Oil Refining Sector

Thursday 11th December 2025 Westminster Hall

[Relevant document: Fourth Report of the Scottish Affairs Committee, The future of Scotland’s oil and gas industry, HC 459.]

15:00

[Martin Vickers (Brigg and Immingham) (Con)]

I beg to move,

That this House has considered the future of the oil refining sector.

It is a pleasure to see you in the Chair, Mr Western. I am pleased that this debate has attracted considerable support, particularly from north of the border, and that today The Times had a timely editorial on this issue.

My constituency is in northern Lincolnshire on the south bank of the Humber, which has been christened “the UK’s Energy Estuary”. In recent years, the Humber has become a world-leader in the offshore and renewable energy sector—something we are proud of locally. However, while the Humber is full of opportunity for offshore and renewable energy and will play a significant role in the UK’s net zero efforts, we must not overlook the UK’s carbon energy needs as we make the transition to cleaner energy sources. We must face the fact that a significant portion of our total energy consumption still comes from oil, gas and coal and will continue to do so. The UK’s annual total primary energy consumption is around 130 million to 140 million tonnes of oil equivalent; fossil fuels made up roughly 79% to 81% of that in the year 2022-23.

The Humber has played a significant role in ensuring that that demand is met. Until the crisis at Lindsey oil refinery in my constituency earlier this year, the Humber could boast of producing a third of the UK’s refined fuel, with two of the UK’s six major oil refineries based in the Humber region. Now, as we approach the end of 2025, only four operational refineries remain in the UK, following this year’s closure of Grangemouth, with significant job losses, and the uncertainty at the aforementioned Lindsey refinery where over 400 people are employed. Even more striking is the fact that the number of refineries is down from 18 in the 1970s.

Sadly for the oil refining sector, most people do not even realise that it exists or appreciate its importance, yet the sector is a vital part of the UK’s energy security. A number of our crucial sectors rely on it, including the transport industry and defence sectors. All Members will know that oil refineries produce products that are essential for our critical energy needs, such as petrol, diesel, jet fuel and fuel oil. The Lindsey refinery has a capacity equivalent to around 35% of British petrol consumption and 10% of British diesel, and also supplies aviation fuel to Heathrow via pipeline.

Yet the House of Commons Library states:

“Refinery output in 2024 was 48 million tonnes. This was 55% below the 1973 peak.”

Output in 2024

“was around 14% below levels from the late 2010s and more than 40% below output from the start of the century.”

That is worrying considering that refineries supply 47% of the UK’s final energy demand, as 100% of aviation, 97% of road and 61% of rail transport still relies on liquid fuels. The refineries also support 100,000-plus jobs across the UK, with 4,000 directly in the refineries. We collect £37 billion annually in tax—that is duty and VAT—from them, and they deliver low-carbon fuels that have an impact equivalent to removing 3 million cars from the road each year. That is not to mention the fact that ours are among the lowest-carbon refineries globally—in fact, 80% of the UK’s top import partners have a higher carbon intensity—yet despite their importance we have seen the closure at Grangemouth and the uncertainty at Lindsey.

What does the future hold? UK oil refineries continue to face a number of challenges. Of course demand for refined products will decrease as the country continues to reduce its emissions in accordance with the legally binding commitment to achieve net zero emissions by 2050, though that target may change. Moreover, energy is the single largest cost of operating a refinery. The industry faces high energy costs, and carbon costs negatively impact the competitiveness of UK refineries. UK refineries are essentially competing with one hand tied behind their back while their competitors pay little or nothing in carbon costs. That is on top of the issue of unequal access to decarbonisation opportunities.

Our route to lower emissions must not come at the price of deindustrialisation or at the expense of our energy security. As an editorial in The Times today points out, some in the Government are so hostile to fossil fuels and so beholden to the green ideology that they are willing to sacrifice our future income and tolerate the jobs that are being lost. We must put the national interest first. Moreover, our climate targets are still some way off, so in the meantime we must continue to rely on the products that refineries produce.

