian-Ukrain war has led to an artificial spike in refinery margins due to, in effect, the sanctions and the constraint of diesel coming into north-west Europe. However, what that doesn't change is the fundamentals and we've just discussed exactly those. So there is an oversupply of refining capacity in north-west Europe. I'm sure Rice Dead can and do report on exactly that. And then with respect to Grangemouth we've just discussed some of the specific factors there that make it lower quartile performing in terms of its financial performance. As regards your specific decision of what we did in 2020, I think you're referring to we reduced our throughput from 210,000 barrels to 150,000 barrels per day. We did that in response to the prevailing conditions at the time and what we did was we reduced our throughput to better align with our inland demand. So that delta that we brought off at that point, the capacity that we mothballed that was being exported into ARA, Ansterdam, Rotterdam and Antwerp and it was being exported at a loss. So we were producing a product to which we couldn't sell our domestic interland. We had to export at a loss into Europe. So that is on a self-effacing terms, that makes no economic sense. So the decision in that context to mothball that portion of capacity was absolutely the right decision. You talked about the 150,000 barrel demand that currently is at the moment. What happens to that demand? Will it be that slack when you close the refinery say five years time whatever it happens to be? What happens to that demand? So demand forecasts are evolving and we have to acknowledge we are in the transition away from fossil fuels at the moment. There is increased penetration by EVs, by hybrids and that's absolutely right. We're not arguing against that but what that does is it reduces the demand for the product that we produce. So there comes a point where it simply becomes uneconomic for us to manufacture it. That's the rate at which it can operate. Once you go below those you go from that to zero. What we're doing is ensuring that we don't get to that point. We get to a point where we can safely transition away at a point in the future away from manufacture but at the same time effectively bring through the imporlogists. When you cut from 210,000 barrels to 150,000 barrels you must have thought that 150,000 barrel demand was sustainable at least in the short term. What my question is basically is you also operate another plant in Lavera, France. Will that demand that you said currently is in Europe and you were exporting it a loss? Will those customers now be served from the French refinery that you own which is also another old BP refinery? No, so the economics, the configuration the operating envelope of Lavera is entirely different from Grangemouth and the two just need to be viewed separately. There's no connection there to be had. As regards the inland demand at 150 barrels that was by design to meet the domestic supply what we're saying is that over time that domestic supply will fall away due to EV penetration hybrids and let's not forget post 2030 the demand for our product will fall quite sharply off a cliff due to the ban on new-build petrol and diesel combustion engines. I am stressing the point what we're doing now is putting in place the enabling infrastructure so that we can continue to play the role of fuel supplier in Scotland but not as a manufacturer at a point in time in the future. My final question is two parts. I wasn't able to find your financial accounts for the year of December 2022, it's known company's house. So could you say what the financial position was at the end of December 2022 and has a final decision been taken to close the plant, the refinery and what would it take to keep it open for a longer period of time? You talked earlier about the CAPEX decision of £40 million but is there any other factors that we need to be taking any account to keep it open? As regards the financial statements I presume there you're referring to Petrin's Manufacturing of Scotland Limited which is the owner and operator of the refinery. We've had lots of questions from journalists and MPs and the like who have done exactly the same exercises. What I would urge is you can't just cherry pick one company in the legal structure. There is a series of interrelated companies that form the Grangemouth refinery business on the basis it's a tolling and manufacturing joint venture only in totality will you see the whole picture of the losses flowing with respect to PIMSL specifically those accounts will be published shortly they will likely show a modest loss I would have presumed because it's a tolling venture it's meant to be a no profit no loss company so that's not the thing to focus on and we can't It's a no loss company how did you make substantial losses because I picked the losses up from the manufacturing company? There are losses inherent in PIMSL but what I'm saying is within the broader group you'll see the totality of the Grangemouth refinery business you're just picking the manufacturer but there's also the company that supplies the crude there's companies that sell the products there's others that provide infrastructure and utilities as well and together on a management accounting basis you have to consolidate those So what was the group profit? I don't know I don't know those won't be available Your second question was what steps could be taken to ensure that the refinery continues to operate So at this point we are having discussions with Scottish Government and UK Government focusing on those sorts of questions and I think to go into them at this stage would be inappropriate Okay, thanks very much I'm going to bring in Evelyn Tweed and then I'm going to come back to this show of green free ports with Colin Beattie Thanks convener Good morning panel Does the plan closure accelerate the anticipated reduction in emissions associated with operations at Grangemouth or did you already anticipate this as part of your net zero strategy? So just so I'm clear on the question the emissions from PMSL specifically the manufacturing entity are associated with the manufacturer trying product As we transition ultimately from manufacturing to import those emissions relative to PMSL will of course reduce but I think it's fair to say there will still be a continued demand for road fuels and jet fuel for a period of time to come therefore those scope 3 emissions from the tailpipe will effectively still be in place for Scotland As regards the broader question of emissions on site I might defer to Colin on that one as sustainability director So our initial plans for the road map as we discussed with the committee in Grangemouth were based upon the refinery being there as a basis but we always knew that for all the reasons of policy and economics that Ian's outlined that this was a possibility so we are looking at and it's probably worth saying that all of the plans that I discussed with the committee continue in place so our projects around delivery on net zero and particularly the next step for fuel switching to hydrogen and provision of hydrogen and the tie-ins with the ACON system and via national gas transmission to that to the ACON system all of those plans continue as I'd outlined with the committee there has been some comments about and you raised it in the introductions about impact on Scottish cluster to be clear we are continuing with our plans there is no impact upon what we're doing the outline and the scope that I described to the committee earlier this year is essentially unchanged so we will continue we will be producing blue hydrogen we will have a CO2 export stream that needs to be stored so our tie-ins via feeder 10 and the ACON project continue absolutely unchanged in terms of the scope just to go over a little bit the ground that you've touched on already you're going to replace the refinery with an import export hub on the side can you give a bit more detail on the expected markets for these imports and exports and the type of work that will be carried out on the new side so to be clear we will be importing and we'll be importing transport fuels so gasoline diesel and jet fuel we'll be bringing that in from international markets through our two operating bases in Scotland so the plan that stands is for us to convert finnart on the west coast which is a deep water port into a bulk diesel import node diesel being the largest grade that we sell in Scotland that will then be piped on a cross-country pipeline from finnart through to Grangemouth on the east coast at Grangemouth there's a tankage modification programs to ensure we can accommodate bulk import of kerosene and gasoline and also diesel if required so that split that is designed to debottleneck access at Grangemouth Jetty by bringing in the bulk diesel import on the west coast and inherent in that plan is fuel resilience and fuel security we will continue to sell the markets that we currently serve and the customers we currently serve and in discussions with those customers they have been supportive of the measures that we're taking so the type of people that we sell our product to buy from refineries and they buy from import terminals as well and there's a recognition in the marketplace that as we move through the energy transition that there will be a move from manufacturing in north west Europe through to importation in north west Europe as well so to be clear there is no export trade that's going to come to this hub note by definition what we'll be doing is importing product to serve our commercial markets in Scotland okay so it's entirely domestic yes the would the markets for this extend south of the border to England as well that's something that we'll review at the time so we currently have an asset in Cumbria in north west England which is rail fed from the refinery down to Dallston and as we move through this process now of reviewing our forward plan we will continue to investigate the other markets that we serve and that includes Belfast as well so we supply into Belfast and again that will be another port that we'll consider economics around I'm just interested in the point of view of the expectations of the size of this hub and the scope of this hub you've indicated domestic markets in the sort of northern part of the UK shall we say but that's limited to a certain extent the expansion opportunities presumably are limited the expansion opportunities with respect to import logistics are what they are with respect to the geographic hinterland we serve the expansion opportunities that I think you're referring to may be more pertinent when we talk about the context of a biorefinery biodiesel production saff production etc going forward which are part of another work stream that's being investigated by the business now we've touched already on the fourth green freeport but I'm still not clear how this hub is going to impact on the fourth green freeport is it going to channel any of its business through there is it to what consideration has been given as to how the opportunities could be developed so the refinery remains within the footprint of the green freeport but where I see the benefit of that is in the forward looking projects in respect of the biorefinery potential and other low carbon projects at Grangemouth those are where the fiscal concessions linked to that policy I think are giving best effect and that's been factored into your plans going forward that will be factored in to our biorefinery project at the appropriate time as we go through the development funnel for that project Mordo Fraser who's joining us remotely so it might just take a second to get Mordo on screen thank you, thank you convener apologies I was trying to unmute there good morning gentlemen a couple of questions just to follow up on Mr Beatty's line of questioning just so I properly understand the situation so at present Grangemouth is there it takes crude oil from the North Sea from elsewhere it refines it then sells its product to markets predominantly in the northern part of the United Kingdom if the refinery closes what then happens to that product that's currently coming from the North Sea where will it go to be refined morning Mr Fraser so whilst the refinery as you'll be aware is linked to the 40s pipeline system at Canill we take very little crude oil via that system that's a legacy arrangement inherent in the BP configuration of the site from time gone by our importation of crude oil is international there is a trading team that focus on exactly that looking at where can we get an appropriate specification of our crude diet at the best possible price and that will be brought in from all corners of the globe right so two follow-ups then in terms of the pipeline from St Fergus that kind of goes into Canill if the refinery closes what happens to that I don't see the linkage there that you're making have been quite clear that the crude diet of the refinery from the North Sea via the 40s pipeline system is minimal our importation of crude currently is mostly via the west coast at Finnart where we bring in large carriers in bulk and transfer that across the cost of country pipeline and it's that that we're switching up to use as a bulk diesel import mode instead of bulk crude import mode in our potential terminal configuration okay so the closure of the refinery has no impact on the gas pipeline correct Mr Fraser thank you okay thank you so my second question therefore is for customers you currently have in the northern part of the UK who are buying your refined product where in future will they source that product from are the customers that we serve today and it's business as usual today for them they will be the customers that we continue to serve all the way through this transition and beyond this transition where will they be purchasing their refined product from from Petroenius as we move into our fuels import mode we will continue to serve them in the way that we've served them historically as a manufacturer of finished fuels okay but those products will be refined elsewhere not at range of course yeah by definition those products will be those finished fuels imported to site and we will sell them through all our existing infrastructure at the Grangemouth Road Rack so there will be no change for any of our customers at the transition point okay alright thank you thank you I'll now move over to Colin Smith to be followed by Maggie Chapman thanks very much convener can I just come back specifically on the issue around jobs your company often talk about the positive impact of jobs not only from the site but also supply chain and contractor jobs so can you just clarify the number of jobs that are affected I think we've heard the figure of around 400 direct jobs but what assessment has been made of the impact on supply chains and contractors and other local businesses as a result of the closure of the refinery so you're right the current head count at the refinery is approximately 500 going forward we anticipate that we will need about 100 heads for the terminal our modelling suggests that by the time we reach that transition date approximately 100 will be eligible for retirement and we anticipate the following cessation of refinery operations and during the currency of the terminal operations there will still be about 50 employees required for decommissioning and demolition of the Grangemouth site for