Ineos’ Grangemouth chemical plant faces closure amid soaring costs

According to the Telegraph, Britain’s largest chemical plant, Ineos’s Olefins and Polymers site at Grangemouth in Scotland, is facing possible closure due to soaring energy costs and high carbon taxes. The facility, which produces essential materials for hundreds of UK plastics manufacturers, including ethylene and propylene, has been operating at a loss for several years. The company has offset its costs through global profits. Plant boss Stuart Collings warned that without a sharp drop in costs within the next couple of years, Ineos may be forced to shut it down, threatening 900 direct jobs and thousands more in the supply chain.

The plant’s heavy reliance on gas means it emits around one million tonnes of CO₂ annually, making it highly exposed to rising carbon taxes and energy bills. According to Ineos, Grangemouth pays about €100 million more per year for energy than a comparable US facility, plus up to €30 million in carbon taxes. UK industrial energy costs are four to five times higher than in China and the US, and significantly above EU levels. Industry figures warn that these costs, driven partly by climate levies, are hollowing out British manufacturing.

Local leaders and politicians, including the UK shadow secretary of state for Scotland, have described the potential loss of Grangemouth’s chemical operations as a catastrophe for Scotland’s economy. Ineos says the site could return to profitability if energy prices and carbon costs became competitive and market conditions improved.

Government support measures, such as the “Supercharger” initiative to reduce electricity prices, may offer limited relief since the plant’s main costs stem from gas use. Industry bodies are calling for a pause on the carbon tax to prevent further industrial decline, as official data shows output in energy-intensive sectors has already fallen by a third since 2021. The Scottish Government has yet to comment, while the Department for Business and Trade says it is in talks with Ineos and the wider sector.

Ceasing operations at the plant would follow the recent closure Ineos’s nearby oil refinery, which resulted in the loss of 400 direct jobs and thousands more indirectly. Operations ended in the second quarter of 2025 due to mounting financial losses and increased competition from more advanced refineries in the Middle East, Africa, and Asia. The facility will now operate as a fuel import terminal.