The sector remains vital for today’s economy, yet our refineries are closing. We must realise that closing UK refineries does not reduce demand; it merely shifts production abroad. That, of course, often leads to higher emissions. We are thereby exporting jobs outside the UK while failing in our efforts to cut emissions. Losing further capacity would therefore leave the UK increasingly dependent on imports and the unpredictability of global politics, relying on other nations that often have weak rules on environmental protection, labour rights and safety.

Moreover, once a refinery closes, it does not return. The skills, infrastructure and investment are lost permanently. We must also consider the impact on the local economy and local people that closures cause. At Lindsey, over 400 people are directly employed on the site, and well over 1,000 rely on it through the supply chain. As North Lincolnshire council said in its position statement on Lindsey oil, the implications of any closure of the site will have far-reaching consequences for the local economy and the people employed directly and indirectly.

The council has stated that the potential closure of the refinery will have a significant impact on local market confidence, particularly following the turmoil at British Steel earlier this year. As such, failure to properly support the businesses impacted could multiply exponentially the impact of the closure. Moreover, the south Humber bank, where the site is located, relies on the interconnectivity of its industrial supply chains. As such, the refinery is not an isolated operator but an integral node in a wider network that supplies products to downstream users, and disruption at one site can quickly ripple across the regional economy.

These integrated clusters work in tandem, reflecting the modern industrial model, and our economic resilience relies on the system being maintained, thereby ensuring long-term industrial sustainability in the UK. I note the Scottish Affairs Committee’s conclusions on the handling of Grangemouth, which can be found in the Committee’s recently published report on Scotland’s oil and gas industries. I am sure the Chair of the Committee, the hon. Member for Glasgow West (Patricia Ferguson), will delve more deeply into the detail of the report, though let me quickly say now that the report stated that both the UK and Scottish Governments should have acted sooner to prepare for the crisis in Falkirk.

[Euan Stainbank (Falkirk) (Lab)]

I hear the hon. Member on the strategic importance of oil refineries; we have seen it in Grangemouth for over 100 years. Back in February 2024, in response to a question from the former Member for East Lothian, the right hon. Member for Richmond and Northallerton (Rishi Sunak), the then Prime Minister, described the closure of Grangemouth refinery as “obviously a commercial decision”. Does the hon. Member for Brigg and Immingham (Martin Vickers) agree with that characterisation by the former Prime Minister, who was at the time his party’s leader, given that he is describing—and I agree with him—the strategic role that oil refineries play in his community?

[Martin Vickers]

The hon. Member makes an important point: it is the case that such decisions are not solely commercial; the Government must consider, more widely, energy security and the impact on the economy.

In preparation for this debate, I received representations from various interested parties that are dependent on the oil refining sector. They have outlined their concerns, some of which I have mentioned already, and the solutions they would like to see put forward. One issue that has been mentioned to me is the expansion of the scope of the carbon border adjustment mechanism to include oil refineries’ products. As Members may know, the CBAM is a tax levied on goods at the border based on their carbon content. Expanding the CBAM to products from oil refineries based overseas, as the Government proposed in their autumn Budget, would enable domestic oil refineries to remain competitive and stop them fighting with one arm tied behind their back.

I mentioned that the refining sector is subject to ever-increasing regulatory burdens and carbon pricing. Sadly, the impact of net zero politics, particularly the UK emissions trading scheme, is driving rapid and sustained deindustrialisation of the British economy. Refining receives substantially lower free allowances under the scheme compared with other industries, such as steel and cement, and ETS costs are one of the highest expenditures in a refinery’s operating budget. Competitors in other regions do not face those costs, which seriously damages the competitiveness of UK refineries. We must realise that the ETS damages our energy security and should be urgently repealed. Longer-term solutions may include bringing refined products fully into the UK CBAM or ensuring that the UK retains control over refineries in any future UK-EU carbon market linkage agreement. If we do not want to let this issue get any more out of control, we must act now.

Before concluding, I refer back to the situation at Lindsey oil, because the company is in administration. We have a situation in which FTI Consulting, acting on behalf of the official receiver, is engaged in discussions with potential buyers and investors. Those talks are rightly confidential, and when questioned, Ministers have repeatedly said that they are awaiting the recommendations from FTI. That inevitably feeds speculation through the grapevine that angers employees and their union representatives. I have held meetings with two consortia that are interested in buying the whole site and continuing operations, and the leader of North Lincolnshire council has held discussions with a third. Do the Government support a deal that would retain the refinery complete? Until now there has been no answer. I again ask the Minister: do the Government favour that option and, if necessary, would they provide some support?