a period of up to about 3 years there must be supply chain jobs contractors jobs already in place at the moment in the refinery as well as the people you directly employed I'm just wondering what assessment has been made about any potential loss there because the company constantly talk up the positive impact they have on supply chain jobs but there's obviously going to be a negative impact I'm just wondering what the assessment has been made of that so there is a supply chain that does support Grangemouth in refinery operations and that support terminal the demand for services from that supply chain will inevitably drop which is why it's equally important and in parallel with the cessation of refinery we continue our studies around biorefining and the potential to bring those sorts of projects online because ultimately we talk about the just transition but this is the just transition in action and there's inevitability about us having to migrate from the fossil based economy to the non fossil economy and that goes to the businesses and it goes to supply chain so that's where I want to direct our focus going forward I agree, if we've got a just transition the starting point is we need to know how many people are currently employed directly and indirectly with the refinery if we're going to have a just transition to support those people but I'm still not entirely clear what the impact would be numerically I suppose on supply chain jobs and what assessments have been made on that but can I come back to the 2025 figure you've indicated you're not clear if it will close then what would stop it closing in 2025 that is making a loss at the moment your direction of travel has clearly assessed that you should be ready to close in 2025 what is going to change that you've not already built in between now and 2025 and what impact does that have on your existing workforce because employees in the refinery at the moment highly skilled employees are now effectively being told that their job is on a timer they will be looking for other employment presumably because you can't give them any setting to be on 2025 so what assessment have you made about the impact just on your daily operations of the fact that you're likely to lose staff between now and 2025 skilled staff who will be looking at opportunities elsewhere presumably away from Green's mouth because of the work you're doing elsewhere in the site to bring other things on stream frankly that's long term stuff it's not going to create any jobs in the short term and people are going to leave the area because of effectively your announcement so Mr Smith you've correctly identified and referenced twice the highly skilled staff we've got in site and they are the absolute focus of the management team presently and you're right, this news will be unsettling for them and together with the unions and the employee forums we've had very advanced discussions with them and notwithstanding that we're not in a formal consultation with them about the closure process we have put in place via the annual pay review a series of enhanced measures to protect them so as of yesterday I understand the unions will be recommending to their members an upgrade to their duncey terms as well as an above inflation pay rise and it's for exactly that reason we need to give them as much financial security as we can at this time in order that we can continue to operate as a refinery both while it's economically viable and also to put in place the enabling infrastructure for the terminal transition so the employees are absolutely at the heart of our strategy so what incentive is there to stay till 2025 if you're a skilled worker who looks up with grains wealth potentially what is incentive to stay there are you saying that if you stay you'll get a financial bonus I'm not clear if you know your job's going to probably disappear in 2025 you're not saying anything at all it's going to go beyond 2025 realistically we know it's 2025 what is the incentive for anybody to stay on that site if they're a skilled employee as I say there is a package of financial support around our workforce to incentivise them to stay for that period and it's business as usual as it stands today the refinery is in full operations mode we need our staff to stay and therefore it's incumbent on us as a business to incentivise them to stay to just precipitate a larger problem for the business and as such we're doing everything we can to keep that workforce motivated and engaged recognising Mr Smith that this is a period of uncertainty and in terms of the supply chain are you doing anything at all to reassure them to suggest that there may be alternative you'll know who your suppliers are you'll know who your contractors are on that site in terms of your future plans are you in discussion with them or what it may mean for them we've only recently announced it we are having exactly those discussions both with employees, supply chain and all the other stakeholders because there's a large envelope of people we have to reach out to and talk through and have exactly these sorts of discussions with thank you thank you for joining us this morning I want to continue on lines of questioning around jobs and workforce planning and what you anticipate happening I suppose not only the 18 months but beyond that you've talked about the reduction in jobs that is likely to happen as the site shifts from refinery to an import hub I suppose I'm interested in the relationship between that and you've spoken about the buyer refinery for the future with the plans for the green free port there was an estimated 50,000 jobs that would be generated by that talking about a reduction to roughly 100 jobs with the import and you mentioned 50 that would be needed to decommission existing infrastructure how do you see that playing into that broader quite astonishing increase in job numbers for the site or for the area for the free port I haven't been involved and I'm not aware of the data that supports the green free port job figures so that's not for me to comment on what I can comment on and what I have commented on with respect to Mr Smith and Mr Beatty's questions isn't around the transition that we are putting in effect for our staff and I guess I have to reiterate the point that in effect to the green free port for us the benefits there are best suited as I understand it to forward looking projects that we are currently going through the appraise project development funnel so there's not been a direct link then around workforce planning beyond the shift to an import hub the specifics of the green free ports and the figure that you've referenced there no that's not factored into our thinking our thinking has been of how can we do the best that we have the responsibility for as a business to manage and with the jobs that you anticipate continuing to exist with the import hub what skills retraining what professional changes will be required for the employees you currently have and how will you support them through that? It's business as usual currently so everyone is going through their training and keeping their tickets up and that's essential and that won't change until a decision is made and even then once we make the transition there will be a package of measures and I would anticipate with the support of Scottish Government and Falkirk Council etc to ensure that there is appropriate support for those employees who will not be transitioning into the terminal business and that's something that we have a good track record of as a business and we did it in 2020 and I'm confident that we will employ the same rigor as in when we make the transition announcement with respect to refinery operations I understand what you're saying about the people who will no longer have roles I'm talking about the people who will will they have because I imagine that there'll be slightly different types of jobs what skills training will be in place for them to make sure that they actually are and that the jobs that they want to be doing so when, as I said we are at the start of the project where we're doing the workforce planning and around the terminal transition and we have a highly skilled workforce now for operating the refinery which is a top-tier complex comasite those jobs will be directly relevant and useful and will fill the gaps we need for the terminal business as when we make that announcement so I absolutely see transfer from one to another and I suppose again another line of questioning Colin had was around the supply chain and the indirect jobs do you see a role for your business in supporting any reskilling upskilling and retraining for supply chain contractors and others or do you think that's their business I imagine it will be a combination of both Ms Chapman I think the Scottish Government, Falkirk Council and Petronus will all have a role to play as in when we reach that point and we understand fully what the supply chain needs of the terminal business will be I don't think it falls exclusively to any one party My final question on a slightly different point not thinking about jobs and employees necessarily but what engagement have you had or are you planning to have around the site because obviously there will be an impact on them with the work that needs to happen over the 18 months and then potentially I don't know but potentially it will have a very different kind of impact on them the import business will be quite different from the refinery business in terms of the consequences the impact on the immediate and not so immediate communities and small businesses The community that has grown up around Grangemouth has been there for a very long time and has seen it transition over a number of decades and years as it's developed there will inevitably be a process of consultation with the local community as we move through the process but I come back to the point now we are at day 1 no decision has been made it's business as usual you and your colleagues have raised excellent points that those discussions have to a large extent started and will continue as and when we progress through the decision making process if I can just press you on that you say those discussions have started in what form have discussions with the community taken what have they been to date if they've started already and are you using just the formal council team mechanisms through community councils and that kind of thing or are you looking at broader strategies at this stage our engagement has been at the highest level so you can imagine for us key stakeholders in respect to our local community will be the likes of Falkirk council so that's where our attentions have focused currently and I think that's absolutely right recognising that yes we've made the announcement but we are at day 1 of the process as and when we have an understanding of when closure will be how it will be effective and what that programme looks like at that stage you're absolutely right we can go back to specific stakeholders on those discussions with them and do you expect the 18 months of work that you're at day 1 of do you expect that having a negative impact on the community as operations shift during those 18 months of work no there'll be no direct so during the currency of the engineering programme to affect the changes at Finner and at Grangemouth that won't have any adverse effect upon local communities in the east or in the west of Scotland just for bringing in Kevin Stewart Mr Hardie you keep saying no decision has been made but what part of this decision hasn't been made because it sounds like the refinery is going to close we're going to move towards imports and exports you've confirmed the kind of job changes, job losses we're looking at what bit of the you keep saying no decision has been made what bit of it's not been made I don't think I can be much clear madam convener and sorry if it's not landed we have not made a decision as and when we will be closing in Grangemouth refinery the positive decision we have made is to put in place the investment the £10 million investment in order to enable the logistics works on the west coast of Scotland and the east coast of Scotland so the timescale is the final decision that's not been made when this is going to happen although most indicators seem to be spring 25 so there is I think a recognition that the refinery will close we wouldn't be putting in place these measures in refinery operating for the next 20 years so that's simply not the case and no one in the refinery industry within UK or Scottish government I think reasonably believes that what we are doing is putting in place the infrastructure such that as and when the business makes that decision there is no change from a continuity of supply position for Scotland good thank you thank you very much convener and good morning I want to go back to my comment that has already been made around about the Scottish cluster and the acorn project and I'm going to quote you Mr Prichard here if I misquote you you can tell me but you have said that your plans remain unchanged around about the Scottish cluster and the acorn project and that you are continuing with those plans obviously you're looking at substantial change here to the business could you explain why it is that you feel that your commitment and your plan works for the Scottish cluster and acorn project remain unchanged of course and thank you for the question and the opportunity to clarify Mr Stewart in respect of the scope that I described of where we are switching our fuels across to hydrogen the key assets that we are focusing on that we are turning across to hydrogen within Grangemouth are our petrochemicals complex KG ethylene cracker and our utilities so our combined heat and power plant and our utilities boilers providing steam and power to all of the site and remind everyone that there is still a petrochemicals complex and the cannial terminal from the 40s pipeline system that are there in determining our design basis and you'll notice what I haven't mentioned in there we assumed no demand from the refinery for its fired heaters for hydrogen or to replace its current hydrogen unit that exists while it's a fossil fuel processing refinery so the reason that I'm saying that our plans continue essentially as I discussed with the committee earlier in the year is that the design basis our customers are exactly the same as they were and they're unchanging we have put ourselves in a position and made it very clear that if there is a future demand from the refinery we will be there to provide a future demand be that from a utilities or a fuel or a hydrogen transport basis and that will all be upside an additional demand for our plans for Grangemouth's hydrogen provision and if that comes from blue hydrogen that will then be additional CO2 that we are capturing and putting through the acorn system so the reason that I say it's essentially unchanged is exactly that because we didn't actually have a demand from the refinery in the first place that we were factoring in your original business plan to ensure that you were supplying the refinery there's no direct demand for their fuel switching or to replace a hydrogen unit okay, I want to move to a few other bits around about the bio refinery I'd like to hear a little bit more about your plans for hydrogen which you've already mentioned and beyond that I'd like to know where you're at in terms of