Good morning and welcome to this meeting of the Scottish Affairs Committee. We are joined this morning by two colleagues from other Committees who are guesting on our Committee. They are Antonia Bance from the Business and Trade Committee and Torcuil Crichton from the Energy Security and Net Zero Committee. Welcome to them and welcome to our witnesses. Good morning, gentlemen. I think some of us met Colin and Iain when we visited Grangemouth recently and others were involved in a Zoom call with Anu recently too, so faces are familiar even if we have not been in this sort of setting before. Welcome. We will go straight into questions but I will ask each of you to introduce yourselves, please, and say briefly where you work and what you do.

Good morning. Iain Hardie, Head of Legal & External Affairs for Petroineos.

Good morning. Colin Pritchard, Sustainability & External Relations Director for INEOS Olefins & Polymers UK, based in Grangemouth.

Good morning. My name is Anu Bhambi. I lead the Energy Transition Business at EY in the UK.

Thank you all. I will open with my first question. We have heard some variations to this date, but when did Petroineos first realise that Grangemouth, or at least the oil refinery, was no longer a viable business in its current form?

We have been engaging with the Government for a number of years on that point, recognising that the forward trajectory for liquid fuels was in decline, there was the ban on ICE, the internal combustion engine, in 2030 in Scotland, 2035 in England. There was a series of ever-increasing and ever-expensive turnarounds due on the refinery. Those were aspects of information that we shared with the Government and with the workforce for a number of years. The decision to make the closure decision was a hard one, and we did it in two phases, first announcing our intention to close the refinery. We did that to be fair to the market and to our workforce and because an important part of the transition from refinery to terminal is making sure that we are operationally ready. That is what we have been doing for the last 12 months, going through the process of internal transition as an organisation, from an operational perspective and from a commercial perspective, to create a new business so that we can continue to supply Scotland’s fuel needs in the long term.

Could you put a date on when those discussions first began?

We had discussions with representatives of the Scottish and UK Governments as long as five years ago, when we ran them through three broad agenda items. One was the challenges faced by the refinery and its loss-making nature. I think those figures are well publicised. The shareholders have invested over £1 billion in the refinery since its inception in 2011 and they have lost over £600 million. That was a key part and has remained a constant. The second part of our discussion was our commitment to maintaining continuity of supply for Scotland and the importance of creating a viable terminal business. The third bit of all these discussions—and I say this with confidence because I was in these meetings—was around the energy transition and the important role Grangemouth could play as a hub for low-carbon manufacturing in the future. As it stood today, however—and today could mean any point in the preceding five years—the regulatory and fiscal framework was not conducive to investing in low-carbon biofuels or other low-carbon manufacturing opportunities on site. There was a threat, as now realised, that we could be left with several hundred acres of brownfield land absent an intervention by the Scottish or UK Government.

Was there any attempt made by either Government to assist your company to carry on at Grangemouth with the refinery?

There was rhetoric. There were repeated statements by Ministers in the Scottish and UK Governments that they would leave no stone unturned to ensure that the refinery continued to operate. However, we are where we are. Both Governments were given the opportunity, the data and access to the data to make an investment decision, and neither Government chose to do that. I can only presume that they drew the same conclusions that we have drawn, that continued refinery operations in Grangemouth were not an economic proposition and, therefore, they were unwilling to put taxpayers’ money into that vehicle.

If those discussions began five years ago, when was the final decision made that, “Yes, this is the plan, now we are going to withdraw”?

That final decision was made when we made our first announcement to staff that there was the intention to transition. Latterly we had the final decision in January of this year when we concluded that the decision was made because we had to run through a consultation process. We took longer than the statutory 45 days because we were committed to do it fairly, thoroughly and robustly. Feedback from union representatives on site has been that that has been, so far as it can be, recognising it as a difficult process, well managed. I think that is a credit to the shareholders and the refinery management.

We have heard—and you will forgive me, I am not a technical expert in these matters by any means—in evidence that one of the problems you have with the refinery is with the hydrocracker unit. Is that correct? Is it currently out of action and, if it is, how much would it take to bring it back into operation?

You are right. There has been a lot of focus on the hydrocracker unit and I am not sure why because it belies the broader problems that beset the refinery. The Grangemouth refinery is a bottom quartile performing refinery on the Solomon, which is the independent index for refineries in north-west Europe. It has significant energy inefficiencies due to disaggregated units. It has a high cost of capex due to its age and configuration, and its operating costs are high as well. Those are the fundamentals. The other market fundamental is that we are in a declining market, and that is outwith our control. Grangemouth being one of the oldest refineries in Europe—the second oldest in Europe and the oldest in the UK—it is perhaps unsurprising that it is the first to fail in that regard. The hydrocracker was important. It is a vital piece of upgrading kit for the refinery and a lot of value is driven from that. However, even if it was operational, it would not have offset the half a million dollars a day losses that were being incurred in the lead-up to the refinery closure. Any suggestion that we did not run with all pace and all rigour and diligence to try to get that unit back online is simply incorrect. It was a source of frustration for the staff on site because people were working day and night to get that unit back on, and we had five attempted restarts for it. Then management and shareholders concluded, I think rightly, that they did not have the confidence to continue down that path, and so the decision was made that we had to stop. In parallel with that, there was the refinery closure decision.

It has also been suggested that if the hydrocracker were working, it would be a relatively straightforward thing, and I use the word carefully— perhaps not easy but straightforward—to convert the refinery to produce sustainable aviation fuel in a relatively short period. Is that correct?

No. There are two fundamental points there. One is that the conversion to a sustainable aviation fuel production facility does not rely exclusively on the hydrocracker—point one. Perhaps the more fundamental point is that if we were to produce biofuels at Grangemouth, it would be what we call first-generation biofuels, which would use HEFA. I think you would have heard Mr Thomson speak about that last week. As it currently stands, UK regulation caps how much HEFA can be used. The cap is so low as to amount to an effective ban, and therefore we are in this chicken-and-egg scenario. Even if we had the production facilities, which we do not, the feedstock required for that process is not available. The irony here—and this is something the Committee may wish to explore—is that the SAF mandate still exists. As producers, we are required to go to the European market and import European HEFA-derived SAF to sell in the UK, which seems perverse. Indeed, that is one of the findings of the Willow report and a very clear example of where unintended consequences of regulation have led to a lack of a credible investment environment for a potential SAF plant at Grangemouth. I am not saying exclusively, but it is certainly one of the very clear markers that could, and we would argue should, be addressed to unlock potential SAF development at Grangemouth.

It may well be something we come back to in the second phase of our inquiry, so thank you very much for that. Do you have a supplementary question, Kirsteen?

Thank you. I want to pick up on the hydrocracker point because it does still seem to be a bone of contention and we have received conflicting information. You said that there had been five attempted restarts and that you came to the conclusion that it just was not possible to get it fully operational. However, when we had a representative of Unite the union here, their position was that the hydrocracker had been repaired and was fully operational. I am trying to get to the bottom of these two conflicting views. Were the unions involved in any discussions around the hydrocracker? Were they aware of the attempted restarts and of why you decided that it could not come back into full operation?

There is a remarkable level of focus on the hydrocracker that I simply do not understand. I encourage you to take the company's word about efforts to restart that unit. We can share with you some written evidence that we provided to the Scottish Government on exactly this point, which might help to clarify.

I appreciate that, but could you answer my question as to whether any union officials were involved in discussions or were aware of the attempted restarts? I think it is important for this Committee to have a clear view on whether the hydrocracker is operational or not, although I take on board your point that it is perhaps not the central issue. However, I think the union’s position is somewhat different.

We will address the union position and you will get written evidence that will very clearly explain the timeline, and there is a timeline of events that we can share with you. Were the unions directly involved in discussions around the hydrocracker restart? I would presume not. It is an operational issue that the business would take in the ordinary course. Would local union representatives at the site be aware of what was going on? Absolutely. They have an important line of access to information. Probably what you are hearing is a disconnect between a narrative from Unite HQ and the local representatives on site. We need to be mindful of that because it is becoming increasingly obvious to us that some wedge issues are being played here that we need to be aware of. I will get you the written evidence, I will submit it and hopefully, that can be circulated to the Committee, if that is okay.

