The unfolding situation at Mossmorran and Grangemouth highlights a broader trend impacting the industrial landscape across Europe and the UK. The decline of hydrocarbon-based industries is not an unforeseen event but a predictable outcome rooted in governmental policies and global economic shifts.
ExxonMobil’s decision to close its ethylene plant at Mossmorran is not due to any philanthropic shortfall but stems from a strategic move to allocate resources more efficiently elsewhere. The company has stated that “the UK’s current economic and policy environment” is a significant factor behind the plant’s lack of competitiveness, indicating a growing trend of shifting operations beyond not just Scotland, but Europe as a whole.
Similarly, Ineos is scaling back its operations across Europe, driven by the continent’s commitment to green energy, which has rendered it less competitive. According to Sir Jim Ratcliffe, Ineos’ chairman and CEO, a plant in Cologne incurs €250 million more annually in energy costs and carbon taxes compared to a facility in Texas. “Energy costs here,” Ratcliffe adds, “are four to five times greater than they are in the United States or the Persian Gulf.”
In the current economic climate, many companies are choosing to relocate. Hunting, an energy services provider, recently announced the transfer of its manufacturing base from Aberdeenshire to Dubai, underscoring the UK’s dwindling competitiveness as a business hub.
The response from opposition politicians points to an absence of a solid rescue strategy for Mossmorran. However, the broader narrative indicates a national choice to phase out the oil and gas industry, a stance supported by major political parties, including the Greens. This shift underscores a wider acceptance of the transition away from hydrocarbons, relegating detailed plans to secondary importance.
The concept of a “just transition” is frequently mentioned, yet often criticized as unrealistic. The notion that jobs in the oil and gas sector could seamlessly be replaced by employment in clean energy is deemed a fallacy. As it stands, industries dependent on hydrocarbons are fundamentally different from those in the renewable sector.
Calls for a smooth transition overlook the fact that progress towards net zero implies the cessation of existing industries. Political leaders across the spectrum, including Conservatives, Labour, SNP, Liberal Democrats, and Greens, have collectively perpetuated the myth of an easy shift. Achieving net zero by 2045 is a goal that requires acknowledging the inherent challenges.
The historical lesson of pit villages not transforming into financial service hubs serves as a cautionary tale. Similarly, transitioning petrochemical industry workers to roles in the “green industrial revolution” remains an elusive goal. The investment in the Scottish government’s Just Transition Fund illustrates the challenge, having spent £43 million to create only 110 jobs, some of which are in unrelated sectors like adventure tourism.
Critics argue that policies such as the energy profits levy, taxing oil and gas profits at 78%, discourage investments. Introduced by a Conservative government, the levy is now a point of contention, with Labour further compounding previous policy mistakes.
The SNP has also been clear in its stance against the oil and gas sector, signaling an end to the industry in Scotland. Despite the availability of viable oil and gas resources, the move towards climate change goals has been prioritized by nationalists, reflecting a strategic shift.
Companies are responding to these signals by relocating operations, a predictable outcome given the government’s stance. Despite this, the broader European and UK policy direction has arguably contributed to a more challenging environment for energy-intensive industries. While the transition towards net zero is deemed a worthy goal, it requires political leaders to fully acknowledge and accept the ramifications of their policies.
Original Story at www.thetimes.com