Grangemouth’s £200 Million Rescue Is Still Sitting Unused

£200 million set aside for Grangemouth from the National Wealth Fund has not been committed or spent, the Department for Energy Security and Net Zero has confirmed. The disclosure, in a September 2026 freedom of information reply, lands more than 18 months after then prime minister Keir Starmer announced the money on 23 February 2025.

Barrie Cunning, founder of Scotland 2050, has now written to Chancellor John Healey ahead of the 28 October budget to ask what sits in the pipeline, what happens to the cash if nothing clears the fund’s tests, and whether ministers will ease those tests so a project can actually be built. He also wants a summit of both governments, opposition parties and industry before Christmas.

None of the £200 Million Has Been Drawn Down

Starmer presented the allocation as co-investment with private firms, an “investment in Scotland’s industrial future” after Petroineos said it would stop refining. Petroineos, the Ineos and PetroChina joint venture, processed its last crude at Grangemouth on 29 April 2025. About 400 refinery jobs went. The wider complex had employed about 2,000 people and once supplied about 65% of Scotland’s refined fuels. The site, which opened in 1924, is being turned into a fuel import terminal with a much smaller staff.

The energy department’s wording is blunt. “No funding from the National Wealth Fund has been committed or spent on projects at Grangemouth.” That is not the same as saying the pledge was cancelled. Officials still describe the £200 million as ring-fenced and ready. By December 2025 they said around 140 enquiries had come in. Ring-fencing is not a cheque, and the FOI is the first public confirmation that none of that cheque has been written.

SNP MSP Lloyd Melville put the same fact in plainer terms, saying Labour had promised £200 million for Grangemouth and had not delivered a penny. Unite industrial officer Lorna Robertson said workers did not want to hear that the money was ring-fenced. They wanted to know when it would be invested and when there would be boots on the ground.

WHAT WE KNOW

• The pledge: On 23 February 2025 the UK government said the National Wealth Fund would put £200 million into new opportunities at Grangemouth, on top of a £100 million Falkirk and Grangemouth Growth Deal.
• The study: Project Willow, a £1.5 million EY study published on 19 March 2025, set out nine options and a public base case of about £3.5 billion of capital spending, with up to 800 jobs by 2040.
• The FOI: In September 2026 the energy department said none of the National Wealth Fund money had been committed or spent on projects at the site.

WHAT IS UNCONFIRMED

• The pipeline: Treasury has not published which propositions, if any, are under active National Wealth Fund review.
• The deadline: There is no public date on which unused Grangemouth funding would lapse, be recycled, or be spent another way.
• The summit: Cunning’s pre-Christmas meeting is a request, not a fixture in either government’s diary.

A smaller UK grant pot is moving. That money is not the National Wealth Fund, and treating the two as one is how a zero drawdown keeps being described as delivery.

A Positive Return Is the Lock on the Fund

The freeze is in the small print that accompanied the original announcement. Any National Wealth Fund deal must be an investible proposition. It must deliver a positive return, support growth or climate goals, back key sectors, and crowd in private finance. Those tests were how ministers showed the £200 million was serious capital rather than a grant with a flag on it.

And to attract private investment into the partnership we need we will allocate £200 million from the National Wealth Fund for investment in Grangemouth – an investment in Scotland’s industrial future.

Keir Starmer, then Prime Minister, 23 February 2025 announcement

Cunning does not ask Healey to scrap that discipline. He asks the Treasury to publish what is in the Grangemouth pipeline and to say what happens to the £200 million, and to the site, if no proposition meets the criteria by a defined date. He also wants room to flex the rules so a project can be secured for development. That is a polite way of saying the fund’s own tests are blocking the rescue the fund was hired to make.

The site’s operator has already said that if low-carbon manufacturing made commercial sense now, industry would already be doing it. A first-of-a-kind plant on a closing refinery is exactly the sort of bet a positive-return test is designed to slow. The irony is not hidden in a footnote. It was printed as a condition on the day the money was announced, and it is why the envelope can stay full while the plant empties.

The GOV.UK plan that followed Willow listed nine low carbon options for the site and repeated the same commercial bar. Scottish ministers put £25 million into a Grangemouth Just Transition Fund to help firms bring forward investible ideas. First Minister John Swinney said in March 2025 that the Scottish Government had already committed or invested £87 million around the cluster. None of that converts the National Wealth Fund into a grant.