I think that would be helpful. Thank you.

It would be great to have that. Thank you.

I will do that.

I will certainly speak to that, and then we can also speak more broadly to the Willow report and the broader policy framework within which we operate in the larger energy sector, because Grangemouth is more than just the refinery. On the refinery, we are grasping a number of issues. There are macroeconomic issues. This is not a direct answer to your question but it is important. The macroeconomic context for the refinery closure is essential. As I said before, it is the UK’s oldest refinery, bottom-quartile performing and energy inefficient, with very high capital and operating costs. We simply cannot compete with the newer refineries coming onstream in the middle east, Asia and Africa. Finished fuel is a global commodity that can easily be moved around the world and that is a positive and a negative for domestic manufacturing. The other issue we have grappled with is a decline in the UK market. Penetration by EV and hybrid vehicles is naturally seeing a decline in the demand for fossil fuels. Finally, if you want a direct answer about policy, the UK and Scottish Governments made the collective decision to ban new-build combustion engines—petrol and diesel cars—post 2030 and 2035 in England. Against that backdrop, it is perhaps not unsurprising that a refinery that manufactures petrol and diesel will struggle. That is central to the underlying rationale for refinery closure. If I may I will pivot to Colin Pritchard. I think there are important broader issues around the UK policy approach for the cluster at large that might help your thinking as well.

Indeed. Thank you, Iain. I guess part of the genesis of Willow itself is the proposition that we have looked at cases for doing new processes in new plants that would be within the energy transition, both within the refinery and the chemicals business. There is a broad fundamental—and it is an expression that if you come across me often you will probably be sick of hearing—but we need to create a policy that is doing something different from banning the current state that we want to move from but supports the move to the new state that we want. I can understand that based on simplicity and looking like action, it is much easier to ban what we think we do not want than it is to create what we do want. A trite illustration would be the topical subject of low emission zones, if you are looking at vehicles coming into the centre of big cities. It is easy to ban vehicles from coming in but a better policy outcome, I would suggest, is having a public transport system that is low-carbon, low-cost and efficient and means why would you wish to drive any vehicle into the centre of town. You can see that replicated across oil and gas. We have seemed to be quite happy to move to ban oil and gas in the UK in our own production rather than pushing renewable so far that it naturally phases out oil and gas and you can transition. When you think about that, you begin to see the genesis of what we saw in Willow. We kept on looking at doing business cases for new plants. It did not make economic sense. You end up not being able to invest in the new while the existing is being made uneconomic or banned. You can see that happening in the oil and gas sector. Iain has just explained exactly why that happened in the refining sector. It was a fourth-quartile refinery. You could have invested in new equipment to upgrade it but the signal from Governments, both Scottish and UK, was that there is no internal combustion engine, there is no future, so there is no period for it to pay back. The business has reacted to that policy and regulatory framework and gets to a point where it is beyond it to do anything other than close. It is the same for the next step of the energy transition. My fear and, from talking with Iain, the genesis of the idea for Willow was that there is a policy gap here. We need to get the Governments engaged in the process. We need this co-design process to help us create a business case that we can invest in. We need to get the regulatory and policy framework right so we can invest but we also—and the thing that is very different about the approach to Willow—need to address the community, climate change and skills benefits that will come to society as a whole to effectively make the business case for Governments as to why they should change the regulatory and policy framework. It is working together to get that across, if you see at the outset the seven lenses of how we are looking at Willow. I hope that helps to address your question.

I understand. There is no change to fuel security. We have invested £30 million in site to improve the infrastructure and tankage at Grangemouth to underpin that. We have done this with scrutiny from the energy security team at DESNZ and with validation by an external consultant. We have created what we are calling a virtual pipeline from the major European supply hub of ARA—Amsterdam, Rotterdam and Antwerp. We have taken long-term storage positions there. We have taken long-term charter parties of the specific class of vessels that can get in and out of the Grangemouth docks. We have control of the Grangemouth terminal and jetty as a result of our ownership of the former refinery business. We have control of each element of the supply chain and that will ensure, with our long-term storage in ARA, with our long-term storage capability at Grangemouth, that we have sufficient ullage and molecule flow to keep Scotland wet with fuel into the longer term. That has been validated externally and by the UK Government energy security team.

I will direct my question to Mr Hardie and Mr Pritchard. How many refinery workers will be made redundant in April? I know there have been media reports suggesting that there could be 435 job losses over the next 18 months. Can you tell me how accurate this figure is?

Let me give you the accurate details there, Ms Burke. We took 470 colleagues through the consultation process. There were 377 voluntary redundancies and 28 compulsory redundancies, so 5% of headcount. Our transition team, which will operate for between 12 and 18 months as we move from refinery to terminal business, will have 170 roles and ultimately the terminal business itself will have 65 full-time roles. We have facilitated 36 cross-site moves to our sister company INEOS and we have made sure that all 18 of our apprentices can either finish their training with us or have facilitated moves to local third parties.

Do you know if all the employees facing redundancy will receive their 18 months’ pay?

Yes. We moved very early on in the process, in fact before we made our announcement about the intention to transition. We had already moved from the statutory to 18-month redundancy terms. That was in recognition of trying to put some financial security around what was a very uncomfortable position and I think that has served us well. Our staff, unions and employee forums have responded well to that. So, yes that is available to everyone who is taking voluntary redundancy or compulsory redundancy.

Can I make a point because I know there has been some confusion and conversations about Petroineos employees? Currently, within the consultation process, there will be some potential redundancies within the INEOS businesses, INEOS Chemicals Grangemouth Limited and the utilities and infrastructure businesses, INEOS Infrastructure Grangemouth Limited. Those redundancies are in consultation at the moment so I cannot give you any details about where that is. To be clear, however—and I only clarify that because I know there were questions asked in the House—the 18 months only applies to Petroineos employees.

Thank you for clarifying that. We know that the job losses will have a big impact on the community. Has there been any assessment of the number of indirect job losses?

PwC conducted a piece of work on behalf of the Scottish Government. It looked at the broader implications of the supply chain. Yes, that analysis is there.

Thank you, gentlemen, for coming in. To clarify, you seem to indicate that emergency responders and shared services—will they be covered by the 18-month deal?

Those are going through consultation at the moment. They are employed by a different legal entity, INEOS Chemicals Grangemouth Limited or INEOS Infrastructure Grangemouth Limited, so they are not subject to the 18 months that Petroineos has given to the Petroineos employees. We are much the same in this context as any indirect employees through the rest of the Scottish supply chain.

In short, they probably will not be covered.

Their exact terms are currently in consultation but they are not covered by the 18-month commitment that Petroineos has made to Petroineos employees.

But you as an employer could decide voluntarily to include those employees in that guarantee. Why have you decided not to do that?

They were in a consultation process. I cannot tell you what the outcome of that one is. I also suggest that there is no difference between us as an indirect employee versus the burger van that might be going from three employees down to two employees as a result of the refinery closing.

That is obvious nonsense given that you are a partner in the joint vehicle.

Yes, we are, but they are separate legal—

The burger van isn’t, is it?

Yes, true enough and I withdraw that. I apologise. But yes, in the context they are separate legal entities and they need to go through their due and correct consultation process.

Okay. I know that you have said that you are just a member of the supply chain but you can voluntarily commit here to making sure that your employees have similar, if not the same, terms of redundancy as the Petroineos employees. Are you able to do that today?

No.

Okay. Will you write to this Committee to tell us the terms you offer?

I am not sure what the policy is on that one but I will take that back and find out. I am presuming we are allowed to disclose but I will find out what we are allowed to disclose from the conversations and the consultation process.

