Dear Mrs Reeves, Mr Miliband and Mr Murray,

A just transition to Net Zero for the UK, starting in Grangemouth

Congratulations on your recent appointments to Cabinet. We are writing to you as co-chairs of Scotland’s Just Transition Commission, an independent and politically neutral body tasked with providing scrutiny and advice to the Scottish Government on the planning and delivery of policy measures to support a just transition across economic sectors and regions. Our membership includes senior leaders from business and industry, trade unions, environmental groups as well as subject experts. We work to build consensus around difficult and complex questions related to decarbonisation and its associated social and economic impacts, engaging in depth with workers and communities, and applying the principle that achieving an equitable sharing of costs and benefits will enable progress through mitigation and adaptation to Net Zero.

We are encouraged that significant elements of the Labour manifesto show strong alignment with just transition principles developed in Scotland and internationally, particularly the emphasis on working strategically to maximise the social and economic benefits, including for local communities, of the expansion of renewable energy, and expanding opportunities for young people via the move towards a green economy. Policy certainty, stability and the credibility of detailed and costed plans have special value in mitigating the risk of a disorderly, and therefore unjust, transition.

Close co-operation
We welcome the early indications of a positive strategic reset in the relationship between the Scottish Government and UK Government on this agenda. A constructive and consistent pattern of co-operation and exchange between levels of government on shared challenges (such as those related to the modernisation of transmission and distribution infrastructure and the pricing of electricity from renewables) will be critical to enabling responsible, long-term economic stewardship. The proposed Acorn project (and its pipeline Feeder 10) stands to have a critical role in the retention and growth of Scotland’s industrial sector, and without this infrastructure there would be significant additional risks of an unjust and unmanaged transition.

As a Commission, we hope to work closely with UK colleagues over the coming years on a range of urgent issues of common concern. We would welcome a meeting at your earliest convenience with you and other Cabinet colleagues to share key learnings around the just transition process that has been developed in Scotland thus far, and to support any initiatives at UK level that aim to ensure Net Zero is achieved fairly. Some significant elements to consider would be the development of just transition plans for economic sectors as well as regions, the focus on the whole economy rather than only fossil fuels, and the value of structured, detailed engagement with those impacted by the changes associated with Net Zero.

The importance of the just transition as a strategy to build public trust and confidence in the drive for clean energy has been highlighted in the case of the Grangemouth refinery which also raises significant issues for broader UK industrial policy.

Next steps for Grangemouth
Today we have published our report A Just Transition for Grangemouth and a copy is attached. As well as the Commission’s recommendations, insights and findings, it includes research undertaken under the Commission’s direction to record perspectives of workers at the refinery regarding the future of the site.

As an industrial site of UK-wide strategic importance we welcome the Prime Minister’s commitment to ensuring the best outcome possible for Grangemouth and hope the UK Government will play an active and enabling role on the Grangemouth Future Industry Board as it works to develop the Grangemouth Industrial Just Transition Plan. We would welcome any opportunity to meet with you or your officials as this work progresses and hope you will find the attached report helpful to this end.

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

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

Five years of policymaking on this agenda has not developed sufficiently to require high carbon emitters to deliver a just transition as standard practice. As we stated in our annual report: the current path will not deliver. The limitations of collective efforts to date are nowhere more clearly in evidence than at Grangemouth, which presents an acute challenge for applying a just transition approach, given the central role of a privately owned company and foreign state-owned enterprise, and the associated difficulties in setting conditions and implementing effective mechanisms for open dialogue about the site’s future.

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

The following are some key considerations we hope will be helpful in informing further work in this area. While some of these are addressed specifically to the Scottish Government, per the Commission’s remit, we have included them here as they may be helpful to the UK Government in considering its broader strategic approach on industrial decarbonisation.

