Hansard

I welcome the opportunity to open the debate on behalf of the Economy and Fair Work Committee. I highlight the committee’s two just transition reports, focusing on the Grangemouth area, and on Moray and the north-east of Scotland. I thank all those who contributed their views, the witnesses who gave evidence and the community groups and representatives who met us. I also thank the Just Transition Commission. Its briefings during the inquiries were invaluable and its publications support members’ on-going understanding and scrutiny.

We know that economic transformation is needed to support industry to reduce emissions, phase out polluting sectors, transition to greener jobs and meet net zero targets. We want the process of transformation to create opportunities for new skilled jobs, innovation and investment, but the process also presents risks for workers and communities that rely on emissions-heavy industries and sectors.

The definition of a just transition is important if we are to be able to recognise that it has been achieved. The committee heard a number of interpretations of a just transition, and we advised that, in providing a definition, the Scottish Government should establish

“clear and measurable targets for success.”

The just transition lab in Aberdeen has created a set of indicators, including not only traditional measures but social and community impact measures of a just transition.

In both inquiries, we heard about the crucial importance of communities not being left behind as the industrial transition takes place. In both inquiries, the affected communities called for improved transport links, quality housing and investment in their towns. The communities recognised the impact of changing industry and what that could mean for them. There was clear desire not to repeat the mistakes of the past. Coherent plans must be drawn up in collaboration with communities, and there must be resources to support that.

Although two reports are up for debate, recent announcements from Grangemouth have accelerated its need for a just transition. Our first report was on the Grangemouth industrial cluster. We concluded our report hardly weeks before Petroineos announced the closure of the oil refinery in 2025.

One of the remaining large industrial sites offering significant employment, the Grangemouth refinery has been one of Scotland’s largest manufacturing sites, employing almost 2,000 people. Petroineos has said that its activities in Grangemouth account for around 4 per cent of Scottish gross domestic product. However, that is not sustainable. Parliament has signed up to ambitious targets to reduce emissions. The industrial site at Grangemouth accounts for around a third of total emissions from companies in Scotland, and Friends of the Earth Scotland states that it is responsible for 9 per cent of Scotland’s overall emissions.

The committee published its report in June last year. At that time, recognising the inevitability of change at Grangemouth, the committee reiterated the importance of the Scottish Government setting out a clear vision in a just transition plan. In its response to the committee’s report, the Scottish Government referred to its 2022-23 programme for government, stating that it sets out

“a clear mandate to deliver a Just Transition Plan for the Grangemouth Industrial Cluster”,

and that that commitment is reiterated in its 2023-24 programme for government. The committee is therefore disappointed that the plan is still awaited.

The Scottish Government has committed to bringing forward the plan by the end of this year. However, while we have been waiting for that plan, a transition that looks pretty unjust is happening before our eyes. The committee did not anticipate, so soon after its inquiry, the announcement by Petroineos that the refinery would cease operation with the loss of hundreds of jobs. Although it is recognised that, if we are to achieve a shift to a low-carbon economy, Grangemouth in its current form has a shortened life expectancy, the sudden announcement of the refinery’s closure was a shock.

During the committee’s inquiry, Petroineos declined to give evidence to us, despite a number of invitations and a visit to the site. During our work, the committee was not made aware of the company’s plans for the refinery to close in the timescale that it has laid out.

I acknowledge that, following the announcement last November, Petroineos accepted an invitation to attend the committee, and attended in December. At that time, there were hopes, certainly among politicians and workers, that operations could continue beyond next year to allow more time for a green alternative to be established at the site. However, last month, it was announced that the refinery will close next summer, with the loss of 400 jobs, and, undoubtedly, with many more job losses in the wider supply chain. Converting the site to an import terminal will safeguard some of the workforce but with significantly fewer jobs than currently exist.

Against that backdrop, it is even more important to highlight the committee’s work and to emphasise how crucial it is that the Scottish Government has a meaningful just transition plan for the Grangemouth area. Recent remarks by the Just Transition Commission are sobering. In July, it said:

“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”.

There has to be greater direction and leadership in the bodies that have been established to support the transition locally. There has been confusion over the role of the Grangemouth future industry board. Although the board now has broader membership and is ministerially led both by the Scottish and UK Governments, one of its key roles is to implement plans that are still being prepared. Change is under way but plans risk being out of date before they are published.

Following last month’s confirmation that the refinery will cease operations next year, the committee acknowledges and welcomes the announcement from both Governments of a support package that is focused on local investment and employment support. However, there is an urgent need for a long-term plan. The Scottish Government’s advisory body, the Just Transition Commission, has emphasised the need for effort to be

“adequately resourced and approached as an urgent priority of national importance”.

The Economy and Fair Work Committee echoes that call.

In addition, delays in bringing forward Scottish Government strategies, such as the energy strategy and the just transition plan, regional just transition plans and the climate change update plan, have been frustrating. Delays have an economic impact on business, investor confidence and community action.

Following the committee’s work on Grangemouth, we turned our focus to a just transition for the north-east and Moray, and in particular to the Scottish Government’s just transition fund. The north-east is home to Scotland’s oil and gas production, generating significant economic activity and energy supply, and the sector supports 65,000 jobs in the region. I thank Aberdeen City Council, the Aberdeen arts centre and the Port of Aberdeen for hosting the committee, and I thank all the community activists and members who took the time to share their views.

In 2021, the Scottish Government established a 10-year, £500 million just transition fund specifically for the north-east and Moray. The Scottish Government has no other region-specific fund, either for the Grangemouth area or for any other area, and we wished to scrutinise the effectiveness of that fund.

The stated aim of the fund was to identify

“key projects, through co-design with those impacted by the transition to Net Zero, to accelerate the development of a transformed and decarbonised economy in the North East and Moray.”

During our inquiry, we heard concerns about the future of the fund. A total of £12 million was allocated to the fund during the current financial year, in comparison with £50 million last year. We recognise the Government’s stated commitment to the fund, but there are questions over the fund’s sustainability, given its current reliance on financial transactions.

There were also concerns about the type of funding and how accessible the fund is, especially to not-for-profit and community organisations. The use of financial transactions presents restrictions and constraints for many applicants. The committee supported calls for the Scottish Government to look further at the possibility of multiyear funding to allow for longer-term planning and certainty. It also supported calls for a mix of sustained revenue and capital funding, with sufficient revenue funding to support capacity building in communities to access the fund.

Skills featured in both inquiries, and the committee reiterates its concerns about the 24 per cent cut in the employability budget—concerns that were echoed by the Fair Work Convention at committee yesterday. The suspension of the flexible workforce development fund and the decrease in apprenticeships are also concerning.

The committee recognises the need for greater focus on developing and reskilling our current and future workforce for the transition, and calls on Government to provide greater focus and direction in that area, and for there to be greater coherence across Government to that end.

Both inquiries were concluded before the United Kingdom general election, and we now have a new Westminster Government. In those inquiries, and in the other work of the committee, we have recognised the scale of investment that is required and the need to leverage finance.

We await the impact of GB energy, and I urge the Scottish Government to work co-operatively with the UK Government on the significant challenges that we face in achieving a just transition. I recognise that the cabinet secretary shares that view.

I look forward to the rest of the debate. On behalf of the Economy and Fair Work Committee, I move,

That the Parliament notes the conclusions and recommendations contained in the Economy and Fair Work Committee’s 4th Report, 2023 (Session 6), Inquiry into a Just Transition to net zero for the Grangemouth area (SP Paper 405), and its 4th Report, 2024, (Session 6), Inquiry into a Just Transition for the North East and Moray (SP Paper 556).