Thank you. If I may, Chair, the PwC report said there will be over 2,800 potential impacts on the supply chain. What further action are you taking to mitigate that, perhaps in consultation with your partners in the relevant Governments and local authorities?

We have worked with SMAS, which is the Scottish Manufacturing Advisory Service, to provide support for the supply chain. A point to remember here, Ms Bance, is that the supply chain is a big, sophisticated creature. Quite often the supply chain companies are bigger than Petroineos. They have their own meaningful role to play in energy transition. They were consulted through Project Willow and we would hope, coming full circle, that they will have an important role to play in transforming the Grangemouth industrial cluster in the future.

The decision to close the refinery has been described by Unite as a needless act of industrial vandalism. How do you react to that?

I find that language troubling and unnecessary. I think we have been very clear and very transparent with our approach to refinery closure. You saw that in the split announcement that we did where we talked about the intention and then ultimately having to make the closure decision. I think you will also see a schism between Unite HQ and the local representatives of Unite. The relationships with our employees, our local union reps and our employee forums on site are excellent. They understand the position of the Grangemouth refinery in the macroeconomic space it sits in and I think they understand very well the reasons for the closure. We tried from the outset to put a financial security blanket around them to the best we could with the 18-month redundancy terms. Beyond that, of course, it is a challenge but I think we need to now focus on going forward and that is why Petroineos conceived Project Willow. We took this to the Government to try to articulate the case for change going forward, recognising that before the refinery closure, we had done our own internal analysis to try to understand if there were any commercially viable opportunities for redevelopment on site. The answer was no. So with that, what do we do? Do we rest on our hands and do nothing or do we try to move the narrative forward? We took the latter path and we went to the Government with the plan for trying to identify the barriers to change and how they could be unlocked. That was the genesis of Willow and I think that programme of co-design, working hand in glove with the Scottish Government, the UK Government and the unions, is a first-of-a-kind way of addressing these totemic challenges for industrial change in the UK. The unions have reflected on the product of it as being a positive outcome and certainly our First Minister recognised the success, our Prime Minister has recognised the success and we look forward to driving that agenda forward.

Taking the high number of people accepting voluntary redundancies as good, it suggests to me that 18 months is roughly the right sort of figure. I am just picking up on Antonia’s figure. Assuming that 50% of Petroineos is owned by INEOS, I cannot understand why you would not stand up and say that you were very supportive of the 18 months and would do the same for our own business. This might be above your pay grade, which is why you are not telling us, but I think everybody in this room would leave here very much more relaxed if we felt that INEOS were the people who were driving the fair 18-month payment rather than PetroChina.

I might help Colin out here because I have been through the process. When you are in a consultation, such as they are now, actively in consultation, there is a consultation room and what happens in the consultation room stays in the consultation room. Colin is not part of that process so he will not have access to that information and even if he did have access to the information, I can assure you that he would not be allowed to speak to it today. The consultation will run its course. Clearly, the unions and others will make representations on the 18 months but we will have to wait for that process to run its ordinary course through its statutory 45-day process.

Again, something that I think the Committee will look out for with interest in the coming weeks.

Project Willow analysed 300 potential technologies that could be deployed at Grangemouth. Why did you choose the nine proposed projects?

We looked at 368 but we felt that the precise number would be a little bit too much detail in the documentation. We went through a process against the direction that we had received from the UK Government, the Scottish Government, Scottish Enterprise, Petroineos, INEOS and PetroChina. That was: can you please make sure that as you go through this analysis, you have something real at the end of it and if there isn’t something real at the end of it, tell us early on so we can close the project down and walk away. One of the things we needed to do was to have a look at the technology-readiness level of each technology. We needed to understand how these technologies could come together. We used a lens around a local supply source, local demand source and local infrastructure that should be leveraged. The idea was that this particular combination of potential projects should be able to withstand global competition. If we truly want to bring private sector investment into a concept like Willow—people who tend to deploy this capital have lots of places they can deploy capital across the world—we needed to make sure that this could withstand that. We tried to look at the local feedstocks, local demand sinks, and the infrastructure pieces. We said that we believe at this time, based on the current market day conditions and the current legislation and policy situation, that these nine have a chance to get off the ground. Within that, it is worth saying we have three cases. We have what we call a base case, a growth case and then something that we all hope for, which is a full-potential case. The base case incorporates things that we believe could be started today, or yesterday and have a high likelihood of success to get off the ground within the next three to five years, maybe six or seven. To do that, two things need to be taken into consideration. First, can we incentivise the private sector to step in, invest and take these projects forward? Secondly, to do that, do we have feedstock that really is sustainably sourced? What we do not want to do is be beholden to importing things on big ships that burn heavy diesel oil, which when you look at the carbon intensity on a full lifecycle basis just does not make any sense to me. I hope that gives you an indication of why we ended up with these nine projects. Will these nine be the ones that get off the ground? The likelihood is that things will evolve. Two things will drive that, other investments going into technology today that may be better, more efficient, more effective and, secondly, the nature of the private sector parties that will come to bear and hopefully take Project Willow forward. They will also have their own views of what they are willing to invest in and what they are willing to do in taking risk and looking for the reward that they need for their shareholders. At the moment we have a starter for 10, a real starter for 10 that should incentivise the private sector and take us forward but it will evolve.

I think you have answered one of my other questions. You are saying that there might be external changes in the landscape that will shift what is realistic and deliverable and other new things that may emerge as contenders. Okay.

May I add to that?

Sure.

This is a point that I wanted to make earlier to, I think, Ms Bance’s question. If we look at the global landscape on a hydrocarbon basis, the investment going into refineries across the world needs to be taken into consideration. There is a lot of investment going on in the middle east and in Africa, which will further put pressure on UK refineries, not just Grangemouth but all of them. That will also have an implication for how much capital gets invested in low-carbon technology and that will also have an impact on Willow going forward. My point here is that that global perspective, not just from how capital gets allocated to low-carbon but how it gets allocated to hydrocarbon, will be party to and will determine what the shape of Willow looks like in five, 10 or 15 years. Sorry, but I think that is important.

I appreciate that. Thank you. Can you tell me what you think the barriers are to implementing Project Willow’s proposed projects?

I think that barriers is quite a hard word and will think instead about some of the risks. The two big risks are time and focus. What I mean by time, is keeping momentum going and being able to engage with the private sector, for the Government to be able to engage with the various elements of government to bring together some of the changes that are required from a policy and regulatory perspective. The timing of running those parallel streams, which are quite complex—managing a JV between two parties seems to be quite complex, imagine if you have five or six, all of them vying for different things because they have different challenges and different ambitions of their own. That timing is important, and keeping the momentum. The hope is that some type of memorandum of understanding across the first wave of those private sector entities could be achieved before the summer recess. Gosh, wouldn’t that be something? The second thing is focus. The worst thing that could happen, and it is a risk, is that we have this Select Committee hearing, there is a little bit of stuff in the press and then it starts to peter out. What happens is that attention gets diverted to other assets, other things and other catastrophes and Willow does not maintain focus on those who can make change, and that is the private sector and the public sector. Those are the two risks I see going forward. Are they barriers? No. Do they influence the success of Willow? Yes, and potentially the shape as well.

Okay. We are now in the position where we have nine proposed projects, some more expensive than others and some have longer lead times than others. That leads me to ask whether this should have happened years ago, because it feels to me as if it should have. Were there any conversations around this type of project when you had those original discussions, I think it was five years ago, with both UK and Scottish Governments?

Yes, a feature of all our discussions with the Government was the financial position of the refinery as it stood, the necessity for there to be a move to a terminal to maintain continuity of supply and the issues around the hurdles to low-carbon development, low-carbon manufacturing on site. It is worth noting that while we are talking about Grangemouth here, it is just simply the lighthouse for this. Everything that has come out of Willow will be of universal application to the other industrial clusters in the UK. As Anu said, with the investment going into bigger, more modern refineries in the middle east, Asia and Africa, I suspect there will be pressure on the UK’s other refineries. I bet your bottom dollar that they are welcoming the findings of Willow and are hoping that they are pushed on with the pace and rigour that we are trying to engender here.