Have the Government instructed FTI to prioritise jobs? A letter from Unite the Union to the Secretary of State throws that into doubt. In the letter, Unite says:

“In this vein you informed me and the Unite reps for the refinery on two occasions that you had advised FTI that bids which save the jobs should be prioritised and that if needed, there could be government money for a viable bid which saved the site.”

Is Government money available? The reply seems to throw doubt on all of that. The reply from the Minister for Energy to Sharon Graham at Unite says that the Government

“have made repeatedly clear that long-term and sustainable employment is a priority for the Government”,

but that does not necessarily mean it is a priority that has been passed on to the official receiver.

At a meeting with me and the hon. Member for Great Grimsby and Cleethorpes (Melanie Onn), the Minister for Energy assured us that if the worst came to the worst and the refinery were to close, or there were to be large- scale job losses, one option would be for the Government to work with MPs, local authorities and other agencies to form a taskforce to consider what help and support would be available to revive the local economy. Is that offer still open? My understanding is that the Government have said that there will be no further redundancies until the end of March, which I welcome. Could today’s Minister clarify whether the Government are meeting the cost of that, or whether the costs will be taken into account by the administrators and the amount available to creditors adjusted accordingly?

The future of not just Lindsey oil but the whole oil refining sector is at stake. The Government must review their current position and act to secure the industry for the future.

[Several hon. Members rose—]

[Matt Western (in the Chair)]

Order. I see that seven Members are looking to speak. Let us start with six-minute speeches and see how we progress.

15:14

[Douglas McAllister (West Dunbartonshire) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Western. I thank the hon. Member for Brigg and Immingham (Martin Vickers) for securing this important debate. I speak in my capacity as a member of the Scottish Affairs Committee, which has recently published a report, “The future of Scotland’s oil and gas industry”, as part of our inquiry into Scotland’s role in the UK’s energy transition. I thank the hon. Member for allowing the report to be tagged to this debate on the Order Paper.

The closure of the Grangemouth oil refinery, following the Petroineos announcement in November 2023 that refining operations would cease at the site, was a key focus of our report. The Grangemouth oil refinery operated for over a century, and was Scotland’s only oil refinery before refining officially ended in April this year. The refinery’s closure has left some 400 employees and the wider Grangemouth community facing deep uncertainty. The Prime Minister’s pledge of £200 million through the National Wealth Fund for future industries at the site was welcome, as was the Scottish Government’s announcement of £25 million to help establish a just transition for Grangemouth. The extra £14.5 million announced in the Budget was another welcome boost. However, the Government have not yet set out how that will be delivered and how it will tangibly result in jobs.

The Committee visited the Grangemouth site during our inquiry. We heard oral evidence from Petroineos, the company that owns the refinery, from its parent company Ineos, from union representatives, from Project Willow and from the Forth Valley college, which provides the skills support for former refinery workers. Our report concluded that both Governments should have acted sooner to set in motion plans for the site’s future and to prepare for resulting job losses. That lack of action created an employment gap and hardship to the local community that could have been avoided.

We said in our report that Grangemouth is the “canary in a coalmine” and a stark warning of what is to come. That warning proved prescient: just a few months on from the publication of the report, ExxonMobil announced its plans to shut the Mossmorran ethylene plant in February 2026. That is yet another example of Scotland’s rapidly changing industrial base. As we move away from our reliance on fossil fuels, industrial transition will only accelerate. For our national resilience, we must learn from these cases.

The Grangemouth case has illustrated the need for the Government’s active stewardship in the energy transition. Our report recommends that the Government set out clear principles that outline the conditions and actions that underpin a just transition. We recommend principles that emphasise the importance of early Government intervention, proactive engagement with workers and communities, and a focus on decent jobs. Those principles should draw on best practice and ensure that transitions are fair and planned, not rushed and reactive.