MiAlgae and Celtic Renewables Fill a Narrow Gap

What has been spent is coming from other pots, and the sums are a different order of magnitude. In the November 2025 Budget the then chancellor set aside £14.5 million in grants to help turn Grangemouth into a low-carbon tech hub. That package sits beside the £200 million, not inside it.

On 11 December 2025 the UK government named the first project at the Grangemouth site: MiAlgae, a Scottish firm that grows algae on whisky by-products to make fish-free Omega 3. The UK grant is up to £1.5 million. Officials said the plant would create about 130 direct jobs at Grangemouth over five years and support 180 more across Scotland, 310 in all, and put an extra £53 million into the Scottish economy. They also said each tonne of algae would save 30 tonnes of fish. Eligible local workers were promised priority, including a job interview guarantee. MiAlgae founder and chief executive Douglas Martin called it a new chapter. It is not one of Willow’s nine industrial options.

Celtic Renewables is. The Scottish Government has put £6.23 million behind the firm’s plan to scale ABE biorefining, turning food, drink and farm waste into acetone, butanol and ethanol, with 149 jobs by 2029. On the first anniversary of Willow, 19 March 2026, ministers said Scottish Government money into new projects had reached £11.4 million, including £1.5 million of Scottish funding for MiAlgae on top of the UK grant, and that the cluster investment was expected to create 279 new direct jobs by 2029. That 279 is 130 plus 149. Scottish Enterprise had awarded another £10 million to new projects.

THE FUNDING POTS AT GRANGEMOUTH

Skills money is also live. By December 2025, 296 workers had received one-to-one support and 269 were in training or had finished it. By March 2026 ministers said 316 people had been helped through up to £1 million of Scottish funding and £1 million of UK funding. Unite and the Scottish Government also built a jobs priority scheme, with £41,000 to help the union run it, so firms that take Just Transition Fund cash must look first at former refinery staff. Unite Scottish secretary Susan Fitzgerald said the scheme came from workers who lost their jobs when the plant closed.

Those are real posts and real courses. They are not a replacement for a refinery. About 400 skilled jobs left in 2025. The cluster plan counts 279 new direct jobs by 2029, and Willow’s 800 sits in 2040. Climate Action and Energy Secretary Gillian Martin has called the Petroineos closure premature. Energy minister Michael Shanks, launching MiAlgae, said that when Labour took office there was no plan for Grangemouth. The plan that then appeared is still waiting on private capital that has to clear a return test.

Project Willow Still Needs About £3.5 Billion

Willow is the document everyone waves and nobody can fund at the scale it describes. EY looked at 300 technologies and kept nine, grouped as waste recycling, bio-feedstock, and a conduit for offshore wind. The public base case is about £3.5 billion of capital spending for a site that could, if all went well, support up to 800 jobs by 2040. That is 15 years after the refinery stopped. The nine credible projects and their costs make the gap with a £200 million co-investment fund obvious on a single page.

THE NINE OPTIONS IN PROJECT WILLOW

• Hydrothermal plastic recycling: Breaks down hard-to-recycle plastics into recycled naphtha and vapour, with a 2028 start, £120-250 million of capital, and 35-60 jobs.
• Dissolution plastics recycling: Uses chemicals to return polyethylene and polypropylene toward a virgin-like state.
• ABE biorefining: Ferments carbohydrate-rich waste into acetone, butanol and ethanol, the path Celtic Renewables is already on.
• Second generation bioethanol: Breaks down Scottish timber into bioethanol for blending and industry.
• Anaerobic digestion and pyrolysis: Turns bioresources into biomethane, with a small 2028 plant that could grow later.
• HEFA: Converts Scottish oil seed cover crops into sustainable aviation fuel and renewable diesel using low-carbon hydrogen, aimed at 2032, £740-900 million, and 90-120 jobs.
• Fuel switching: Replaces natural gas with low-carbon hydrogen in industrial heat, around 2030.
• E-methanol and methanol-to-jet: Uses hydrogen and carbon dioxide to make jet fuel from 2035, at £1.7-2.1 billion, with 240-270 jobs.
• E-ammonia: Makes low-carbon ammonia from hydrogen for shipping and chemicals, a growth case of £2-2.5 billion later in the 2030s.