I guess the refinery conversations are the starting point in terms of time and place but it is important—and you can see it in the findings on projects in the suite of nine projects—that is it is more than producing transport fuels. It is about manufacturing and that is because Grangemouth itself is a much wider entity than just the refinery even with the obvious impact of the refinery’s transition that is within. This is about trying to create the energy transition for all of the workers who are currently in Grangemouth. The opportunity—and this is in the subtitle on the Willow report—is for delivering growth. The success of Willow is about considerably more than 400 jobs or 2,500 jobs. It is about having growth in the manufacturing sector within Grangemouth and, as Iain says, also providing a template for the rest of the UK and the other industrial clusters. The challenges that we face in trying to develop Willow will be experienced across the UK by all of the other manufacturing sectors. We must keep that firm belief in manufacturing because that is the way that we create wealth in the nation.

I would say that this is exciting. Willow is probably one of the most exciting assets I have had the privilege to work on. It is a real opportunity for change in the UK. It is the first of a kind where you can bring together circularity, energy transition, build out security of supply and, yes, it applies to other opportunities within the UK. I come back to the time point. EY went through a competitive process to win this piece of work. We started when that process started and we started at the beginning of September. Could we have had more time? Of course. I am a consultant, I am always going to want more time. I am going to want to check as much data as I can and I want to make sure it is as empirically rigorous as possible, but this is exciting right now. We just have to maintain focus and make sure we do it within time.

Think of what we have done in the last six months. We have moved at a transactional pace, working hand-in-glove with Government in a way that has never been done before to try to articulate a case for change. What has that led to that is real? It has led to the Prime Minister announcing up to a base of £200 million of National Wealth Fund moneys and the First Minister in Scotland announcing £25 million there as well. That is to be applauded. That is a start. However, money alone will not drive a success case for Grangemouth. We have identified, through our decision-based road map submitted to Government, the necessary regulatory hurdles that need to be addressed. If those hurdles are addressed, we begin to unlock the third-party investment to the site that we need and then industry will do what industry does. Industry is looking for investable propositions. Grangemouth is a fabulous asset. It has top-tier infrastructure, excellent utilities, fabulous logistics. If we cannot make the energy transition work at somewhere like Grangemouth, you need to fundamentally revisit as a nation what we are trying to do as part of building a low-carbon economy because Grangemouth is absolutely the hub for those sorts of activities going forward.

Thank you. I appreciate that we now have a road map of sorts and that there is clarity and ambition there. However, there are still people concerned about their jobs, concerned about their communities and concerned about the gap between the closure of the refinery and moving forward with some of the projects in Willow, so I do have to seek clarity on this point. Petroineos suggested to the UK and Scottish Governments five years ago that this work should be commenced so that communities are not left with the gap and the position that they are now in. Is that correct?

We have talked about the case for change with senior politicians for a number of years. What changed really for us was when the Labour Government came in and Mr Miliband and his team just got it in a way that we had not had before. With his leadership and stewardship and the day-to-day involvement of Mr Shanks, and similarly with Ms Martin in the Scottish Government, we have driven at this transactional pace. I mean like an M&A pace of progress, effectively working six days a week, 12 hours a day to drive this to conclusion.

Sixteen hours a day.

Yes. You are right, Ms Sullivan. I can understand the desire to look back and push us on that. Willow was never able to respond to what happened historically. That is what it is. However, what it has done is articulate a very powerful case for change. I hope that this Committee, and other Committees like it, will hear what we are saying, will understand the rigour and the discipline with which we have applied ourselves to this question and seek to apply continual pressure on Government to make the case for change real. If you do—and as I said before, industry will do what industry does—that headline figure of £200 million from the Government will become a backstop because ultimately, and in a perfect world, it will not be required or will only be required for the most difficult projects.

My final question at this juncture is: who is in charge of the site’s future and how confident are you that they will act on Project Willow’s recommendations?

The next phase of Project Willow, as you will be aware, is being managed by Scottish Enterprise. Scottish Enterprise is fronting it and I understand that in the background they will have the support of OfI, National Wealth Fund and Scottish Development International.

And your confidence?

We will work with them throughout the process to make sure that the best parties are brought to site and the best projects are given the opportunity for success provided the Governments do their bit and move with pace and rigour to address the regulatory changes that we have articulated in our decision-based road map.

I have several requests for supplementaries so I ask my colleagues to be as brief and succinct as they can be.

Thank you all for coming. My question is about the workings of Project Willow and how contingent it is on the other operations ongoing at Grangemouth. You have the petrochemical side and also the Forties pipeline. How important in the planning of Project Willow and the feasibility of the nine projects within Project Willow is, for example, the Forties pipeline? What are your reflections on any change in the operations of the North sea, the decline of the North sea and the timescale of that, and how will that impact the success or otherwise of Project Willow?

It is key to recognise that if we are going to transition—we are talking about an industry transition—we have to transition from something. In that respect, the quick answer is it is very important that the Forties pipeline system and especially the chemicals business are still there and they are intrinsically linked with each other. There is feed from the North sea gas that has to go somewhere. It goes into the chemicals processes. If there is no chemicals process, you have a domino effect, potentially, out to the North sea and the fields. It would be remiss of me not to take the opportunity to say that the chemical sector is struggling. It is cyclical by nature. We are currently seeing, as with global economic demand, that we are at what we would term the bottom of the cycle. This is a good asset in the middle and at the top of the cycle. The core of the chemicals complex is our ethylene cracker, which is probably in the top 10% of capacity in Europe. It is a good asset, an advantaged asset. But, and you will have seen the announcements from our owner, we are struggling massively with high energy costs and high carbon costs that put us at a significant disadvantage against other areas and other regimes that are importing their product into Europe and the UK with a quarter or a fifth of the energy costs and with no carbon taxation. That means a challenge for survival in the existing businesses. We have been in conversations with the Government about this but we need help and assistance in making sure that we bridge and go there because the assets are good assets, well-run, and safe. We need to make sure that they are there to be able to transition from.

When we were looking at Willow, the two other things we were looking at were efficiency and effectiveness. How can we do this in the most cost-effective way possible and as quickly as possible? When we looked at the lay of the land, the infrastructure there, we have tried to say, “What can we use today with minimal effort and what would that mean in making things more cost-effective and efficient?” As we designed the nine projects, we also looked at the opportunities between the projects, and the synergies. The good examples here are sustainable aviation fuel and particularly the HEFA plant. The relationship between the HEFA plant, the hydrothermal plastics recycling and the bio-waste pyrolysis is quite important because they could become feedstocks into the HEFA plant. That accelerates things. That makes the whole thing a bit more circular. It puts less reliance on other feedstocks being required. It is partly about the localised infrastructure that is there today and it is partly about making sure that we identify, map and therefore model the synergies between those different technical assets. The point that I made before about focus will be important because you will have different people owning and operating in likelihood as different plants. The commercial arrangements between the two will need to be modelled and mapped to ensure that everybody has their fair share of whatever pie is available. It is about the localised infrastructure but it is also about the relationship between the different assets and I think that is worth highlighting.