Last month, the Minister for Energy, my hon. Friend the Member for Rutherglen (Michael Shanks), said that announcements will be forthcoming on the investment proposals brought forward by the National Wealth Fund. I understand that the first project to be funded on the site was announced today: a groundbreaking biotech company using by-products from whisky distillation, which is jointly funded by both the UK and Scottish Governments’ £3 million of investment and hopes to deliver over 300 good jobs. That announcement is welcome.

The timescales of establishing future industries at Grangemouth and the jobs that they will create all hinge on the types of investment proposal put forward. I commend the Committee’s report to all hon. Members. A response from the Government is expected by Christmas; I hope that that response will recognise the sentiment in our report that continued momentum on Grangemouth’s future is vital. Project Willow must not be left to gather dust while jobs are at stake. Communities that have powered our economy for generations deserve certainty and a fair future.

15:18

[Sir Edward Leigh (Gainsborough) (Con)]

I thank my hon. Friend and constituency neighbour the Member for Brigg and Immingham (Martin Vickers) for securing this timely debate about Lindsey oil refinery, which employed many of my constituents. The closure is a disaster for our Greater Lincolnshire area. It is, I believe, a direct result of green policies that are no longer logical.

I am no climate change sceptic. I am prepared to have investment in green energy—we are world leaders in offshore wind in the Humber, are we not? We are doing our bit, but the Government are taking it to new heights. All ideologues are dangerous, but fanatical ideologues are the most dangerous of all, and that is what we have in our Secretary of State. We have these ludicrous targets; I commend the editorial in The Times today calling it “targetitis”. Originally, Theresa May arbitrarily set a limit of 2040. Where did that come from? Boris Johnson, in his bumptious, casual way, not considering the evidence, unilaterally cut it down to 2030. Where did that come from? All this is massively damaging.

I would not mind if we were actually making a difference to global warming, but we are responsible for only 1% of global emissions. According to some estimates, our total global emissions are less than China’s annual accrual. We are making absolutely no difference! China holds us in contempt. It is doing to us what we did to it in the 19th century. China is totally ruthless.

[Luke Taylor (Sutton and Cheam) (LD)]

Will the right hon. Member give way?

[Sir Edward Leigh]

I give way to the hon. Gentleman, who is the son of a very distinguished councillor in my constituency.

[Luke Taylor]

It is a pleasure to contribute to this debate. Together, the 100 smallest carbon-emitting countries represent more carbon emissions than China on its own, so if all those smaller-emitting countries make their own contribution it can make a bigger contribution to cuts than China. Does the right hon. Member not agree that those small measures add up to a huge difference globally?

[Sir Edward Leigh]

That may be a fair point. I said at the beginning of my speech that I am not a climate change sceptic. Everybody is prepared to do their bit.

I have already mentioned wind farms, but what about solar energy? In Lincolnshire we are prepared to have solar energy on our farmland, but in my constituency 16,000 acres of the most productive land in the entire country—enough land to feed the city of Hull every single year—is put under solar farms, with panels manufactured in China, destroying our ability to feed ourselves. There has to be a balance, but at the moment we do not have one. We are importing so much from our dear friends in Norway that they are opening 250 exploration wells.

This debate, secured by my hon. Friend the Member for Brigg and Immingham, is extremely timely. The closure of Lindsey oil refinery is a complete disaster. It employs many of our constituents and is vital for the whole of our industrial infrastructure. We need strong domestic refining capacity. The Secretary of State goes on about energy security all the time, but that would strengthen energy security at a time when we are already importing two thirds of our gas and increasing volumes of refined fuels.

I would not mind these green policies, but we are not actually contributing to tackling global warming; we are simply exporting carbon emissions to other countries. It is complete madness. If we were sensible about this, and if it were possible to get some sort of global recognition of the problem, maybe we could start to tackle it. Relying on foreign refiners means exporting jobs and value overseas while leaving Britain more exposed to global price shocks and geopolitical risks. Expansion of the UK refining sector protects thousands of highly skilled, well-paid jobs. It also supports an entire region and supply chain in engineering, fabrication, logistics and maintenance. Those are precisely the jobs that sustain industrial communities and create apprenticeships for young people.