1. The just transition plan for Grangemouth must earn the trust of workers and the local community – Clear, measurable actions owned by each institution involved in the Grangemouth Future Industry Board should be expressly aimed at restoring the trust of the local community that a just transition approach will deliver where previous initiatives over recent years have fallen short. The strategy needs to be very clear in terms of the timescales associated with each action, so that the plan can provide specific reassurance for the short, medium and long term. To make the vision credible, the plan must set out how progress will be monitored and evaluated against specific metrics and indicators, supported by a robust critical path analysis that maps contingencies and takes seriously the possibility of failure or underperformance across key elements of the strategy proposed, including those associated with specific technologies, fuels and regulations (such as the cap on the use of Hydrotreated Esters and Fatty Acids (HEFA) for sustainable aviation fuel). By the end of Q3 2024, we expect to see a draft plan to be agreed through social dialogue with workers and meaningful participation of the community and other stakeholders. This will require an intensive sequence of meetings, including in-person, to support constructive dialogue, shared understanding and tangible new commitments. The value of the plan will depend on the level of assurance and security it provides to workers whose livelihoods are on the line, as well as to the local community in Grangemouth. The needs of workers and community around Finnart also needs to come into the scope of this plan, since the refinery’s closure could have a particularly severe impact on them and their environment.
2. The Grangemouth plan must be the first in a rapidly developed series of just transition plans for Scotland’s highest emitting sites — The Scottish Government should set out clear fair work and community involvement provisions for the closure of high carbon assets (clearly foreseeable given long term trends) and scale up of clean energy. A sign of the just transition is anticipating the inevitable phase out of fossil fuels in ways that involve workers and communities so that closure and greening is shaped in a socially positive way. The Scottish Government should now ensure that those with responsibility for each of the top 20 industrial emission sites in Scotland, including operations at Peterhead, Mossmorran, Dunbar, St Fergus, Markinch, Lockerbie, Shetland, Irvine, Alloa, Dalkeith, Stirling and Girvan, are required to consult, negotiate and publish a just transition plan to show how the social and environmental dimension of transition will be managed. This process should begin as a matter of urgency.
3. A new intergenerational social contract is needed to safeguard local young people and their community’s future—Concern for the prospects and livelihoods of young people and future generations was the major theme across our engagement activities at Grangemouth. The retention of jobs and the local skills base on an intergenerational basis must be the core strategic aim of Grangemouth’s just transition plan, with concrete and measurable actions for delivery. As was clear from our discussions with educators and students at Forth Valley College, our colleges are of critical importance in achieving this, and their key strategic role needs to be reflected through greater levels of investment to truly maximise their value as a bulwark of just transition. Existing age restrictions on eligibility for modern apprenticeship funding should be widened as far as possible, given the obvious long-term strategic economic benefit of highly skilled people that we need across all sectors for this transition. Clear and measurable actions to guarantee access to high quality learning in STEM subjects will be crucial for Grangemouth’s young people, and the approach to careers advisement should be reviewed to ensure learners are not taught to privilege university education over college by default. This new social contract must also apply to those living within “the shadow of the complex” (as one resident put it to us) in the hazard consultation zone, enduring heavy traffic, dealing with emergencies and environmental risk and the continued lack of official lorry parks. More should be done by industrial owners and operators to mitigate the impact on residents and rebuild community relationships (historically sports and social clubs supported by employers have proven effective mechanisms here).
4. Grangemouth needs a new economic model that goes well beyond the refinery, leveraged to deliver enduring community benefit – All public money/subsidy deployed to support the transition at Grangemouth must come with conditionalities linked to just transition, whether in terms of fair work, community benefit, equity stakes, profit-sharing mechanisms, environmental needs (e.g. flood prevention), etc. The refinery is an important industrial facility and source of livelihoods but it does not define the Grangemouth economy. Given the failure to avoid a disorderly exit from oil refining, a strategic focus needs to be placed on the decarbonisation of the petrochemicals plant and the rest of the chemicals cluster both in terms of energy inputs and feedstocks. The social performance and potential of the Forth Greenport needs to be examined so that it delivers fair work, shares value with the community and achieves positive environmental impact. New businesses should also be attracted, including social enterprises and community energy initiatives. The Just Transition Plan for Grangemouth needs to stress transformation and diversification both in terms of sector and business model and show how the community living within the hazard consultation zone will meaningfully benefit. An investment plan for the Grangemouth ecosystem including public, private and social investment, ownership and stakes, and a smart use of public money tied to just transition outcomes and deploying equity, debt, guarantee and grant dimensions and attracting investment from Scotland’s citizen investors through ISAs and pension funds. The Scottish Government needs to develop a compelling case with limited fiscal resources to secure the right type of investment that will deliver long-term economic, social and environmental benefit. It also needs to negotiate more strategically with the UK to secure all-UK deals for significant clusters such as Grangemouth and make sure that labour rights and human rights are at the heart of the UK equivalent to the EU’s CBAM for the import of all carbon intensive products (including oil, gas and petrochemicals).

We look forward to hearing from you and supporting your work on this critical agenda.

Yours sincerely,

Professor Dave Reay and Satwat Rehman

Co-Chairs of the Just Transition Commission