Indeed there is a bigger infrastructure opportunity. Sorry, I end up going big when I think of these things but there is a unique opportunity that to me became apparent when we were going through Willow. This is looking at the later tranches of enabling things such as the wind resource in Scotland and green hydrogen. There is a meeting point, I hope, in Grangemouth of that green hydrogen being pulled down, developing those assets and pulling the infrastructure, but to enable that to get to e-methanol and synthetic molecules, you need biogenic CO2. You need CO2 to be brought to Grangemouth, and that is where Acorn would come in as a unique opportunity. In Scotland the Acorn T&S can provide, along with SCO₂T Connect, the National Gas Transmissions Project working up and down Scotland, could act as the aggregator of CO2, using similar schemes of permitting like green electricity or biomethane. You could deem biogenic CO2 to be delivered at Grangemouth—and it probably would be brought there; there are quite a number of sources around in the south of Scotland in the central belt—and you have the opportunity to bring those two together in Grangemouth to get to e-methanol to go from methanol to jet, to have that as a chemicals feedstock. Thinking in the Willow report about the magic triangle of what you want to get in a project, we have a feedstock through green hydrogen, which we should be able to have as a wonderful resource within Scotland and a unique opportunity with Acorn. What in a lot of areas is a CO2 disposal system could be a value opportunity and have a value and growth proposition for Scotland. We have that linked with infrastructure and the ability to reuse the existing oil and gas infrastructure and natural gas transmissions infrastructure that goes up and down between the central belt of Scotland, not 15 to 20 kilometres away from site all the way up to St Fergus, and then you have the demand, the last key bit that you need in the triangle. There is a sweet spot, which is the sustainable aviation fuel methanol to go into maritime fuels or even in as a chemical feedstock, so it is a perfect example of bigger supply chain opportunities, not just the synergies that Anu was articulating that are within Grangemouth.

It is elegant. It is very elegant.

On the specific issue of the Acorn project, how vital is it that that project is given the backing of the Government with the fiscal regime and the licensing permit, which has long been asked for?

There has been a lot of conversation about Acorn just in the transportation and storage and the carbon capture sense and I hope with that last bit we articulated the optimism and the vision. If you want to get to that end state of significant, large quantities of e-methanol production and all that that could bring, Acorn is essential to delivery. On the timeline—Anu’s point—yes we always want all of this to bring in as quickly as possible. It goes back to some of the challenges that exist in trying to get this together because we now have to co-ordinate the wind resource development with the green hydrogen development with the infrastructure to bring it to Grangemouth at the same time as the CO2 infrastructure, and with all of this happening. It is a challenge that will take time and I guess within the timelines that is really where we are saying that realistically that is at least a decade away.

Acorn has been stop-start for a long time now. It predates me being in Parliament and indeed there were variations of it beforehand. Do you feel that the Government now accept the urgency of making sure that the project is given the green light in the way that others have?

That is a hard question, to ask what I think the Government think about and what they are saying, particularly with the comprehensive spending review going on at the moment. Are we getting to a pivotal point in that we need to provide a clear path forward, a timeline and a commitment for those who have invested? I am thinking of the Acorn partners, not INEOS. They need to see that timeline to see what they are going to do. They need that commitment to be able to keep their investment.

Thank you for your work, by the way. Your positivity is very refreshing and good to hear. Segueing to the projects that have been outlined, the nine projects themselves and within Willow, what timeframe do you think is viable for them to come on stream? Are you expecting investors, perhaps the likes of those sitting beside you at the table at the moment, to want to be in a position to move them forward at pace and scale?

There are two questions. The first one is how quickly we could mobilise and get something off the ground to continue the momentum. I think some of that comes down to the public sector being able to push forward some of the reforms that we are advocating for. The second part is for the private sector to be engaged more formally and we could start that today, tomorrow, yesterday. My hypothesis is that the moment you have that first MOU and you have actual capital being deployed in development expenditure, in DevEx, you could move at pace and have one, two, or three assets potentially commissioned by the end of the by the end of the decade, if not before. The big one is HEFA, which is complicated, as we have all talked about. Similarly, we agree with some of the points that Unite raised last week. There is a lot there to think about and there is a lot to understand in the overall energy system. Our hypothesis is that you could have some assets off the ground by the end of the decade, if not before, and potentially a HEFA plant in the early parts of 2030, 2031, or 2032. As for what that constellation of private sector entities looks like, I just do not know. You can imagine that I have asked, but we do not know.

Why do not we ask then? Is Petroineos interested in taking forward any of these proposals within Willow and within the timeframes that we hope for?

We are actively evaluating the conclusions of Willow. As you can appreciate, there have been two teams. There is the team looking at running Willow—it was our project, we conceived it, we ran with EY at pace to deliver it. In parallel, there is a team looking at the opportunities arising from it and in addition one of the key roles we will play in the very near term is that of landlord and in conjunction with any utilities provider. What is central to success for Willow is access to land, utilities and logistics and we have said from the very get-go of this project that we want to see maximum employment and maximum investment into the site regardless of who that is. Yes, we are reviewing the projects but what we are not doing, because it is not the right thing to do, is jumping to the head of the queue. That is on the Petroineos side. On the PetroChina side, they have expressed an interest in the potential SAF pathway because that is a place that they have played in globally. In respect of INEOS, there might be an appetite for other projects as well.

Yes, for INEOS more from the petrochemical side of things, potentially some of those early projects. I guess we go through the same routine as a landlord and owner of land but between us, we only own a fraction of the land that is in Grangemouth. There are other parties and there are also linkages between Willow delivering with the Grangemouth Future Industry Board activities and also with Forth Green freeport activities. There are plenty of other landholders in there and who should be in there, hence Iain’s point about not being at the front of the queue. However, we have that opportunity. There are certain options in plastics recycling that look very interesting. It could be new processes. If e-methanol becomes available as a feedstock, any processes that are derived from that could be in there. We remain open and looking at the options as much as any of the other investors. I suggest that for success, for the long-term sustainability success of Grangemouth, we need to have as broad a base of investors as we possibly can, as many different companies involved as we possibly can.

The likelihood is that your investors will cycle out based on the maturity of the site. As the site matures, certain risk profiles will step in and you will have different owners in a year or two years to five,10, 15 years and therefore the level of—forgive this horrible word but it is the only one I could use—optionality that you need in the delivery vehicle and the set-up of that today is really important.

Mr Hardie, you and your colleagues have mentioned some of the regulatory barriers that need to come down for the options in Project Willow to be realistic. I think it is important for this Committee to shine a light on what those regulatory barriers are, where they sit and what your confidence is that they can be removed in a timescale that makes these developments possible.

I will get Anu to speak to some of the detail, but to help answer your question, Ms Bance, behind the PID, the public information document that you have seen, there is a strategic outline case that was prepared for HM Treasury. That is a Green Book document that articulates the case for change in the specific changes that need to be made, when and why, the consequence. However, what it does vitally—and I do not think that this has been done before—is it puts a government value to it. When we look at projects we look at IRR, NPVs, rate of return on the investment made. In our document to Government we have articulated the decarbonisation benefit, the economic benefit, the jobs benefit and the energy security benefit. Those are the levers, those are the things that Government seek to ensure and that is what we have done for each of the necessary changes. We can pick a couple of the projects and describe some of the changes and the relative challenge to them.

Absolutely. To frame that, there are five areas of focus that the Government could rally around, let’s be positive. The first thing is grant funding, fine, particularly for those smaller entities that perhaps do not have a balance sheet but have the technological capability. There is grant funding, there is a state-sponsored investment programme.

That is very official but I was talking about the regulatory requirements that are necessary. We will come on to money.

Absolutely fine. Then there is the regulatory and policy elements on market reform for biofuels. That is a big-ticket item. There is the hydrogen economy, making sure that market support mechanisms are there and stimulating low-carbon demand. This is helping to accelerate policy in low-carbon chemicals and plastics demand, supporting that demand build-up. Some more examples are that—we made a lot of requests here. We made 35-plus, out of which we have articulated one or two, maybe three, which are must-haves, almost. One that could be pertaining to this is the HEFA cap exemption for domestic cover-crop feedstocks, as well as the HEFA cap being extended by 10 years to allow us to bring in and use other types of feedstocks, like used cooking oil and tallow. Those are two examples of the sorts of things that we could do. We understand the sustainability and the ecological reasons why those caps are in place, but if they could be extended for a period of time to give us momentum, it will allow us to be able to start the development process, bring in that external capital, build up the supply chains around these assets, which need to be done, and may have the additional benefit of ancillary jobs, ancillary industry and ancillary value to the Scottish economy and to the UK economy as well. That gives you a flavour of the types of things that we have.

