THE owners of the Grangemouth oil refinery are set to earn a multimillion-pound windfall when the plant closes next year, due to a climate scheme loophole.
Petroineos (Ineos), which is a joint venture between Jim Ratcliffe’s petrochemical giant Ineos and Chinese state oil company Petrochina, could earn around £6m from the sale of thousands of free pollution permits.
A joint investigation by The Ferret and Democracy for Sale found that the UK Government will issue Ineos with credits in 2025 which could be sold for profit.
The permits come from the UK Government’s Emissions Trading Scheme (ETS) and are widely considered one of the “cornerstones” of the country’s decarbonisation plans to reach net zero.
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Under the scheme major polluters must buy a government permit for each tonne of polluting carbon dioxide they produce.
The scheme aims to encourage companies by incentivising them to lower emissions over time.
However, to help protect some companies from other businesses in the same industry in other countries with weaker climate laws the UK Government distributes batches of the permits for free.
According to the Ferret Grangemouth will receive a full year’s worth of these free permits in 2025 despite the oil refinery closing in the Spring with 400 of its workers losing their jobs.
The Ferret added Ineos could be left with a surplus of around 180,000 unused permits when Grangemouth closes which could then be sold on for profit to other companies in the scheme.
Scottish Greens MSP, Gillian Mackay (below), less than a mile away from the refinery, said Grangemouth’s closure will be “devastating for the workers who will lose their livelihoods and the community”.
She added: “Ineos should not be allowed to profiteer from any free permits, and the UK Government must do everything it can to stop this from happening.
“To hear that Ineos could potentially pocket £6m profit while its talented, skilled hard-working staff are forgotten is sickening.
“It is workers who need to see the benefit of any windfall rather than it being used to line the pockets of a greedy billionaire who has done enough damage.”
According to the Ferret’s investigation, since ETS launched in 2021, companies across the UK which are part of the Ineos Group have received nearly seven million free pollution permits calculated to be worth a combined £350m based on average prices over the past four years.
Among the businesses owned by Ineos which received more permits than they needed was its Forties pipeline in the North Sea which brings oil onshore.
It received 50,000 excess permits in 2021 and had a surplus of 17,500 in 2023, according to the investigation.
Ineos’s Grangemouth chemicals plant, which is separate from its refinery, was allocated 25,000 unused permits in 2023.
An investigation last year by the Financial Times found that a firm owned by Ratcliffe was allocated 148,000 permits for a chemicals plant in the north east of England that had already started its decommission process.
Former Scottish Labour leader, Richard Leonard MSP, said there is a “history of Ineos and Jim Ratcliffe” taking public money to “help generate vast profits at the expense of the workers and their communities”.
He has called for the loophole in the ETS to be closed.
Grangemouth will receive its free permits for 2025 at the end of February next year with a spokesperson for Ineos saying it had “fully complied with the rules and reporting requirements” of the scheme.
Reportedly the UK Government Department for Energy Security and Net Zero is considering a move to prevent windfalls from free permits for companies who close their sites.
However, there is no confirmation of these or a public timeline for their implementation.
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A spokesperson for the department said: “While we cannot comment on the credits of individual operators, the UK Emission Trading Scheme is helping us deliver our mission for clean power by 2030.
“We are reviewing free allocation rules to make the system as robust as it can be, while continuing to support UK businesses through the transition to net zero.”
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