UK chemicals industry faces crisis as INEOS plant closes

The United Kingdom’s last operational synthetic ethanol plant, owned by INEOS and located in Grangemouth, Scotland, has ceased production, marking the end of an era for the nation’s chemical industry. The closure, which results in the loss of several hundred jobs, underscores the challenges facing the sector, including high energy costs, steep carbon taxes, and a lack of supportive industrial strategy.

Over the last five years, the UK’s chemicals industry has experienced the closure of 10 major complexes, with no new plants built for a generation. By contrast, countries like the U.S.A. have seen significant investment in chemical manufacturing. The Grangemouth facility, one of only two synthetic ethanol plants in Europe, has played a vital role in producing a key ingredient for pharmaceuticals, including modern blockbuster drugs. Its closure highlights the competitive disadvantages faced by UK manufacturers.

 “De-industrialising Britain achieves nothing for the environment. It merely shifts production and emissions elsewhere. The UK, and particularly the North, needs high-quality manufacturing and associated jobs,” said Sir Jim Ratcliffe, chairman of INEOS.

Rising costs and sustainability challenges

Energy prices in the UK have doubled in five years and are now five times higher than those in the U.S.A. Carbon taxes further burden domestic producers, creating cost differentials that hinder competitiveness. The Grangemouth plant had achieved a nearly 50% reduction in carbon emissions over two decades but required further investment and government support to continue operations.

INEOS is calling for urgent government action to support manufacturing with globally competitive energy policies, a balanced emissions trading scheme, and trade policies that protect domestic industries.

The plant, which once produced enough ethanol to fill 90 Olympic-sized swimming pools annually, will now see its output replaced by imports. This shift could have wider economic impacts, with the net loss of 80 direct jobs and more than 500 indirect roles in the supply chain.