Is there a document that you can share with the Committee on these points? You mentioned that you had submitted a PID to the Treasury.

You have the PID. That is our shorthand for the 30-page public information document. What Treasury has is a strategic outline case that articulates the necessary changes for each of the projects and the necessary benefits that would flow therefrom.

Are you able to share that or a version of that?

I would need to check a response. That is with Treasury. That is the Green Book document. Let me check and I will get back to Ms Ferguson.

Thank you very much. You will have lots of homework, Mr Hardie.

Anu, sustainable aviation fuel is seen as the holy grail for the aviation industry and perhaps for Grangemouth as well. How realistic is it to make fuel from chip fat?

Good question. If we address the question in three parts. Can you get enough feedstock in the right manner at the right place at the right time? Does the technology exist today to be able to process that into sustainable aviation fuel? Can you get that sustainable aviation fuel produced at a price that somebody can pay for? If all of those three things hold true, yes, it is feasible. The trick is getting all three of those things to work on the same site at the same time. The biggest problem that we find is not necessarily the technology at the moment, it is the feedstock and the price at the end. If we could work through with some of the suggestions that we have made through the report, that could enable a viable asset to get off the ground at Grangemouth.

You mentioned one of the obstacles was the HEFA cap exemption. That sounds like something to do with cows to me but it might not be.

Apologies, yes.

What role could the Government play in getting you to producing SAF?

The first thing is allowing hydrogenated esters and fatty acids processing to produce sustainable aviation fuel, to extend the cap. Currently we are seeing a cap coming into force at 70% from HEFA, declining over a period, so that you incentivise other technologies like e-fuels to come through, power to liquid. The Government could do two things. The first is to extend that timeline and, secondly, incentivise some of the alternative feedstocks that could go into that asset as well, particularly with cover crops. Now we are going away from energy into agriculture. We have seen a move to invest in non-food energy crops in other parts of the world with other companies that are heavily investing. These are things that do not necessarily damage the soil and can be planted and harvested outside of the usual food-crop cycle to produce oil seeds that could be then used to produce sustainable aviation fuel. There is enough land in Scotland and one of the things that we have suggested is that trials need to be done with the support of DEFRA, the UK Government, the Scottish Government and some of the agricultural bodies in Scotland to see if they could do similar trials to those done in the US, where they have been successful in this activity.

I see a danger here of Grangemouth being described as the Drax of Scotland where you bring in sustainable materials from somewhere else to create a new fuel.

We have tried to avoid that.

Let me be very clear. It is funny you raise that. One of our red lines for the Willow team was that Drax, in our opinion, was not an exemplar of good on sustainability. We are very clear that 100% reliance on an overseas bio-feedstock was not suitable. That said, it is important that we recognise the limitations of domestic feedstocks. We seek to maximise them where we are. Anu has spoken very eloquently about the cover-crop potential. I will be even more enthusiastic than Anu on this one. This is an example of where Willow is at its best. If we get that right, you are in the world of a circular economy, of genuine economic growth. You will be creating new value chains that simply do not exist today. That, by definition, is economic growth and that is what we must be seeing. It is relatively low-hanging fruit. It could and should be done, the Willow team suggest, to unlock that HEFA-derived SAF pathway. The other point to note, and you touched on it, is the pricing. Currently the cost of HEFA versus traditional jet fuel is four or five times that. The Government have talked about but have not put in place any pricing support mechanism for SAF. They are currently just using the stick method, which is the mandate ever increasing over time, as opposed to the carrot method, of, “Let’s try to help industry do the right thing and move away”. There absolutely is an appetite for this in the industry. You are in this very novel world where you are seeing airlines invest in SAF production facilities. I cannot think of any other industry where that rings true. If your end user, airlines—your British Airways, your IAGs, your KLMs—are investing in manufacturing for SAF, that tells you that there is a market pull and it tells you that one other link in the chain is not there. At present in the UK the determinative issue is around feedstock supply. In Europe they have a different view. They do not have a ban on HEFA-derived feedstocks. As a result, they will be exporting their HEFA-derived fuel into the UK, where we are obliged under the mandate to purchase it, notwithstanding that that could be a domestic pathway but for some relatively simple regulatory changes that are within the gift of the UK Government.

You sound excited about sustainable aviation fuel. PetroChina is one of your big shareholders.

Let’s look at why people are excited about SAF. It is because you have that market pull because aviation is a hard-to-decarbonise sector but in technical readiness the first generation technology exists today and could be deployed. When you step out to synthetic fuels, the e-SAF that we spoke of, it is super exciting, and that is holy grail, to get to wholly synthetic fuel, where you are taking hydrogen and CO2, putting that together to create jet fuel. That is a fabulous place but we have to be very realistic that that is a good way down the path and there are a lot of other projects that have to happen. That is why Anu was talking about the sequencing being so important. However, there is a near-term win to be had in SAF. I just look to the market. The market does what the market does and, as I said, you have airlines investing in production facilities. That tells you that there is demand but as yet there is not the fully built-up supply chain and, therefore, the investment case necessary to invest, let’s be honest, hundreds of millions of pounds, is not there.

It would something like £2 billion to get Grangemouth to SAF. Would PetroChina be interested in doing that?

The SAF pathway is open to everyone. I think that there will be, as Anu said, multiple different actors coming in and out of the project at any one time. The fully built-up costs that we are talking about there is the synthetic SAF. As I say, there are a lot of people who will play in the broader Grangemouth cluster.

There are over 60 companies right now that are pushing on trying to get their e-SAF, electro-SAF, off the ground, that are in different stages of raising capital. If one or two of those were able to be party to the Willow concept, you could see momentum building very quickly.

The evidence to this Committee from Unite and others was that sustainable aviation fuel, SAF, is where Grangemouth should be heading. They say, “Just go for it”. I know that there is a sequence to go through but do you think that we should accelerate and push harder on it? What is your message to Government on that?

It is great to have their support and momentum behind that. We are in furious agreement with Unite on. However, I think that it has been on the record as saying that Grangemouth could be turned into a SAF facility overnight. That is simply not the case. It has given some information to the Willow team. We have reviewed it and the examples that it has chosen are not analogous to where we are at with Grangemouth. Yes, we are absolutely aligned on the headline of a development of SAF at Grangemouth, but the feedstock that it has referenced in one of its examples is soyabean, for example. That is currently banned in the UK. It fell foul of the legitimate policy decision about the use of arable land for food versus fuel. The other one that it has suggested is in Scandinavia, and that uses the byproduct of papermill manufacture, which is a very well-established industry in the Nordics. We do not have that industry in the UK so we do not have that byproduct available as a feedstock. The other is the temporal aspect. Any suggestion that we could simply convert in a year or two is very wide of the mark. That might be your construction phase, but to get to that construction phase you have five, six, seven, eight years of engineering, design, planning, commissioning and so on, all of which we are in the starting phase of now. Yes, we want to move and, yes, we want to move at pace but it will not be an overnight fix.

The last point on this was the assets that were referenced by the Unite union are relatively high in how recently they were built and how efficient they are. They rank highly on the Nelson index, whereas Grangemouth is a very different beast in that respect. With those assets you could see that development going on at a greater pace but we also know that the pre-development work was years and years before a final decision was made.

Sustainable aviation fuel, grown and refined in Scotland, by 2040?

Again it comes back to my original point of those three parts. If those three parts could come into unison you could see some type of HEFA plant getting off the ground in the early 2030s to mid-2030s. However, it requires, remember, time and focus. We need to start moving yesterday.

Thank you, we have a supplementary from Kirsteen Sullivan.

Thank you, it is a very brief one. We have touched upon the view of the unions, in particular Unite, that there could be SAF production up and running in Grangemouth in a very short time. There have also been suggestions that the existing infrastructure on the refinery site could be repurposed for that. Do you disagree with that position?

It is the same answer that we have just given to Mr Crichton, which is that the feedstock that it has suggested on those other assets are not comparable. We do not have those in the UK.