looking at sustainable aviation fuel and the production thereof which is going to be extremely important and does the proposed closure of the refinery at a certain point which you're unable to tell us at this moment when that will be where does that put those ambitions and beyond that where do you think the refinery plans play in the minds of confidence of future investors in what you're looking to scope for the future quite a lot to unpack there quite a lot, yeah do you want to hear first so there's two separate projects there's the bio refinery project and the petroenius study there's also the blue hydrogen project do you want to hear about both or do you have a preference for one or two just mix it all up we've got a very short period of time I will summarise both very quickly because I have more questions I'll keep waffling in that case with respect to the bio refinery that is at an appraised stage so that's very early commercial and technical feasibility and what we're doing is a mix based approach so there is a new build review there also is a repurposing review based on the refineries existing configurations then there is two sizes there's effectively a mid case and a high case in terms of production and Tracks trying to recognise whether we just focus on a domestic market or whether we then do what we had done previously as a refinery historically which was export into ARA recognise as you have is going to be a demand for these biofuels going forward specifically with respect to SAF there's a few really important things we can say there so in part and it's something we've not discussed actually enough I feel as a business we are reviewing the potential for importation of SAF it's not as easy as just bringing in jet fuel in the way we currently do and piping it in and storing it and selling it to market there is a separate piece of logistics and enabling work we have to do on site work is funded and is being done and our plan in 2024 is to carry out a number of test cases of that where we import SAF from Europe and sell through the existing terminal infrastructure at Grangemouth to customers Why not manufacture SAF here? That's exactly what our bio refinery project will do so the bio refinery project is looking at the feasibility of manufacturing biodiesel and SAF now there is a very long and detailed discussion about the hurdles to that but there's two big ones that the committee should be aware of with respect to SAF we talked about investor confidence as well the reason we're not seeing a large uptake of SAF manufacturing at scale and at pace in the UK yet is I would argue exactly that investor confidence point there is some major challenges to the UK policy framework around that too specifically one we know there's going to be a SAF mandate coming in but we don't yet know what thresholds it will be at over what period of time therefore by definition how is a project developer are you expected to design procure and manufacture a plant to meet a feedstock a product demand you don't yet know is firmly there and secondly there's a big disconnect between the feedstocks that you can use for bio in the UK and in Europe UK government is proposing and is sticking to what's called a HEFA cap which will mean it's forcing industry to move to second generation technology with a lower technical readiness and as a result I fear and the data shows that by the time the SAF mandate comes on stream there will not be sufficient domestic manufacturing in the UK to meet it and we'll revert back to being a net importer of sustainable aviation fuel into the UK and that's something that could and should be addressed in order to incentivise and push on the development of bioprojects in the UK I think that's probably enough for me on the biofinial hand over to Colin to talk about any of this blue hydrogen project which is of equal significance I'm just trying to clarify the question specifically around the blue hydrogen project that you'd like me to cover just give us a brief summary and you know these plans what bothers me the way that you're doing things at this moment is that there may be an impact in the future in terms of confidence in terms of moving some of these projects forward so to be clear the project that we've got is underwritten by the demand that we've got on-site for hydrogen that comes from the petrochemicals complex and from the 40s pipeline system so the projects that Ian was discussing that we could see in the future of biofuels and SAF development and other low-carbon hydrogen feeding into the transport sector if they're giving the right support and the right policy support some of the aspects that Ian's discussing also that they actually make commercial sense at the moment there is a general challenge which is true across the whole of the energy transition in terms of our policies seem to be more directed at banning the old than they are in creating the future that we wish to move to the latter is decidedly more complex I admit and an example in there well I won't go for the example so when you look at what we're planning to do there should be investor confidence because we have a demand and offtake and in fact the way that the UK government's low-carbon hydrogen agreements are set up actually confidence over your offtake is absolutely key and ultimately that might even limit ambitions across the UK of these hydrogen projects being developed so I would reiterate again if we can get the right policy and support in for the future projects that we've discussed from the refinery this is only going to be additional demand and should actually bolster and build on what is already a solid demand base for our hydrogen project okay I'm going to move a little bit over because there's been talk of energy security previous members have asked questions around about the forties pipeline and what comes in at Canill you've discussed in some great depths around about the export that currently goes on to ARA and you have talked about a crude mix from international markets in terms of the energy security aspect of this and carbon footprint is there not an argument that more crude should come in in that forties pipeline to Grangemouse and stopping the supply because you've talked about finart and the pipeline being used for diesel I've not heard anything about petrol or kerosene or how that would come in to the import plan from an energy security perspective would it not be better for the forties pipeline to Grangemouse more rather than relying on international shipping coming in to finart general comment on that and then I may have some specifics so I think let's unpack where you are going with this Mr Stewart so first with respect to the terminal we're not talking about international crude we're talking about international refined product we've spoken about the reconfiguration of finart on the west coast to be for bulk importation of diesel that inherently gives us strong security of supply that is the most popular grade of finished fuel sold in the UK by definition that frees up capacity in the east coast at the Grangemouth Jetties at debottlenex access to that infrastructure for the bulk importation of gasoline and kerosene as well as back up logistics for diesel as well and I might add so in our current it's the importation aspect that gets me we're talking a lot about energy security and let's look at this from layman's terms we have the North Sea basin producing crude and you are refining that crude and you are refining that into various different products the North Sea produces crude do we take much North Sea crude via Canale to take your FPS example the answer is no, it is entirely de minimis are we exposed from a fuel security international supply chain perspective today with respect to our operations absolutely because we have to import crude internationally in the same way that we thought that would be important but that's my point do we actually need to be importing the North Sea basin and what it's producing to a greater degree I recognise that there are different types of crude and all the rest of it because there's different types we're getting mixed up between crude and refined product what we're saying is that the economics of manufacturing refined product at Grangemouth in the competitive land state within which it sits is not going to be viable in the longer term we're going to have to trash transition away from manufacturing and adding on top of the $1 billion of losses already attributable to that business by moving to an import business the alternative is unsustainable losses going forward which is not a viable future and is not inherent in any just transition planning modelling I think we could go on for quite some time in terms of the competitive international market and the energy security point of view there has to be changes to that market and in terms of reducing carbon footprint overall there has to be changes to that market as well what I'm driving at is from an energy security point of view and utilising the North Sea basin to the max to save on importing crude and product would it not be better to utilise that pipeline to canil more and would it be beneficial for Petroenios for the UK Government in particular to look at what can be done to help in terms of that energy security by investing in that energy security now you know I'm very well aware of the 2013 rescue plan which of course led to a £9 million grant from the Scottish Government and £125 million of loan security from the UK Government is it time to look at security and loan security in terms of future energy security and cutting down on the carbon footprint I'll focus on two aspects of me Mr Stewart in the interest of time energy security is something that we take incredibly serious our proposal, our plans are designed to ensure exactly that and give Grangemouth a new life as a future fuels hub for decades to come as regards whether UK Government and Scottish Government should be making interventions to maintain continued refining operations at Grangemouth I'll leave that to make the representations directly okay thank you good morning gentlemen I'm just going to ask a couple of quick questions just around clarifications so I understand exactly what we're up understanding the longer we'll be refining or importing and refining crude at some point at the plant but you will be importing refined fuel into that and that's what assessment you have that has on or assessment you've made on the impact on the decarbonisation process and also potentially just to clarify how that impacts the production of hydrogen and SAF at the plant if I could just get clarification on that so when the Grangemouth refinery stops operating its scope one and scope two emissions will fall by definition and I think that's to the tune of about 1,000 a year however there will still be demand, we will be importing product and that product will be getting combusted in cars, buses etc in Scotland so the scope three emissions for the country I expect to remain largely unchanged and they will track in the downward curve which tracks also the improvements in efficiency in engines and the decline in use as people move to EVs and hybrids etc I think that we touched on that with Mr Stewart so we are doing two things one is there is a project on going to ensure that we can import SAF through Grangemouth going forward and ahead of the mandate in 2025 we are actually planning on doing some test runs in 2024 to prove up the system because the supply chain and the testing etc that we have to do for that product is quite different and then SAF manufacture it is an exciting opportunity and that is an inherent part of our bio refinery project which as I mentioned Mr Stewart is focused on HVO so biodiesel and SAF sustainable aviation fuel and it's that that would give you the domestic manufacture of those two key products it's quite an interesting web we're not refining crude in Scotland anymore so there will be a reduction in carbon production but we are refining crude and we are storing our carbon production by refining it somewhere else overall in reality that's right we can't get away from that aspect you know your spot on the other thing I wanted to ask is about I mean it's blue hydrogen that it's producing there and you discussed just now you have an offtake at the moment for the blue hydrogen that you're producing what is that particular promising area for development of the site do you have potentially looking down the line a much greater offtake of hydrogen so it's said the current plans for the blue hydrogen plant will involve the offtake for arethaline cracker so we will be in a position to provide low carbon steam and power across Grangemouth that will supply the existing assets and there will also be the potential for the to be capacity to supply steam and power to any other businesses that locates just because we will have excess capacity the way we configured so the opportunities for growing the hydrogen demand in Grangemouth are absolutely there clearly from the aspects that Ian's outlined in terms of a bio refinery but also the location in Grangemouth I mean I would go back to why the refinery is there in the first place you've got the land you'll have the logistics and I'm working very closely talking with the likes of Scotia Gas Networks and National Gas Transmissions so with their project H2 Caledonia and Project Union which will link hydrogen the intent is to link Grangemouth into the a national 100% hydrogen supply system that would go the length of not just Scotland but of the UK and that will give the access that we could in order to be able to supply what we would like to locate in Grangemouth and also with our blue hydrogen production and linking into the ACORN project and National Gas Transmissions feed of 10 we'll have the ability to take CO2 away from processes in the vicinity of Grangemouth as well not just in use or petro in use processes in the future so in very many ways the work that we're developing or our next step I should say on our decarbonisation plan will actually set Grangemouth up quite well very well in terms of its linkaging to logistics to be able to make advantage of those hydrogen and CO2 links it just needs the policy support in order to be able to make those energy transition investments come to Grangemouth from both our companies and others Do you have the thought or do you have the capability of moving on to green hydrogen just a personal question I'm very at pains to describe low carbon hydrogen demand because there's blue and there's green again I think I outlined when we had the committee in Grangemouth that we are moving with with blue hydrogen first it's got green hydrogen which means we can move quicker in the quantities of hydrogen that we need in Grangemouth and part of the reason we can do that is by taking advantage of the existing infrastructure from our previous fossil fuel based economy so natural gas coming in from the North Sea and coming down so to be able to get CO2 stored about 400 kilometres away from Grangemouth 500 kilometres safely under the seabed requires 15 to 20 kilometres of new pipeline and the rest of it is reused pipeline so deliverability is really strong that's the reason we're moving faster with blue hydrogen but the end consumers and what we're doing is switching to hydrogen as a fuel so we can use hydrogen from any source whatsoever the end user doesn't matter so green hydrogen