Refining underpins every major industrial sector. Manufacturing, aviation, defence, logistics, agriculture and pharmaceuticals all depend on reliable supplies of fuels and petrochemicals. Allowing it to pass into decline would simply shift production to countries with weaker environmental standards.

Lindsey oil refinery was a major economic anchor for our area. We know that it was put into administration. I share the comments of my hon. Friend the Member for Brigg and Immingham: this is a national crisis in terms of national policy, which is wrong, and of local policy. The people of Greater Lincolnshire demand action from this Government, and they demand it now.

15:24

[Brian Leishman (Alloa and Grangemouth) (Lab)]

It is a pleasure to see you in the Chair today, Mr Western. I thank the hon. Member for Brigg and Immingham (Martin Vickers) for securing this highly important debate, and I draw everyone’s attention to my membership of Unite the union.

Since coming to this place, I have repeatedly raised the issue of the Grangemouth oil refinery closing, with 435 jobs lost on site and 2,822 lost in the wider supply chain. Closure means an end to a century of oil refining on the site and to a generational employer for Grangemouth people. Nearly every family in the town has had someone, or knows someone, who worked at the site. There is no doubt about it: local businesses will feel the pain of the closure. The hairdressers, barbers, small independent retailers, hotels, restaurants, pubs and garages are the very businesses that make up the heartbeat of the local community and the town’s economy. They are all negatively impacted.

The closure is more than just a local constituency issue. It is Scotland’s biggest industrial issue in four decades, it is safe to say, since the end of the coalmining industry. To put the matter into the national context, the Grangemouth refinery was worth more than £400 million per annum to the Scottish economy, according to both Scottish Enterprise and PwC. While conflict rages on in Europe, British people have been susceptible to the resulting price shocks and disrupted supply chains that have impacted the oil industry in Europe. At this perilous time, with refining ending at Grangemouth, Scotland is now in the ridiculous position of importing our own oil. The energy-abundant nation of Scotland is reliant on global logistics and outside influences for our oil products. It is incredible that we have lost our self-sufficiency.

Why has this happened? Why did the refinery close? I will say something different from what right hon. and hon. Members have mentioned so far. Let me be clear: the idea that the Grangemouth refinery closed as part of trying to achieve net zero, or as part of some woke green agenda or an environmental campaign, is utter nonsense. The real reason—the heart of the matter—is Petroineos. It is made up of private capital, Sir Jim Ratcliffe’s Ineos and a foreign Government in the form of Chinese state-backed PetroChina. It controlled the Grangemouth refinery, a key piece of Scottish and British national infrastructure, and closure was a commercial decision.

Closure happened because it was more profitable for a private company to make hundreds of workers redundant and operate Grangemouth as an import terminal. It was international capital concerned with the corporate greed of a billionaire owner, with shareholder dividends their priority. That is the ruthless nature of how international capital works. Ratcliffe has massively weakened Scotland’s national economy and jeopardised our country’s energy security for his own needs. I am disgusted by Governments allowing that to happen, and by the pandering to Ratcliffe in spending billions of pounds to help with the regeneration around Old Trafford and hundreds of millions of pounds to provide a loan guarantee for his plant in Belgium.

I make absolutely no apologies for being ideological. As the country sacrificed state ownership of vital infrastructure, we lost control of our own refinery. We have seen job losses, an exodus of skills and talent, local shops closing and all the social consequences that follow deindustrialisation. That is what has happened to former industrial towns the length and breadth of the United Kingdom. For goodness’ sake! The country needs a different industrial direction, to bring an end to being at the mercy of private capital and foreign Government influence.

There is a clear, coherent case for Government ownership. It is in the public interest. In questions to the Department for Energy Security and Net Zero and to the Treasury, I have asked what ownership stake the UK Government are willing to take in future industries at Grangemouth. I put the same question to the Minister this afternoon.

Just as I make no apologies for being ideological in my opinion of public ownership, I make no apologies for criticising both the UK and Scottish Governments. We know that oil will be part of the energy mix for decades to come, so it is time for both of Scotland’s Governments to be bold. The existing infrastructure of the Grangemouth refinery is largely still in place, and there should be a conversion to sustainable aviation fuel there.

