The Grangemouth Complex in 2018 (before refinery closure)
Credit: Welcome to Ineos Grangemouth Brochure. INEOS

On December 16, the UK government and INEOS have announced a landmark £150 million investment to secure the future of the Grangemouth petrochemical complex in Scotland, the country's last remaining ethylene production facility. The package comprises £120 million in government support through a £75 million loan guarantee and a £50 million grant, with INEOS contributing £30 million. The five-year program aims to modernize equipment, improve energy efficiency, reduce carbon emissions, and protect 500 jobs at the strategically vital site.​

The intervention comes at a critical moment for UK chemical manufacturing. Following the closure of ExxonMobil's Fife ethylene cracker in February 2025 and the permanent shutdown of SABIC's Teesside facility, Grangemouth now stands as Britain's sole source of domestically produced ethylene, a building block chemical essential for medical-grade plastics, water treatment, aerospace components, and automotive manufacturing. The loss of this capacity would leave the UK entirely dependent on imported petrochemicals, severely undermining its industrial sovereignty and supply chain resilience.​

The Grangemouth Complex in 2018 featuring two steam crackers with respectively 6 and 3 furnaces,
i.e. before capacity expansion by the addition of a 10^th furnace in 2020 

The investment follows a turbulent year for the Grangemouth industrial complex. In April 2025, the adjacent oil refinery operated by Petroineos ceased crude processing after decades of losses, eliminating 400 jobs and ending Scotland's domestic fuel refining capacity. Earlier this year, INEOS closed the site's 340,000 tonne-per-year ethanol plant, citing over five years of losses driven by reduced European demand, import competition, and punitive energy costs and carbon taxes. The ethanol closure freed up approximately 214,000 tonnes per year of ethylene previously consumed on-site, creating surplus capacity that INEOS has redirected to exports and other European operations.​

Despite these closures, the ethylene plant faced an uncertain future. INEOS Chairman Sir Jim Ratcliffe has repeatedly warned that UK energy costs running 400% higher than the United States and carbon tax bills exceeding £15 million annually are making British manufacturing uncompetitive and forcing the company to pause green investments. The government's intervention acknowledges these pressures, with Business Secretary Peter Kyle stating that the deal "protects Grangemouth as a site of strategic national importance" and forms part of a Modern Industrial Strategy to reduce energy costs for industry.​

Grangemouth complex integrated flows of raw materials and finished products across the O&P UK business in 2025
Credit: O&P UK Grangemouth - Welcome Guide. INEOS

The £150 million program will fund equipment upgrades, productivity enhancements, and emissions reduction measures to ensure Grangemouth remains competitive over the next five years. However, the deal also highlights broader risks facing European petrochemicals. Approximately 40% of Europe's ethylene production capacity has either shut down or is at imminent risk, driven by high feedstock and energy costs, regulatory burdens, and competition from cheaper imports. Without sustained policy support and cost relief, even this investment may only delay rather than prevent further contraction of the UK's chemical sector.​

For now, the agreement provides a critical lifeline. Chancellor Rachel Reeves emphasized the government's commitment to industrial communities, stating, "We said we would stand squarely behind communities like Grangemouth and we meant it". Yet as Europe's petrochemical industry shrinks, the Grangemouth deal underscores a stark reality: maintaining domestic chemical capacity increasingly requires direct state intervention to offset structural cost disadvantages that threaten the continent's industrial base.​
 

Note: This article was compiled using information from INEOS official press releases, UK Government announcements, BBC News, ICIS Chemical Business, Industrial Info Resources, Chemical & Engineering News, Advanced Biofuels USA, and Portfolio Planning PLUS's previous reporting on the Grangemouth refinery and Fiffe Ethylene Plant closure.

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