I absolutely take that on board. I want to focus on the infrastructure point, because you said it would take six, seven or eight years of engineering. I think Unite’s position is that you have existing infrastructure that could be repurposed in a much shorter timeframe. Could you give your view on that?

As we have looked at the assets, we disagree. They are not comparable constructs of a refinery. The machines and the parts of the refineries that it has referenced are just not the same. That is the first point. The second point is coming back to your timeline. Our timeline includes time for Government to evolve policy and regulation, where appropriate and time for private sector parties to come on board and to get comfortable with what they want to design and build. For that development cycle, that development period, we are probably very similar to where the Unite union is. It is a three or four-year process to get to commissioning of an asset, but it is all the other stuff that needs to happen first, which also happens in the other assets.

I want particularly to ask Mr Hardie and Mr Pritchard their view on the realism of the projects proposed in Willow. I have heard enthusiasm for the opportunities but that has not yet been matched by the sort of commitment that would give the community and the wider industry in the UK confidence that any or all of the projects laid out in Willow will go forward.

That is a very good question and thank you for asking that. There are two answers to it. The first is that the level of rigour and diligence we put into this report was phenomenal and we did that in partnership with Government. There is nothing in here that could not materialise at Grangemouth. Indeed, there may be more, which is an important point to note, because Willow is not the bookends of Grangemouth’s potential. That is point one. Point two is that it is chicken and egg. We have articulated that these are possible but it is “possible subject to”, and I wish that was not the case. I wish that it was just a case of pressing go and that we could deliver on Willow. But the “subject tos” are important. The Government need to effect the change for industry to do what industry does, which is to crowd in and invest in these projects. Absent that, industry will not. If you think about the nature of where we are in the cycle, there is a huge amount of risk associated with investing in nascent and, let’s call it what it is, sub-economic, low-carbon manufacturing in the UK. Therefore, the risk appetite to do it has to be high, your balance sheet has to be high. As a result, the people who have access to that sort of capital have access to projects all around the world. We have to put Grangemouth on the map. We have to say, “Invest here”. We have to be positive about Grangemouth and Government have to be pushed to drive the change. If that happens, and if you look at the nascent benefits of Grangemouth around logistics, utilities and heritage, I think that we will see investment.

Will we get to the £3.5 billion that we need?

That remains to be seen. We have set out a pathway. I do not know. I wish I had a crystal ball but you have nothing but ambition from this side of the table to get us there. The best case and the diligence—we have touched on this before. While the public information document might be 30 pages, behind that there are hundreds and hundreds and hundreds of pages of diligence. We have put up nothing that we do not believe could be delivered, subject to the Government changes that we have articulated in the strategic outline case.

From a technical point that was the process that Anu outlined that we went through of starting with 368—did you say that was the actual number? It got confusing because Anu kept on reducing them and I kept on adding them back in the process as well just to make it more of a challenge for them. However, I think that what we landed on—certainly if you think that there are three timescales: of possible by 2030, subject to all of the caveats that Iain has mentioned; and then by the mid-2030s bringing in some of the bio elements; and then probably it is another decade after that when you can really see the build-out on wind to hydrogen and the synthetic molecules. However, we were at pains to make sure that these were at a high technology readiness level so that the kind of technologies that were being talked about were not test-tube scale, lab, slightly bigger, that they were actually proven. They are not risk free but they have relatively few risks in them versus some of the other ones. Where some of the challenges exist, again articulated, is in those nascent supply chains. Yes, you can build bioethanol based on forestry grown in Scotland, but that is a supply chain that needs to develop and grow, with more of that growth opportunity in there. However, that needs to be broken into. Even if you were going first-generation bioethanol, some of the challenges you have are, “I can grow the crop if you will take the feedstock. I will build the plant to take it if you guarantee the crop.” Great, that is fantastic. Who underwrites the risk as we ramp up in the crop? What happens if there is a crop failure in the first couple of years? That plays back to some of the role that Government can help with, underpinning the risk of establishing those new supply chains.

We were working with a different company in a different part of the world on a similar concept. The biggest issue around that was how you map the price of the seed to sustainable aviation fuel. It has not been done before. How do you get people to believe that you have that price matching all the way through and that the value and the risk is appropriately associated? It is that level of complexity that underpins what Colin is saying. That is where we think that there is something here, because we can see, over a period, transitioning from one feedstock to another to allow the assets to get off the ground and those markets to mature with Government support, particularly if they are supporting on some of the policy side on the pricing of some outputs as well as enabling and engendering some of the feedstocks to get off the ground.

Thank you, I appreciate that. My point continues to be that the signals that could be sent from Petroineos and from INEOS, making it clear, if at all possible, if the risk profile were correct, if the financials added up and if the regulatory environment were correct, that they were intending to make that investment such that they would transition to sustainable aviation fuel. Do you not think that that market signal would be really important in unlocking other investment, unlocking the Government action that you need and also winning the confidence of not just the industrial community around Grangemouth but those all over the country, such as those I represent in the Black Country, looking at this prime example of good jobs going and a hiatus?

Chicken and egg.

Exactly. Could you, in this point, play a different role to unlock that chicken and egg?

Could Government play a different role, be at the vanguard of this, aggressively push the regulatory change to allow industry to crowd in behind? What we have done, Ms Bance, is written to Scottish Enterprise, which is leading on the project delivery phase, and we have expressed our strong interest in different aspects of the Project Willow report, and we will continue to work with it in every available capacity—landlord, utility provider, project developer—because it will require a consortia base going forward. What we have in Willow is not just a case of one company coming in and putting a lot of chips on the table. It will require new strategic partnerships to be developed.

Similarly from INEOS we will be putting in—you have, I have still to write, but we will be going into Scottish Enterprise on the same basis. It is back to down to chicken and egg. I know that INEOS will invest where it can invest. It is what it has done, but it is back to your point that it also does on a global platform. We need to make the UK and Grangemouth be the attractive place to invest, to win that funding, not just from PetroChina and Petroineos and INEOS but from all of the other potential investors that are out there, including some of the airline consortia that you have talked about and all of the other people in there. We need to make it an attractive place, so we need to crack the problem of how we change the regulatory and policy framework to be able to create the investment, because at the moment it does not work. That was where we started from in Willow and we have tried to articulate what you can change and, importantly, the co-design of Willow, why it is in Government’s interests and society’s interests, the businesses who will provide the employment interests to get those change effects. We have tried to do that jointly in Willow.

Mr Bhambi, is the Government’s promise of £200 million a sufficient level of public investment to drive through the projects identified by Project Willow?

It is admirable and wonderful to have received that level of commitment from the UK Government. What I am uncertain of right now is how and where that capital is allowed to be and will be deployed, so it is hard for me to answer that question. However, it is a real signal to the private sector that the Government mean business here and that is important. We see it as incredibly positive. We were very surprised and it gave us a warm feeling that Project Willow is landing and is being taken seriously. Is it sufficient? It depends on how it gets deployed. Part of that will also be when it gets deployed.

That comes on to my next question. What are the consequences if the £200 million wealth fund did not materialise? What would the consequences be?

First there is a PR issue from a Government perspective. That is the obvious one. Secondly, it will show the private sector a real lack of support now against Willow. Beyond that it is hard for me to judge. As I said, we were not expecting it. As we have been thinking about how Willow becomes a reality, how it goes from lots of pretty documents and slides to being something that creates real jobs and a sustainable ancillary set of businesses around Scotland, we had not envisaged £200 million being made available from the National Wealth Fund. I think now that the announcement has been made, you are in a different scenario to where we were before, and we were not expecting it. Then we were expecting the private sector to step in.

On the back of that, how confident are you that the new Grangemouth investment team will attract sufficient private investment?

I cannot answer that. I don’t know it, sorry.

I was going to make a point that comes back to the regulatory and policy framework side. If we get that right and we create the environment that will attract investment, it has the ability to lower the requirements. The support and the signal of support that comes with the announcement of the minimum £200 million ringfenced within the National Wealth Fund is very welcome, but actually the prize is to get as much private investment in as we possibly can from around the globe, by getting the regulatory and policy framework right, which lowers those burdens.