wherever that's generated can be used in the future as well from that as an energy source which is why we're trying to link up or we are intending to link up to SGN's H2 Caledonian and Project Union to the Grangemouth site which would then make hydrogen from any source available to anybody who wishes to locate in the Grangemouth area just a very very small question that has been niggling away at me for some time the decision that was made has there any impact being on that decision being made from the hostility that seems to be being heaped upon in the early gas industry at the moment does that have any impact on the decision making process no it's a macroeconomic assessment okay thank you okay thank you I'll just ask a couple of quick questions moving to an importing business will any assessment be made of where the refined product is coming from and how it is being refined because the standards you could look at your international standards UK does have a high standard when it comes to health and safety in the workplace and the products we produce how can we be assured that what is coming in is going to reach that standard or is there any assessment being made of whether it does or not and should form part of the assessment as we transition now through this period of planning any product we bring in will meet relevant international standards of that I have no doubt madam community another question is around as I said at start we had a committee inquiry into a just transition the way in which the announcement has been made looks like a sharp and a sudden decline out of the 400 jobs that will be lost what proportion is that within the site because the whole point of a just transition is to try and not repeat the mistakes that we saw in the mining industry for example and unfortunately the way in which the announcement has been made looks more like that than it does in terms of what we are looking for for a just transition How do you mean in the way the announcement was made what is your concern as regards the communication strategy? We are all sitting in the committee having done an inquiry a few months before and it comes out during a committee meeting that 400 people are about to lose their jobs at the site a number of jobs at a pace that I don't think the committee expected while we recognise there's a shift away from refining and from the use of oil and gas not at the speed at which 2025 would suggest and we'll pick up questions where the cabinet secretary's coming in next around what a just transition actually means because from the outside I have to say this doesn't at this point in time look like a just transition for Grangemouth Your views on what a just transition are well noted and I'll be interested to hear what the cabinet secretary has to say with respect to that as well Okay, thank you Is there any other questions from Dean Kerr? You do accept the narrative of this closure is that there are going to be hundreds of jobs lost and potentially thousands of jobs lost with a devastating impact on the area around Grangemouth, the Falkirk area You do accept that narrative The figures as regards job losses haven't yet been finalised with respect to the terminal business transition as and when that materialises and Mr Kerr, I don't recognise the thousands that you're referring to Okay, so that is your view that the impact on the suppliers and contractors which are thousands of jobs in relation to the Grangemouth site that you don't accept, you don't recognise that as a potential impact? No, I said I didn't recognise where the figure had come from But you understand that that's the nature of the calculation I don't have for you a calculation on the supply chain impact, what we do is there's modelling that is done and there's multipliers that are used to ascertain supply chain impact that we can discuss What is your modelled impact on the supply chain of a potential closure? So the typical modelling number uses a multiple of seven that's taken from the Chemicals Industry Association but I think that belies the fact that within that number not everyone involved in the supply chain works exclusively for the manufacturing business and not every not every business will have no part to play in the future transition so if you've got a more credible data set then that would be a good point to start I think if you're seven times is right then we're talking about thousands of jobs So as interested in your reply to Brian Whittle about the background to this decision Why on earth then given your response to Brian Whittle why did Andrew Gardner the chairman make the extraordinary statements he did just a month before the announcement of the closure He said the future of Grangemouth was on the line because of the policies that were being pursued by the SNP and Labour Is this the independent on Sunday article? This was reported in a number of outlets I've got in front of me a report from the Daily Telegraph But there are direct quotes If you've got direct quotes there I can assure you speaking of the oil and gas policy having effect on petrwiness Mr Gardner was roundly misquoted We want to keep jobs and manufacturing here but Labour hasn't understood we need supplies I need gas, very cheap and available as a free stock Is that wrong? My understanding is that Mr Gardner was speaking about the need for natural gas supplies to be maintained in order to have a feed stock for the blue hydrogen project which form a key pivotal part of INEAS's decarbonisation strategy for the Grangemouth cluster It's really important to recognise that was a wholesale misquoting of what Andrew Gardner said I accept what you're saying Can I just very quickly ask some very specific questions because people We're expecting the cabinet secretary in about five minutes because people are rightly concerned about this So widely regarded by analysts I'm going to quote Alan Gelder who is an analyst at Wood MacKenzie that the hydrocracker unit that produces the diesel at Grangemouth went down the line went down in April and has not come back up Diesel is the most profitable product line coming out of the refinery if I understand that correctly Why has the hydrocracker unit not been put back online? The hydrocracker is not online for operational issues which we've had too we're in our second root cause analysis now are imperative as you've said it's key to, it's the heart of the refinery it's a key upgrading unit not limited to diesel only it is essential for the commercial viability of the refinery that we get that unit back up and running as quickly as possible it is in everyone's interests that we do that Mr Kerr So the reports that that some of the repair and maintenance work connected with the refinery had been stepped down and that this led to an increase in breakdowns including the hydrocracker what's your response to that? I have never seen such a report and I can assure you the care and maintenance programme for the refinery business continues on foot as it has done historically and as it will do going forward we are top tier comasite critical concern full stop The impact of the refinery closure on any of O&P which is also loss making I think it lost 300 million last year what will the impact on that the viability of that operation be given the fact that there is input from the refinery to the process of any of O&P The feedstock integration is entirely limited there is a sharing of corporate and commercial services beyond that the linkages are few and far between these days Mr Kerr and one last comment one last question for me really is timeline when did you notify the UK and Scottish I mean I've been involved in the closure of plants myself these things don't happen in a few days before you make an announcement they take months of planning intricate planning so when so the idea of the decision was made and it was announced in a few days is slightly disingenuous I think that was a long time in planning so when did you inform the UK and Scottish governments of your intention to make an announcement on the day you did so you're entirely right the planning for this is a long term piece and it has been considered in the round for a good while both the Scottish and UK governments were aware of the concept of this and have been for a number of years I'm sure madam convener and you'll pick this up with Mr Gray later on we made the formal notification to UK Government as required under the energy act on the morning of and we similarly made a formal notification to the Scottish government on the morning of but that is an addition that wasn't the first thing they knew about you no that's what I'm saying and that is an addition to them being aware of the concept and the studies and the planning of the potential for it for well over a year prior well over a year thank you okay thank you that now brings us to the end of the evidence session and Ian Hardy for attending I will now briefly suspend the meeting as we have a change of witnesses I now welcome our second panel this morning to discuss Grangemouse Neil Gray, Cabinet Secretary for Wellbeing Economy, Fair Work and Energy who is joined by Kevin McDermid Head of Critical Energy Infrastructure and Commercial Project Energy Industries Division and Su Town End Interim Deputy Director Energy Industries Division both with the Scottish Government to make a brief opening statement Good morning community, good morning colleagues and thank you very much indeed for having me along again this morning I welcome the opportunity to discuss with you the emerging situation as far as we understand it at the Grangemouth Refinery and I both welcome and value your support on this important issue I recognise that this is more than an unsettling time for the workforce at the Grangemouth Refinery and reiterate here this government's absolute commitment to doing all we can to support them I also recognise the potential impact of this announcement in the longer term for supply and chain businesses and commit to ensuring that any subsequent decision that is taken takes cognisance of the wider economic impacts for business and for local people and communities and I think it's important to acknowledge the role that Grangemouth has played nationally and locally as part of our industrial infrastructure it is Scotland's largest industrial site and is in an integrated cluster of strategic infrastructure with expertise in downstream oil, chemicals petrochemicals and innovation it is also hugely important for logistics as Scotland's largest port there are three major industrial sites the Petrinos fuel refinery Ineos and OIP UK which focuses on petrochemicals and Ineos FPS oil and gas pipeline Together these three businesses employ around 1,800 of the 2,000 employees at Grangemouth. The Petrinos refinery is the focus of the recent announcement and the refinery itself dates back to 1924 and is currently owned and operated under the terms of a joint venture formed in 2011 by Ineos and PetroChina In those early days, a century ago which was before the exploration of North Sea oil, the refinery solely relied upon oil sourced from across the globe, much like its operation today. It currently has 500 direct full-time employees and delivers £150 million worth of GVA annually. At Grangemouth Scotland's largest industrial site an integrated cluster of strategic infrastructure with expertise in critical elements of our economy and as I've set out all of this out to make clear how important the site is to us. That is why we are focusing on working with the refinery management and staff to start that transition to the future. The First Minister and I have, as you would expect, met with the refinery senior management team to receive an update on what this announcement means and subsequently met with shareholders yesterday. It remains our understanding that this announcement is not a decision at this point to close the refinery but a decision to start the negotiations to have the potential to transition Grangemouth to an import terminal. During those meetings we stressed the importance of ensuring workers are at the centre of any decisions the business takes on the refineries transition. The business agreed on the importance of working collaboratively with the Scottish Government and trade unions throughout this transition period. Likewise, I have also met with and written to Unite the Union and the STUC and we are aligned on the imperative of securing a just transition for Grangemouth and the industrial cluster and its workforce. It is our intention to publish that just transition plan by spring next year and I am sure that you will want to discuss and hear more about that work during this and subsequent sessions. I just want to finish by reminding the committee that the responsibility for the security of fuel supplies lies with the UK Government and therefore contingency planning relating to fuel supplies are the responsibility of the Secretary of State for Energy, Security and Net Zero. You will be aware that I have written to the Secretary of State and have also had a constructive meeting with Minister Graham Stewart, who is Minister of State for Energy, Security and Minister John Lamont, parliamentary under Secretary of State at the office of the Secretary of State for Scotland, who have both assured me that the appropriate plans are in place in the event that there is any disruption to fuel supplies from Grangemouth. It is my intention and hope that we continue to work constructively as things develop, not least to ensure that we prioritise the wellbeing of the highly skilled workforce and that any final decision safeguards the business's role as a supplier of road and air fuels for years to come. Thank you, convener. I look forward to taking your questions. Thank you, Cabinet Secretary. I don't want to disappoint the Cabinet Secretary, but this morning it sounded like the decision had been taken to close the refinery and you described it as a potential to move. It sounded like there were clear intention to move. The dispute this morning just seemed to be around the date, whether it was spring 25 or some future date, but the evidence... I don't know if other committees agree, but the evidence we heard this morning didn't sound like this was really a decision that was up for much discussion. I'm just wondering if the Cabinet Secretary had a chance to listen to the evidence this morning and whether that reflects discussion he is having. I went on the energy sector earlier on this morning, so I didn't catch the first part of the evidence session. Regardless, I think that that's a fair assessment. I think that there is a transition that is going to be had at the Grangemouth site. With respect to Petrionias, their investment in coming forward with an import terminal ensures that whenever a decision is taken to end the refinery elements, there is still an industrial capacity there, and it protects the fuel security for Scotland as well, which is an important consideration. I think that there is a discussion to be had, which is what I have been having with the joint venture shareholders and the site management around the factors that influence the decision on the timing of that decision, and those discussions are on-going. I am grateful for the fact that the UK Government appears to be at the table for those discussions as well, and I am hopeful that through future meetings we are able to at least understand the process by which