The cheapest near-term idea, hydrothermal recycling, still asks for up to £250 million and a private partner who can live with the fund’s return test. The aviation and ammonia plants sit in the billions and do not run until the mid-2030s. A £200 million co-investment pot cannot carry a £3.5 billion base case unless private capital arrives at scale, and private capital has not arrived at scale. That is the specimen of the stall, not a mood. Willow mapped a cluster. It did not fund one.

Why Grangemouth Got Nothing From the SAF Pot

Sustainable aviation fuel is the Willow option politicians name first. Prime Minister Andy Burnham, who took office in July 2026 and made Healey chancellor, told MPs Grangemouth could be the home of sustainable aviation fuel. SNP MPs then invited him to the town to say how. The Advanced Fuels Fund, a UK grant scheme for those fuels, did not put Grangemouth on the list. Awards ran to £162.3 million for projects in England, over £30 million in Wales, and £3 million for a single Scottish project in Orkney.

That split is a second, separate insult, and it is easy to mash into the unused National Wealth Fund figure because both get talked about as “£200 million for fuels.” They are different instruments. The Wealth Fund is co-investment with a return test. The Advanced Fuels Fund is a grant competition Grangemouth did not win. Robertson called the fuels-fund result an insult on top of the empty Wealth Fund. UK officials said applications were scored through a set process and that they do not discuss individual bids.

There is also a policy snag inside Willow itself. One of the nine options would turn Scottish cover crops into jet fuel. UK rules have squeezed crop-derived aviation fuel, on the view that arable land should grow food. If that bar holds, the HEFA idea is not only expensive. It is poorly matched to the market the mandate is trying to build, and commercial SAF remains easier to import than to make on the Forth.

Demolition Drawings Are Already on the Table

While the large options stay on paper, work is under way to decommission the refinery. Plans are being drawn to knock down plant spread over about 200 acres, a demolition job on a scale Scotland rarely sees. That clock does not wait for a first-of-a-kind finance model. Pipe racks that could have hosted a new process unit become scrap once the cutters move in, and skills walk when people take jobs offshore, in England, or abroad.

The political charge, loud since the FOI, is that a promise was made for headlines and then parked. The mechanical point is colder. A fund told to crowd in private money and show a return will not write the first cheque for a plant the operator says would already exist if it paid. Small biotech and a biorefinery can occupy corners of the site. They cannot, at 279 jobs by 2029, rebuild what the refinery was to the town.

Cunning Wants Ministers in One Room Before Christmas

Cunning’s letter to Healey is the nearest thing to a deadline the site has. Scotland 2050, a long-term policymaking platform for Scotland, says it is not asking for large sums of new money. It wants existing funding reprioritised, commitments honoured, and more power for the Scottish Government to deliver. The Grangemouth passage of that letter is specific: publish the pipeline, say what happens to the £200 million if nothing qualifies, and look at easing the tests. Then put UK ministers, Scottish ministers, opposition parties and companies in one room before Christmas and agree a plan that can be built.

Healey’s budget on 28 October is the first of the Burnham premiership. He has already said it will be built on fiscal discipline and that he wants to move money and power out of Westminster. Cunning’s ask fits that language and collides with it. Flexing National Wealth Fund rules is a fiscal choice. Leaving the £200 million untouched is also a fiscal choice. Either way the budget is where the empty drawdown stops being a local grievance and becomes a line in a national plan, or does not.

FROM PLEDGE TO EMPTY DRAWDOWN

1. 23 February 2025: Starmer announces £200 million from the National Wealth Fund for Grangemouth, subject to investible propositions and a positive return.
2. 19 March 2025: Project Willow publishes nine options, backed by that £200 million and £25 million from the Scottish Government, and talks of up to 800 jobs by 2040.
3. 29 April 2025: Petroineos processes the last crude. About 400 refinery jobs go.
4. 11 December 2025: MiAlgae is named as the first new project, paid from the separate £14.5 million grant pot, not from the Wealth Fund.
5. 19 March 2026: Scottish ministers mark Willow’s first year with £11.4 million into new projects and a 279-job cluster figure for 2029.
6. September 2026: The energy department confirms none of the £200 million has been committed or spent. Cunning writes to Healey and calls for a summit before Christmas.

The Chancellor’s first budget is due on 28 October. Cunning has asked him to say, before then, what sits in the Grangemouth pipeline and what happens to the £200 million if nothing in it clears the test.