A bit more positive to my last answer, Ms Stewart, we have had a few people come to us, a few companies globally, that are interested in Willow and we have been passing on the details to Scottish Enterprise to take forward. Our hope is that there will be momentum. The bit that will be interesting to observe now is—remember the complexity between the projects and the different stakeholders that you have across those? Making sure that value does not get dropped between those will be important for the success of Willow.

Indeed, there have been lots of other entities, different projects. Back to is it going to be this nine or could it be more, there are other ideas that people have that are ancillary and have dropped into my inbox and will be passed across to Scottish Enterprise for that same purpose. Therefore, there is the potential that it does not exactly look like this nine, it looks like a different, hopefully, 18 rather nine projects, but there is already interest being created for that investment.

On the back of that, how do you respond to concerns that bureaucratic inactivity will deter private investment? I suppose that is about the policy stuff.

I hope that that is not the case. We have worked really well with the Scottish and UK Governments, Ministers and officials. Everyone know what needs to be done, everyone is excited by Willow and excited by the output as much as the process. Working hand in glove with Government and industry is absolutely the way to make good regulation. The Government have earned the time now to go away and reflect on the information that we have provided to them to make sure that they provide good regulation. We will be backing them all the way.

Remember the pressure on time and focus? If everyone maintains that, momentum should keep going forward.

You talk about the fantastic potential of Willow and how exciting it is and yet, as Antonia pointed out, you are reluctant to invest yourselves or put yourselves ahead, Petroineos or PetroChina or INEOS. Why is that?

I do not think that you can expect us today to make an investment decision on something that is nascent and sub-economic, so I do not think that that is a sensible question to ask.

Neither could we expect anyone else then?

Exactly, and that is why we are where we are, Mr Crichton, because as it stands today the low-carbon fuel space is not investable by anyone, hence the proof point is that there is no biofuels development in the UK. Ask yourself why that is the case. It is the case because the regulatory environment does not support it.

Chicken and egg again.

Chicken and egg.

You see HEFA regulation as one of the keys to that?

HEFA is one thing, but HEFA is one important corner of nine projects. There is a lot of other projects that are equally important for broader energy and energy-security pathways in the UK. It is just the one that seems to have captured the attention of the unions the most and hence appears in the paper more than anything else.

A small question, partly an observation. The Committee recently visited Norway to look at some energy concerns there. We were told about a project called Greenspot Mongstad. Forgive my Norwegian pronunciation, it is probably not correct. Is that a project that you are aware of, Mr Bhambi?

I think that the team is aware. We monitor most of the developments. If you asked me for any details right now, I would give you the answer that I would come back to you very, very quickly if you need some details on it. Yes, the team is aware; I am not personally aware of it.

Is there something from that project that could be of interest, Ms Ferguson?

Only in the sense—and this is what I was going to come to—that it seemed to me to be a project where no idea was off the table because it was not practical. Some of the ideas seemed to be almost verging, I think it is right to say, on not quite science fiction but on the extremes of viability. An onshore fish farm, for example, was the one that stuck in my mind. It did seem to me that they were pretty radical in the way that they were looking at possibilities.

We have taken a different approach, as we have articulated. We have grounded this in a technical readiness level. One of our inbound assumptions was that we could not fall below a technical readiness level of 6. We did that because we knew the type of capital that we wanted to attract. It is the type of capital that can be deployed to megaprojects in the short to medium term. The sort of stuff that you are talking about there is super exciting and absolutely has a role but it might not have a role for 15, 20, 25 years. That is outside the time horizon that we are looking at for Willow.

I do not have the technical knowledge and I certainly do not have the technical documentation to be able to compare and contrast and I would not want to do that, but the fish farm is apparently coming on stream—pardon the expression—in May, so things do seem to be moving on. However, I did not get the impression that the ideas were ridiculous ideas. They did all seem to be tested and there was a great deal of money being invested in them. I only mention it from the point of view of saying that you might like to read it when you have nothing better to do.

Once we have done my homework we will get stuck into that one.

Exactly, that would be great.

I will go back to my earlier line of questioning. Everyone welcomes the delivery of Project Willow and we are eagerly looking to the next steps progressing, hopefully at pace, but there must be regret that this did not happen five years ago when you first mooted the idea to UK and Scottish Governments at that time, because now there is an employment gap, which is causing concern to employees and to the local community. Can you tell me if the plans under Willow do come to fruition, how long is that employment gap likely be between the job losses that people are about to experience and the new employment opportunities coming online?

No, I cannot tell you, because it depends when those new projects start, Ms Sullivan, so I do not think that you can reasonably expect me to answer that question in any sensible manner.

Is there an expectation? Perhaps that might be a question for you, Anu.

There is a possibility that the first wave of projects, particularly those in the plastics recycling space, the waste space, could come online between 2028 and 2030.

Therefore, we are still a while away.

You have a direct jobs element to that, which is where that manifests at a point in time. Then you have construction jobs and other jobs that could be created in that development cycle. However, coming back to Iain’s point, there is a lot of uncertainty before we can articulate a realistic timeline.

If the refinery workers—and you do have a highly skilled workforce—are forced to seek alternative employment, how will this impact the recruitment for future industries on the site? The workforce will go to where they can get employment and high-quality, well-paid jobs.

That is a point that we can agree on, Ms Sullivan. One of the key partners that we spoke to through this process was Forth Valley college. It will be central in taking the future case for skills that we have identified and making sure that we are able to put in place the necessary programmes such that there is a flow of young talent that can come and work at Grangemouth, be it in a biorefinery, a green plastics plant or a hydrogen facility. As I say, taking a step back, we are agnostic as to what the technology is, we just want to see good jobs at Grangemouth.

We have had many of the stakeholders, like Forth Valley college, as part of the Grangemouth future industries board. Very regularly, as we have got to a certain stage of analysis, we have shared that quite openly and made sure that all the stakeholders are aware so that they can start thinking about what that means for retraining, retooling and reskilling people who will be coming out of the redundancy process.

That work is happening. PACE is involved, Skills Development Scotland and FEC. We have seen the government machine work well in that regard.

Will that, in your view, hopefully mitigate any risks of there not being the skills present in that community to meet the future demand?

I would hope so, Ms Sullivan.

Okay. You have probably answered this question, perhaps on my earlier question. How could the employment gap have been avoided or minimised? I expect that may be through starting Project Willow five years ago at least.

I cannot answer it any better than you have.

Thank you. Anu, do you wish to add to that?

What is done is done but now we have a real momentum opportunity. Let’s make sure that we do not take the foot off the accelerator.

If I can finish on a more positive point, will there be guaranteed jobs in new industries at the site for any Petroineos worker facing redundancy?

That will fall into my earlier answer, Ms Sullivan. If those projects are not even sanctioned yet and they do not exist, I cannot promise anyone a job in them.

Are there any pathways that you could see that you could potentially offer?

I am almost at pains not to repeat the phrase that it is chicken and egg, but it is chicken and egg. There are necessary precursors that need to change before any party, let alone the existing shareholders, can look to make an investment decision in Grangemouth. Once those things change, once there is a line of sight to those things being changed, once there is an acceptance by Government that they need to change, industry will do what industry does, which is pile into Grangemouth, because it is a fabulous asset base. I welcome the fact that we have this level of attention and rigour on it because it is highlighting Grangemouth, highlighting its potential. The more that we can have people talking about Grangemouth, the better.

That is the end of our questions to you this morning, gentlemen. Thank you very much for that. I am afraid that we did give you a little bit of homework and some documentation that we would like to receive. It would be very helpful to get that as soon as possible. We have a number of other evidence sessions in this inquiry, so it will be some time yet before we make our conclusions public. Thank you very much for coming along today. It has been really interesting to hear of the story and of Willow too. We look forward to hearing much more about Willow as we go forward. Thank you.