they are taking that decision and whether there is anything that can be done to extend the life of the refinery, but I don't wish to pose any further question about the challenge that there is here, given part of what the evidence you have heard this morning on the macroeconomic elements that are at play here and the reason for why that decision has been taken. You know that the committee did an inquiry into just transition for Grangemouth in the summer, and from the outset this announcement was made during our committee meeting two weeks ago. I think that it was a bit of a shock to members that the announcement was made in the way it was and the timescales that were attached to it. We have concerns that doesn't look like a just transition to us after the work that was done in the summer to then have this type of announcement. With a fairly 400 jobs, it's a lot from the portion of the site. It is four-fifths of the amount of the refinery, but overall on the site it is quite a lot of jobs that will be lost from the site. I mean, how does this affect the government's just transition plans? Because this looks from the outside like what we went through with the mining industry and what we're trying to avoid in this current situation that we're in. I would absolutely agree with you that we're looking to try to avoid the way in which the industrialisation has been taken to communities in the past, communities that you represent, convener communities that I represent in Airdrie and Shots as well, absolutely looking to avoid that. The work that we are doing on our just transition plan for Grangemouth is continuing. I'm hoping that we have a date now set for a ministerial element to the Grangemouth Future Industry Board that I'm hoping that UK ministers will be along at as well so that we can discuss the impact that this has upon the work that we're trying to achieve for the Grangemouth site and colleagues have already articulated some of the potential options that there are for future investment and future industrial activity at the site. I think that in terms of the jobs those are still to be finalised. We're still to understand the full detail over what the refinery losses can be made up for in terms of import terminal and obviously looking to push as hard as possible to ensure that whenever a decision is taken that we're protecting as many jobs as possible for the reasons that you articulate and obviously we're looking on a wider sense to make sure that we are seeing as many job opportunities to retain highly skilled workers in the traditional oil and gas sectors into the green industrial revolution that is coming and ensure that we can see line of sight for workers who are looking to transition to be able to do so and remain here in Scotland. For the Grangemouth area it's not just the 400 jobs and I think people will recognise the 400 jobs are people who are very highly skilled and one thing we constantly hear at the committee is industries can't get the skilled people that they need so you can anticipate that those people who are high skilled will have transferrable skills but the impact on the wider community some of the members will pick up on supply chains but there's supply chains and the wider community that's where the just transition is meant to be delivered in terms of the Government's plans part of the just transition plans was to gain a fuller understanding of the impact of the site on the wider community and the supply chains and the economic impact of changes at the site is that anticipated to still be part of the just transition plan which is delayed when the plan is published it will be redundant given we've had this recent announcement so what can we expect in the plan in spring and will it take cognisance of this recent announcement? Absolutely, it's absolutely central to that ongoing work and has been the case through its development I think you've repeated again that a 400 that is an assumption rather than a definite pushback from many of us this morning that it wasn't 400 jobs we're talking about I understand that I'm just saying that at this stage it's still an assumption rather than a definite and we are looking to do everything that we can to make sure that we're maximising the number of jobs that are retained at the site and also it can be retained amongst the wider community because I absolutely understand that Grangemouth is a hub of industrial activity and brings with it investment in our community and a supply chain that feeds it I think Mr Hardy articulated the fact that there will be on-going business based on the import terminal that will ensure that there is still business opportunity there and it is a complex supply chain that feeds a number of different aspects of the Grangemouth site so we're still assessing alongside the business what the likely impact is going to be but I'm hopeful that it will be maintained in a strong position as possible and that is part of the reason why we're carrying on with the work of the Just Transition Plan and also looking to see a further meeting with ministerial involvement both the Scottish and UK Governments of the Grangemouth Future Industry Board early in January I think that the date of the 18th has been proposed in order so that we can examine exactly these types of questions How often does the Future Industries Board meet and how often does the Government meet with them? On a regular basis both that ministerial and official level I'm not sure the date of the last meeting at official level was The last one was last week and before that it was about six weeks previously I think so it is reasonably regularly and it's across the public sector Are we going to focus on the issue of jobs as that has come up and the members who previously asked questions would they like to come and talk about it? Good morning Cabinet Secretary, thank you for being here this morning Colin and I talked about trying to understand a little bit more about the impact on jobs with the panel earlier and I take what you say about the 400 being an estimate but it's not certain yet I think one of the things that I found quite concerning was that there didn't seem to be any analysis done or any thought to actually understand the consequences for supply chain for the indirect jobs on the refinery Now I know that's only one element of the work that happens at Grangemouth and although we didn't go into any detail this morning the other operations will still have the indirect supply chain contracts but I'm wondering what assessment the Scottish Government has done or is planning to do and I suppose this feeds into the just transition plan as well because we've heard suggestions around the freeport proposal that 50,000 jobs could be created in associated with that obviously not all at Grangemouth and not all related to the refinery but I'm just wondering what your of the data we have the data we need and the plans to get to actually understand the consequences for supply chain jobs because I don't think we got any information on that earlier So there's a couple of elements in there first around the jobs and the assumption around potential losses as I said in my introduction I had very good constructive meetings with Unite the Union and with STUC around this and they are working very closely with the management and the JV making sure that as much protection as possible is given to the workforce and also that there is as much of a workforce retained in order to ensure that the refinery is operational for as long as that decision is alive In terms of the work on the supply chain as I said is featured in the work of the Grangemouth Future Industries Board and the work that we're doing around the just transition plan but I would say that the types of supply chain operations such as the logistics elements are going to be still there because when it's an import terminal there is still going to be a need to see the logistics from the site move to the forecours so there are still going to be supply chain elements that will be retained as part of this but we're looking to try to make sure that we're assessing as acutely as possible, working with the joint venture around understanding to a greater extent as Ms Chapman has challenged to understand what the potential impact could be on the supply chain Thanks for that and I suppose one of the elements of the work that the Industry Board is doing now and also will feeding to the just transition plan itself is around skills upskilling shifts that are required I think there was an expectation that there would be very clear shared responsibility I think it's probably the kindest way I can put it between the Scottish Government Council the joint venture and possibly others as well to secure not only the upskilling re-skilling retraining needed for the current employees who are retained but for supply chain workers as well and what we're working on Can you say a little bit more about that? That absolutely is central to the work of the Grangemouth Future Industry Board it's going to be absolutely central to the just transition plan that's published because you cannot have a just transition without having a just transition for the workforce so of course it's central to what we're doing Sorry Can I just add in terms of the Grangemouth Future Industry Board it has representation across the public sector and includes people from Falkirk Council from Skills Development Scotland from Forth Valley College so there is already a lot of discussion in the conversation that we had last week we were already starting to discuss how the college, how SDS could be involved in exactly the support that you're asking for in terms of both the existing workforce the supply chain but also thinking about the wider impact of the Grangemouth community and how we ensure that young people continue to see Grangemouth as a place to live and work and to have well-paid successful jobs in the future Okay Thanks Suzy, that's really helpful My final question on this kind of issue is earlier Ian Hardy said that this is the just transition in action those were his words to the business, employees and supply chain issues that we need to deal with and I'm wondering I suppose I have a little bit of anxiety there can be an industry shift a change as we're anticipating from a refinery to an import hub that's a change but it doesn't necessarily speak to the just transition in that it's a change and I'm just wondering how where you see this you said earlier in response to a question from the convener that this will clearly be part of the just transition plan that appreciates is still being worked up and yet to be published but I just wonder how how we are ensuring that it's not just a shift and we're not just saying yeah okay we will retain jobs we will have maybe a few jobs a few more jobs over here but actually we're talking about the transition as a whole and it's not just a shift from one kind of industrial process to another the social elements around it as well as the economic and industrial elements too so I think the critical element here is around making sure that we continue to work on some of the other opportunities that are available for the site around carbon capture and storage around the absolute central place that the Grangemouth site plays within the Scottish cluster but also the questions that were previously raised around hydrogen and the potential for a bio refinery as well those are absolutely critical in ensuring that we see not just a shift but also a transition and I think on the hydrogen and the bio refinery parts in particular that is a transition as opposed to just a shift but those elements obviously in Ian Hardy set this out are works in progress in areas that we still need to make sure that all partners are looking to drive forward as quickly as possible okay I might have a couple of other questions okay thank you I was going to say a call of smith about the workforce but I'll just go back to the board so when we did our inquiry in the summer we did express some frustration around the future what are they called again the future industries board because as a board they weren't able to come and give us evidence because they didn't constitute themselves as a board they were really a discussion forum and Richard Dixon has recently written an article about frustration at the lack of activity from the board I understand the last minutes that were public were December 22 so while they might have met I don't know how transparent they are and I don't know if you have an idea when the board's priorities are going to be available that still isn't for 23-24 we're almost at the end of 23 and we're faced with news that we weren't expecting at this stage from Grangemouse the committee would look for some assurances that the board is working effectively and is filling the gaps that is there in terms of planning the transition but we're still waiting on the Government's plan as the other issue so there are two elements there one is that we're publishing our just transition plan early next year so to answer that final part of your question and in terms of the work of the Grangemouse Future Industries Board that continues to be active and I'll make sure that the activities and the forward work of the board is shared with the committee and I can follow up in correspondence on that and I see that she's got further information she wants to part right now maybe I I'll do it automatically maybe I can just add a little bit on the G5 so we've been talking in the Grangemouse Future Industries Board about whether it could be slightly changed in order to take more account of the wider set of stakeholders so at the moment it's really set up which was a recommendation of the committee exactly so at the moment it's set up as a really public sector body focused board and the plan going into the new year which we're starting to discuss with the range of stakeholders is bringing on a much wider range of stakeholders to involve the community working in the area and also to involve ministers both from Scottish Government but also UK Government and UK Government have already expressed a desire to be involved with that and that's something which we're going to be taking forward in January so the board will be slightly restructured in order to take account of the recommendations of the committee and perhaps just to say one final thing in terms of the points you made earlier but also the points Mr Chapman made around the Just Transition Plan we're really keen that this is a plan which is not imposed on the local community but is co-developed with the local community and therefore there's been a series of stakeholder engagement events with businesses with workers and that's now going to go out to the community to have a discussion with them about what they see their vision to be and that will then feed into what becomes the chief vision going forward so the two sets of worker and it's strictly linked that the work we're doing in terms of engagement and developing the Just Transition Plan for Grange Mouse will really inform the way the Grange Mouse Future Industry Board is constituting and takes its work forward and the vision should be available I would say probably in the next couple of months after Christmas but that's subject to what we hear from the community and other stakeholders we think it's really important that they have their space to see what they want to be the ones that are most directly affected but there is a recognition that the Grange Mouse recent announcement does impact on a Just Transition Plan significantly because we've kind of moved at a pace that I don't think was anticipated when the plan was originally being drafted I think it it will impact on what goes into the plan for sure but in terms of the timing of the plan we're still expecting to publish it in spring next year Colin Smyth, have you wished to come on in the questions around? Can I just follow up on some of those points given the direction of travel we've had for some time the policy decisions in relation to net zero that the closure of the refinery itself won't come as a surprise to the Government that was always likely to be the case so just for clarity can you tell us where the refinery was likely to close not the specific announcement around the timescale that seems to suggest 2025 but when would you say the Government were aware the refinery itself was likely to close? I think it's a fair comment and I think it's a fair assessment that a century-old refinery that has been lost making and has received intervention at numerous points over recent years there was going to be a risk around its future especially when it's competing with super refineries elsewhere in the world particularly in the Middle East and in China and the viability of refineries not just in Scotland or the rest of the UK but in this part of Europe are actually being driven down by that international competitiveness so we've been in discussion with the joint venture for some time around making sure that there is a future for the Grangemouth site and looking at all the possible options for a just transition the points that we've raised previously around hydrogen carbon capture and biorefinery but as I say the first time that we're made aware of the decision itself was at the same time as the workforce which actually I have to say is an admirable thing an incredible thing that the Government wants to tell their workforce first and tell them at the same time as they told ourselves In the previous session though I appreciate you may not have heard it but Ian Hardie the head of legal affairs Petrinus said he suggested that the Government were pretty much made aware a year ago that a refinery was likely to close not the date but the refinery was likely to close would that be accurate? I would have to go back to look at minutes and look at previous discussions we've been aware for some time that there is for a long time because as I say there have been previous interventions that the future of the refinery was at risk and that's why we've been engaging heavily with them to ensure that there is a just transition but also that there is an investment in the import terminal which ensures the energy security for Scotland and other parts of the UK it's again an important investment that the joint venture is making so that when a decision is eventually taken on the refinery itself we have continued industrial capacity there and we have energy security around the grains of a site and the fuels that are needed for the transport sector across Scotland Given the time and it just seems that we're told that the Government's just transition plan for grains world sometime next year I mean that's maybe less than a year away from the refinery itself closing I mean are we dealing with this urgently enough I mean that plan what potential impact will that plan have in supporting those workers that are likely to lose their jobs from 2025 I mean it does look as if the timescale is not urgently enough I mean we've already heard the concerns over the grains world future industry board we don't even seem to have an assessment of the job losses that are likely to result because of this announcement we know there will be 400 direct jobs we don't seem to know what the impact will be on the supply chain so do you think you're dealing with this urgently enough given that this transition plan might come out less than a year away from the refinery actually closing Yes because we've been engaging with the joint venture for some time and ensuring that the investment is important terminal to give us assurance on the supply of energy security for Scotland and ensuring that we have a just transition plan coming in ahead of any decision being taken because there's no final decision being taken yet around the future of the refinery the decision that has been taken is to give the investment certainty for the import terminal for the transition of the site and ensures that the energy security needs are met obviously we'll continue to engage with the joint venture with the grains world future industry board of which we're members the UK government and the trade unions around maximising the job opportunities that are there looking at how we can support the wider grains world site on the opportunities that are there for further wider job opportunities the concerns that Mr Smith fairly articulates are addressed as best as we possibly can in an interaction with a commercial decision that has been taken by Petrinious In terms of jobs and this is what a just transition is you've got several hundred jobs at risk here but even the investment in that import facility is likely only to have a hundred direct jobs what I'm not clear about is what works taking place in order to secure employment for those existing workforce in the refinery and the many supply chain jobs that are being affected I mean what work is being done you've talked about working with the company around the import facility around security of energy but what about the jobs the hundreds of jobs at the refinery at the moment what work is taking place to secure a future for them and the workers that are likely to be looking to leave the company because they are affected by being told their jobs are likely to be launched come 2025 so again there are a number of elements within this we've been doing a lot of work through the Grangemouth Future Industry Board around looking at opportunities that there are for the Grangemouth site to ensure that there's continued industrial activity recognising the fact that one aspect here, the refinery 100 years old or approaching 100 years old and is not competitive on an international stage in terms of other refineries around the world as has been set out by your previous panel so we have been engaging on that work we also know that these are highly skilled workers we don't know the final quantum of potential job losses because we are working still with assumptions about what may be lost and what may be retained in terms of an import terminal but we do know that they are highly skilled workers we know that they are going to be much in demand across the energy sector what I'm keen to do through the just transition plan is to ensure that there is as much opportunity as possible here to retain them here in Scotland the other element that Mr Smith spoke about is about how the joint venture can retain those workers here until, for as long as the refinery is operational this was a question that both myself and the First Minister posed to Mr Hardy and his colleagues when we met a couple weeks ago and I believe that there is a significant investment being made in order to retain staff recognising the fact that this is an uncertain time for them so we have impressed upon them the importance of making sure that they are looking after that workforce retaining them and it's obviously in their interest to be doing so to ensure that they continue to have a viable workforce to continue the processes that are in place at the refinery I suppose the issue though is around supply chain and contractor jobs the direct employment at the site of a very high skilled may very well be that they will pursue opportunities elsewhere but that could mean leaving grains as well so that's not a just transition I'm just wondering in your discussions with the company this is obviously a site of critical national infrastructure is there any policy interventions at all in your discussions with the company that would allow them to I suppose continue beyond we don't know the exact date but it looks like 2025 but is there any policy interventions from the Scottish Government or the UK Government that would allow that site to continue for a longer period then it looks as if it's likely to so those are the exact questions that I have asked of the site management when I met them previously and also the joint venture shareholders when I met them yesterday and the discussions on work is on going around that but I wish to underline this is incredibly challenging situation where the projections for the margins for the site I think the team said that they're in a stable financial situation at the moment but they haven't been in the past there has been a substantial subsidy and investment come from the joint venture in order to retain this going forward so I don't wish to set unrealistic expectations in terms of what might be possible or what would be considered by the joint venture to be necessary to see the refinery go beyond 2025 but as Mr Smith would expect those are exact for the discussions the point being raised with the joint venture that we are having active discussions around what might be possible there and the other point the earlier part of Mr Smith's question was around the supply chain and I think in response to Maggie Chapman I addressed this that we're assessing the situation in terms of the supply chain but we have to recognise that when there is a transition from there's been a refinery in an import terminal there is going to be substantial supply chain activity that will be maintained by its very nature but we need to do more work on examining exactly what that's going to look like make some progress Colin Beattie to be followed by Kevin Stewart thank you coming to the green free port how does the plan change to import activity aligned with the aims of the green free port policy and are you satisfied that this would represent the type of additionality that this policy was intended to encourage so obviously the green free port is going to capture significant activity beyond the Grangemouth site and we're looking to make sure that there are opportunities taken advantage of it through the green free port such as supplying manufacturing and other services for the offshore renewable sector and other industrial activity clearly this is a decision that's being taken on a commercial basis by the joint venture I suspect regardless of the status of the free port status being there and actually has been taken with a wider macroeconomic situation at play so I'm happy to have a further discussion around the green free port and what our ambitions are for it but I don't think this has had a particular bearing on the decision that's been taken apparently not but the previous panel when we were discussing this with them didn't seem to me to have a very clear idea of where the new import hub would fit in with the green free port I would have hoped there was an opportunity there as much as anything else it just seemed a wee bit vague and I'm not sure if you heard that part of the discussion but I would have hoped for something a little more positive I'm happy to take that away and also explore it with the joint venture as well I didn't hear that part of the discussion but like I said I'm happy to take that away and speak to the joint venture around what their assumptions are Thank you Kevin Stewart to be followed by Murdo Fraser Thank you convener and good morning The previous panel Mr Pritchard in particular was keen to stress that the announcement would not have any impact on the plans for the Scottish cluster and the Acorn project Would that be the cabinet secretary's understanding and how is the Scottish Government going to continue to scrutinise this to make sure that that's the case? That is absolutely my understanding that was one of the first questions that I had to ensure I was confident in and even with an import terminal there will continue to be hydrocarbons produced there will continue to be elements of flaring is my understanding where there is substantial carbon could be captured or moving to an import terminal and the wider Grangemouth site obviously has significant carbon emissions that can be captured so not just from discussions with the joint venture but also with the cluster that I had a couple of weeks ago in Aberdeen Grangemouth is absolutely central to their plans Thank you There have been discussions this morning as well around about hydrogen production around about the bio refinery project some discussion around about sustainable aviation fuel the previous panel were keen to talk about importing sustainable aviation fuel cabinet secretary have you had any discussions with the UK Government and with other partners around about manufacturing sustainable aviation fuel orcadian yourself you realise the essential fact that aviation has to play here in Scotland as we move forward still what can be done to try and ensure that Scotland plays a part in the manufacturing of SAF and can that be done at Grangemouth as part of that just transition I appreciate Mr Stewart's question and obviously we touched on some of this last week when we were talking about Glasgow Prestwick and there are challenges here around feedstock there are also challenges around regulation that I think Mr Hardy articulated well and are continuing to make the case to the UK Government to have a regulatory environment that would support the investment in the production of sustainable aviation fuel obviously something that I'm looking to pursue and I would encourage the committee to look at that in more detail because obviously this has an important critical role to play for some of our strategic assets we spoke about Glasgow Prestwick but also the connectivity as Mr Stewart articulates my own heritage in Orkney but other island groups as well but also for us to be connected internationally that plays in us seeking to continue to grow the Scottish economy and the important role that plays also discussion this morning about energy security around about the impacts of international markets one of the points that was raised by the first panel this morning in terms of that import hub plan was diesel coming in at Finart and going to Grangemy through the existing pipeline I asked questions around about the carbon footprint of importing that diesel you yourself earlier talked about the international market China and refiners in the Middle East being much more modern and much more competitive but the carbon footprint of importing from China from the Middle Easter wherever it may be is huge and while our carbon footprint reduces if there's no refinery at Grangemouse the carbon footprint of importing could actually be greater so has there been any look and I recognise that this is the UK Government's responsibility any look at saying if we can utilise the 40s pipeline more to include from the North Sea basin and continuing to refine at the likes of Grangemouse from an energy security point of view in this weird and wonderful world that we live in is probably the best way and also that we cut down in the carbon footprint of importing whether that be diesel, petrol, kerosene or even as we move forward the likes of SAF I thank Mr Stewart for that and he will be aware that there are industrial reasons as to why we already have to import significant amounts of oil and gas particularly oil into Scotland and that is because of the high sulfur content my understanding is of North Sea oil and so while I absolutely appreciate the point that Mr Stewart is making and agree that carbon footprint perspective the current situation and that going forward to a lesser or greater degree we are offshoring our carbon footprint rather than taking responsibility for it I understand that that is the situation as we face it right now because I think it's only around 30% of North Sea oil is actually you refined at Grangemouse for the industrial reasons that are well set out I am aware of the high sulfur content and the fact that crude from the North Sea basin goes elsewhere and there were talk of other refineries in North West Europe today as well but maybe the investment in a new refinery a modernised refinery if the UK Government were willing to do that could take account of the high sulfur content of crude from the North Sea basin in order to get the right end products in diesel petrol and kerosene I'm no expert in this Cabinet Secretary but I've been told on many occasions by folks who are experts that refineries have got their own peak point if you like in dealing with certain crudes maybe we could do that of Grangemouse as we move on and is that a discussion that's worth having with the UK Government who have the primary responsibility here in order to continue to ensure that we have energy security and to stop that importation and to reduce carbon footprint Having that discussion as part of the mix has to be there I don't know if the committee reached out to have the UK Government appear before it but our 10-day list of teens of January that's the date we've managed to confirm That's helpful to know and that's maybe a question that could be posed there Susie wishes us a settlement Can I add just a little bit in terms of whether it would be economic for Grangemouse to build a whole new refinery to use more oil from the North Sea One of the issues which we understand is causing pressure on refineries across the world and particularly in Europe is the scale of operation and that unfortunately Scotland has only got a relatively small population in terms of the size of the refinery and to invest in a really large very modern refinery probably wouldn't make economic sense in terms of the throughput of the project there isn't the market for a really large new refinery but I think one of the reasons why I've asked the questions that I have is quite simply because it's not just Scotland it's what is the setup of the refineries in the rest of the UK or even in that triangle because the folk from Petroenios talked about the Antwerp Rotterdam, Amsterdam situation what is the situation in the north-west of Europe at this moment in terms of age and capability of refineries we recognise that oil and gas will still have some parts to play in the future a significant part in some instances and it would be much better to deal with that here than it would be to import from some of the more modern refineries that have been mentioned in the Middle East and China not only from the carbon footprint point of view but also from the energy security point of view that's questions I'll ask the UK Government to make Thank you, I'm going to bring in Murdo Fraser who also has questions around energy security he'll be followed by Brian Whittle Thank you, convener and good morning cabinet secretary I'd just like to follow up on Kevin Stewart's line of questioning around energy security there are currently six refineries across the UK Grangemouth we understand is set to close or that there are plans to close the others that means as we heard from the first panel that customers in Scotland currently being supplied via Grangemouth will be having to source supplies from elsewhere that might be elsewhere in the UK or elsewhere in the world and yet we're still producing oil and gas from the North Sea basin so I suppose my question to the Scottish Government is do you have any concerns about energy security given that we're losing this capacity within Scotland to refine crude oil? So there's two elements again to Murdo Fraser's question the first part around where customers are going to be able to source their fuel is incorrect because the transition to an import terminal means that they can still source they will still be able to source their fuels from Grangemouth the second part around energy security is obviously the responsibility of the UK Government and I believe a minister will be before you in the new year to answer those questions but the assurance that I have received both from the joint venture and from UK ministers is that there are contingency plans in place around Grangemouth both now and going forward and that the transitional arrangements that have been announced for the import terminal is all about ensuring that there is energy security going forward Okay, thank you for that clarification I wonder if you would accept however that because Grangemouth is closing there will still be demand for oil and gas in Scotland that demand will be there probably for decades to come even with a just transition because we know that that demand will exist in effect what we are doing is we are exporting those jobs so that demand will still be there it's just that the jobs won't be here anymore Again I don't believe that's the case either because the transition that we're making to green energy sources and also the continued operations at Grangemouth means that there is going to be job opportunities for people here in Scotland in the energy sector going forward and there is going to be a utilisation and need to utilise the highly skilled technical expertise particularly in the subsea elements but also in the refinery elements to ensure our green industrial revolution can continue so I don't take the premise of Mr Fraser's question with respect I think there will still be huge opportunities for people to be able to work in Scotland in the energy sector for many decades to come regardless of whether that is in the oil and gas or a green energy sector Okay so just to follow that up then if you were speaking today to a worker one of the 400 is potentially looking at losing their jobs over the next 18 months might be longer but might be 18 months what assurances can you give them that within the green economy they're obliged to find a job they'll be able to utilise their skillset That's exactly what we would point to the work that's been done on the just transition plan and indeed the green industrial strategy that's going to be coming out early in the new year in order to give that certainty for people that are currently working in traditional oil and gas sectors, the energy sectors that there will be job opportunities coming forward because of the many and diverse projects that we hope to be able to secure in order to have a strong manufacturing industrial supply chain that's going to feed the green energy opportunities that we have coming forward in pumped hydra storage whether it's an offshore onshore wind floating offshore wind in the marine energy sector or indeed hydrogen and production and utilisation there are going to be many opportunities for people with a high skill level that we see at Grangemouth to be able to transition to other job opportunities and to retain them here in Scotland that is an absolutely critical factor in the work that we are doing and it's an absolute ambition of ours to ensure that we retain as many of those workers here in Scotland Will these new jobs come online quickly enough so that those who potentially lose their jobs at Grangemouth will be able to benefit from them? We're already seeing some of that transition in action. I was in Aberdeen a couple weeks ago and opened the new SSAN offices in Aberdeen and I think I believe that the level a third of their workforce have transitioned already from the oil and gas sector that transition is already happening for Mr Fraser's confidence Okay, thank you cabinet secretary Just as an addition to Mr Fraser's question about the gap you've talked about jobs in Aberdeen for people who live in the central building around Grangemouth because the plans, I know that any of us have a longer sight line of what they want to do on the site so the opportunity is going to be in the central building not just in the north-east I understand that and that's a fair point, I used the example of SSE in the north-east as an example but obviously jobs are being created across Scotland and there will be job opportunities there and obviously for the Grangemouth site we're looking to take forward opportunities as I've said through the future industries board that we're doing with the joint venture UK Government and others around trying to make sure that there's continued industrial capacity and new opportunities hydrogen carbon capture, the biorefinery coming forward and to ensure that those are happening as quickly as possible recognising some of those at a more advanced stage and depending upon decisions not within our making and other decisions that are out with our control but we continue to push hard to see progress on those areas Brian Whittle to be followed by Evelyn Tweed Good morning, cabinet secretary as we heard earlier the wider impact on the decarbonisation programme of the closure here is that I would argue the opposite quite frankly that there's a carbonisation if you like with refining refining and then also importing importing the refined product into Scotland so to combat that following from Mordor Fraser's question now what we need to do is develop that site and develop a signal, it's a major industrial hub one of the biggest in Scotland one of the big, they're already working with blue hydrogen, they're talking this morning potentially going into green hydrogen development of SAF and one of the biggest barriers to development of hydrogen in its scale is the initial CAPEX that's required to develop the size of the site required to develop hydrogen at scale so they have the infrastructure there they also have the skilled jobs and one of the things they said this morning was that that can be loud and clear to me was that policy decisions support that will need to make that move much quicker to allow the jobs to be there for those workers who are going to lose their current jobs and just to I know you said earlier on about what you're already doing this and we're already creating jobs I spoke to a recruitment company who are currently stripping out on the gas sector in the North Sea and most exclusively they're going abroad we need to move quicker on this so can I ask Cabinet Secretary what the Scottish Government are doing to ensure that we do develop into that site into a hydrogen into a SAF hub as well as an import hub I thank Mr Whittle for those questions that perhaps wasn't made clear this morning around the policy barriers that there are to some of these investments coming forward but they are policy areas that are reserved to the UK Government so those are made yes they are these are areas that perhaps Mr Whittle can raise as we are raising around providing policy certainty on the regulation of the usage and transportation of hydrogen which is part of the most recent energy bill that has been passed at UK level Mr Whittle will be able to raise that with whichever UK minister comes before them and to be fair I think that this is an area where I hope we can have close collaboration and a shared understanding of the opportunity before us and the need for us to move fast as Mr Whittle had said so that's on the hydrogen part on the carbon capture part he'll know very well the fact that we need the track 2 status confirmation we need progress to be made there so that the continued investment can happen because that is alongside the use of hydrogen as a fuel the carbon capture elements are the greatest way of decarbonising that industrial cluster and that's why we have had an aspiration for years to see progress on carbon capture and now to see progress on hydrogen happening as well for the areas that we have responsibility for we will do what we can to progress as quickly as possible but on the main parts of these in terms of the barriers that Mr Hardy believe was describing this morning those are with the UK Government the main barrier to hydrogen is actually potential for off take and that was said this morning as well and the Scottish Government itself are investing in the development of green hydrogen you have a fund as does the UK have a fund and I'm pleased to hear that they're starting to work closer together to develop that but it is round off take and it is if there's no off take they won't have to develop the hydrogen and I totally accept around SAF I think they're not moving quick enough on SAF and we'll end up importing far too much of that when we have, as we discussed last week, cabinet secretary but I'm going to push back again what the Scottish Government have to do is make sure that the site at Grangemouth is developed or utilised to its fullest because that kind of CAPEX investment is something that is probably beyond our current ability to develop from scratch so to decarbonise we're going to have to utilise that site to its fullest so I'm asking you what support the Scottish Government will do to make sure that that happens the off take is there as was articulated by the panel this morning the off take is on the site so the production on the site and the usage on the site is to decarbonise the energy supply that they need and processes on the site so that off take concern I think was addressed this morning it's already... What it did say was if you play back that they could increase capacity there and actually use on other sites as well and other areas and I think that is for me what I'm asking is we're behind the curve on the development of hydrogen in this country and the off take is a huge opportunity so yes currently there's a production the off take is on the site but they did say they have the capability given the right policies and the right support to develop more for other areas and again the regulation of the transportation of hydrogen thereafter is still to be confirmed with the UK Government but the off take which is the my understanding any us will need to explain this in more detail my understanding is that the off take is there which is making the commercial decision for the decarbonisation of the production that they are utilising the previous question that Mr Whittle raised was around jobs and around retaining as many people in the oil gas sector as possible that is my shared ambition as Mr Whittle to see as many people as possible retained in the energy sector in particular but in other opportunities that may exist here in Scotland they are highly skilled, highly valued workforce that we want to see a just transition for so I don't deny that there are competing opportunities around the world I want to ensure through the work that we're doing utilising a supply chain for the offshore wind sector and the green industrial strategy that we're developing that we can show a line of sight for people to have a strong energy related career in the green industries here in Scotland I don't know if Suzy did you want to come in I was just going to add one of the decisions that we're expecting this year from UK Government is on the hydrogen blending hydrogen can be blended into the gas grid which will obviously as that progresses if there is a decision to allow a significant amount of hydrogen to be blended into the gas grid that will provide some assurity around off takers going forward just for clarity currently it's around about 10% but looking at it we're up to 20% is that right? that's what we believe might be the case and certainly from Scottish Government's perspective a decision around the 20% mark Good morning Cabinet Secretary Good morning panel Cabinet Secretary, can you share with the committee whether you've had any discussions with North Sea oil and gas firms about the impact of the closure of Grangemouth and what it might mean for their business plans and their business models? I can reassure Ms Tweed that we have regular conversations both with individual oil and gas firms around their current operations and also what I hope will be continued investment in green energy going forward the just transition that we want to see and also industry representatives so I had a meeting very recently with offshore energy UK and also had a meeting on the same day with the Scottish cluster and all the other parties around that and which was able to give confirmation to previous questions give comfort to the fact that this decision to have a transition from a refinery to an import terminal will not have an impact on the Scottish cluster That's reassuring, thank you Okay, thank you Just on the question around time scales other members have asked what has to be done if the life of the refinery was to be extended and you have said during discussions with the Scottish Government on business but does the Scottish Government have, we were expecting the just transition plan in spring, will that include an assessment of how long the refinery could be open for and is it different from spring 25 do you have an alternative idea of how long that should be open if it were to manage if it was a just transition it needs to be managed and that doesn't feel if we're looking at spring 25 particularly managed in terms of the local community in particular So we have been given some warning here which is helpful in terms of the work that we're doing with the just transition plan that the potential date for the refinery closure is Q2 2025 which allows us to ensure that our just transition plan is tailored that allows us to make sure that the work that we're doing both with the joint venture the other businesses involved in Grangemouth other interested parties including the meeting that I had last week with local authority concerned ensures that we're doing everything that we can to bring forward a just transition plan that gives people confidence around the opportunities that will be available in and around Grangemouth and in terms of the green free port it does look from the outside that you've got a refinery and a business that is now moving to an import export at the same time that a green free port has been set up that will have tax breaks and incentives for imports and exports but we've been told that there's no connection between the two but my understanding is that there is no connection that my understanding and I think it was articulated to be fair this morning again that this is about wider macroeconomic conditions rather than any decision making to be fair by either the Scottish UK Government which I assume would include the decisions around the green free port and in terms of importing I asked the panel this morning around you've talked about offsetting the carbon activity has just been moved somewhere else, you're offshore and it still has to happen you're importing refined products but are you planning to do any assessment of where the refined products are coming from and how they are being refined because there are other countries that won't have the same health and safety conditions that we do for our workers and won't be refining to the same standards that we do how do we know that the imports are of the same quality of what we produce in Scotland so obviously we have an assessment based on previous studies around where the oil is currently being imported from and have an understanding of that we don't have a huge amount of control as you'll expect in these commercial decisions that are taken on where to source from and the Mr Hardy said this morning that they are wanting to make sure that the decisions they take on where they source their product from meet international standards to ensure and I would assume that that includes health and safety but also the standards around production of those products as well and a number of members have asked about energy security and no doubt we'll pick that up with the UK Government minister when they're here in January but at a time of increase global instability for us to be increasingly reliant on imports doesn't really seem like the long term planning that well indeed which is exactly the reason why we need a transition for the energy that we use I think alongside environmental and economic the energy security argument of transitioning our energy dependence away from hydrocarbons to renewable energy that we produce and can source here is one that I think is pretty obvious and that's why we'll continue but we're not moving at the pace for that to be in place by 20 spring 25 well no obviously there's going to be clearly there's going to be a continued demand and we understand and know that there's going to be a continued demand for some of the products from oil and gas going forward but those are also going to be continued to be diminishing those are going to be reducing demands and that's why we need to make and this will be over over some time I grant you but in the meantime the decision that the joint venture has taken to make the investment in the import export terminal means from an energy security perspective that is maintained which I think is a good thing and that is something that again you will wish to explore with UK ministers who have a responsibility here but I think that is on the decision and when it's taken on what happens with the refinery I understand the data on that is an important consideration but to have the assurance that we have the import terminal to ensure whenever that decision is taken that we have continued energy security is a vital component in all of this okay I have two additional members who are joining us this morning Stephen Kerr would you like to if the cabinet secretary has time I realise what it did the cabinet secretary will know that as a central Scotland MSP my number one concern is about the constituents who are directly impacted by all this would it be fair to say judging by what you have said this morning you're not optimistic about the future of the refinery you've mentioned once I think the life of the refinery you're not optimistic about that are you? I don't want to set unrealistic expectations I think that previous interventions that have been had here to extend the refinery capacity have been in a different time both in terms of an international perspective but also from a domestic demand perspective as well all I'm wanting to do is explore every single opportunity that there may be alongside UK Government colleagues for extending the life of the refinery I think that Mr Kerr would expect that of both parties but I don't want to make false promises as to what might be possible there I just want to make sure demonstrating to Mr Kerr's regional constituents and those that are spread wider that we're doing everything possible so one of the things that I've raised this morning was the status of the hydrocracker which is a key component in terms of the running of the refinery but also in financial terms it's profitability what have Petroenius told you about what is going on with the hydrocracker? Very similar to what was discussed this morning this is obviously an operational matter for them and they continue to look at ensuring that they can restart the hydrocracker as quickly as possible and the safest way possible Are you content that that is the intention of the business? Yes That's certainly what's been articulated to me and was articulated to you as a committee this morning? It was indeed you weren't surprised about the announcement in the same way the rest of us were surprised that there's notice that this was like to happen, yes? No, I wasn't I don't think anybody should have been particularly surprised about the announcement in itself at the timing we got told the same time as the workforce so the timing there was an element of surprise there for certain but we're talking about a century old refinery that has previously had issues that have been significant interventions made previously and a significant subsidy provided by the joint venture over a number of years so no, there wasn't a great surprise and I don't think there should have been to others that this was a possibility the important consideration for the Scottish Government and indeed the UK Government is obviously energy security is about making sure that there is continued industrial capacity there that is something that we have been working with the joint venture on and will continue to do so I think for the people of the area that came as a great shock I understand what you're saying about the macro position and markets and all the rest of it but if you live in that area it came as a big shock to hear that it was very likely in fact almost certain that the refinery is going to close in the spring of 2025 so the economic impact of this closure when will the Government be in a position to publish an economic impact impact assessment of the closure because at the minute as was raised earlier by Colin Smyth not very clear exactly what the implications, the ramifications are of the refinery closing so when will the Government produce its economic impact assessment that work is ongoing with respect to Mr Kerr the discussion that we've had already has articulated that we're still working with other parties around understanding exactly what the decision to close the refinery is likely to have but also importantly what the mitigation of the import terminal will have and also what other possible investments that we spoke about hydrogen, carbon capture a potential biorefinery may have in addition so that work is ongoing and we'll continue to work to publish that as quickly as we can but an additional consideration here is that the final decision has not been taken yet though I grant Mr Kerr the point that we're in a very difficult situation about the refinery post 2025 and so my energy at the moment is directed at understanding what is going to be important for the joint venture of making the decision that they do around when the refinery is going to close we can do to assist if there is anything the extension of the refinery the economic impact assessment won't load out be holistic we'll consider multiple possible outcomes to the situation we're in but I think we can all agree and I think the convener mentioned earlier there's a little doubt that the refinery is closing I haven't disputed that it's the timing it's the timing that is still uncertain but irrespective of the timing the holistic economic impact assessment would consider all of those factors so it's very critical I think to the path ahead that we understand what happens because of the closure of the refinery whenever that does happen for definite so this piece of work who is doing it and what is the estimation of when it will be available for all of us for the people of the area so that we can begin to get our head around the nature, the extent, the scope of this challenge which undoubtedly it is we continue to work with the partners on the Grangemouth Future Industry Board we continue to have discussions of the UK Government on these areas and we'll continue to work on a just transition plan that will obviously have a consideration and will have an articulation on some of these areas as well to ensure that we are giving information but also comfort to the communities that are central to all of this, the people that are central to all of this that there is future job opportunities future industrial capacity and a just transition that can be achieved for that area so I've made my question wasn't clear to the convener but who is undertaking the economic impact assessment and when is it likely to be able to be published and available those are my critical questions we continue to do that work we are doing that work we continue to do that work and understand alongside other parties including enterprise agencies including the Grangemouth Future Industry Board but as I said the critical element that we've got before us is helping to inform the decision that the joint venture will be taking around the future of the refinery itself now obviously we understand that there is going to be an economic impact from that and we'll continue to work on what that looks like and taking assessment alongside other parties so it's yourself that's responsible for producing it will be and this is a wider responsibility beyond the Scottish Government that has a UK Government element to as well so we need to work with all parties involved to ensure that we're coming up with information that we need to take decisions that we need to take around for instance just transition plan that work on the potential opportunities that there are for future industrial use of the site and we'll continue to do all we can to pull that together as best we can. A holistic economic assessment we take care of that. Will that be available in this first quarter? We'll continue to work on that. We'll continue to work on that. I don't want to give any definitive time scales or dates around what we'll be able to publish. The Just Transition Commission published a report today that says the current path will not deliver a Just Transition and they're calling for a detailed and specific set of policies, actions and investments. Is that what we can expect from the Grangemouth report where it comes in the spring and you'll know that we're also looking at North East Scotland, we're currently doing an inquiry to Just Transition for North East Scotland. So the criticism from the commission is that while the high level policy and approach is maybe embedded there's a lack of action. Will the delivery plans give us that and the committee will scrutinise that when it's published? We will scrutinise that and other committees across Parliament as well. Obviously we will reflect the concerns of the Just Transition Commission and take those on board as we continue to work up the Just Transition plan that we'll be publishing early next year. Okay, thank you. I thank the cabinet secretary and officials for attending this morning and I suspend the meeting and move it. Sorry, thank you. Just to add one point to that we are in response to the action, the Just Transition plan for Grangemouth will contain a detailed action plan that will set out all of that. Clearly that will be an iterative process as it reflects the emerging situation in terms of technology globally and all that, but the plan itself will have an action plan that sets out what actions will be taken in terms of the wider Grangemouth cluster when that's published in the spring. Okay, thank you. As I said, the committee will review the plan once it's published. I thank the cabinet secretary and officials for attending this morning and I suspend the meeting and move it into private session.