We have signed up to highly ambitious mandates, so let us try to meet those targets. Successful conversion of refineries is there for everyone to see—at La Mède in France, Eni’s Venice refinery in Italy and Phillips’s Rodeo refinery in the US. I say this to the Minister today: what happens at Grangemouth will go a long way in deciding how we shape our future economy, who controls it and who this Government actually serve and work for.

15:31

[Seamus Logan (Aberdeenshire North and Moray East) (SNP)]

It is a pleasure to serve under your chairmanship, Mr Western. I commend the hon. Member for Brigg and Immingham (Martin Vickers) for securing this important debate. I also acknowledge the contribution of the hon. Member for Alloa and Grangemouth (Brian Leishman), who spoke with his usual passion, but today I believe with a degree of anger as well, and rightly so.

A just transition supports and protects existing oil and gas sector workers through—I emphasise “through”—the transition to a world-class renewables workforce, a transition in which Scotland is well placed to lead the world. I want to share the following quote:

“‘just transition’ has now become meaningless for so many people and that’s a failure… People should feel like that’s not something done to them, but something they’re part of shaping.”

That was said by the Minister for Energy in a recent interview with the Holyrood magazine. Sadly, for thousands of workers in North sea upstream, midstream and—in the case of refining—downstream jobs, a just transition is far removed from the reality that they face.

The workers now made redundant are angry at the UK Government’s failure to support their transition. Their families and communities are also angry, as are we, their representatives. We know that the just transition is doomed to fail because of three things: first, the failure to press forward with renewable energy schemes in north-east Scotland at the urgent pace that is required; secondly, the failure to allow new exploration licences while persisting with the crippling energy profits levy on the oil and gas sector; and thirdly, the failure to protect refinery jobs at Grangemouth and Mossmorran. Today I learned that 7,000 business leaders, workers and companies have signed a letter to the Prime Minister in which they demand change to the EPL to avoid the projected 1,000 job losses per month.

Looking specifically at the situation in Grangemouth in Scotland, Anas Sarwar, the leader of the Labour party in Scotland, said that a Labour UK Government would

“step in to save the jobs at the refinery and to invest in that transition…and we would put hundreds of millions of pounds behind it to make it a reality.”

No doubt the Minister will cite the £200 million promised to support Grangemouth, and reference has been made to the Scottish Government’s contribution. Of course, today brings good news in that regard, with MiAlgae’s welcome investment announcement on top of the Celtic Renewables project. The Scottish Government are an active partner in funding those projects, and we welcome the investment. However, the funding announced today amounts to only £7.73 million in total, and the 280 jobs —perhaps more—will not be fully realised for five years, if ever. Where is the rest of the promised £200 million? Where is fulfilment of the promise made by the leader of the Labour party in Scotland? Where is the intervention that occurred for Scunthorpe? People need work now. Families need certainty, but all they face this Christmas is uncertainty. In the meantime, the refinery workforce has been largely cast aside.

Looking further afield in Scotland, including Prax Lindsey, the UK has lost a third of its oil refineries just this year, on this Government’s watch. Furthermore, it is an uncomfortable truth for the Government that the UK’s uniquely high energy costs—the highest in the G7—are one of the main factors harming the refining sector and industry more generally.

I acknowledge that the North sea basin is in decline, but the importance of sovereign capability in national security is often repeated from the Government Front Bench. It is particularly true in defence, but how can defence capability be even remotely claimed if the vital fuel needed to operate tanks, ships and aircraft is acquired in the quantities needed through imports from abroad? Those imports can hardly be described as secure in this currently very dangerous world. Refining sites, as mentioned by the hon. Member for Alloa and Grangemouth, have great potential for such things as sustainable aviation fuel production, but this remains a jam tomorrow promise. This is not remotely a positive trend for our economy, our environment, or, vitally, our national security.

I must press the Minister to address these questions. How can she tell the thousands of directly employed and supply chain workers at Grangemouth, Prax Lindsey and the many other sites and companies that are shedding workforce in the oil and gas sector that they are part of shaping the just transition? What assurance can she give those workers that the future is bright, especially when the Acorn project in my constituency faces growing uncertainty, for example? I urge her to address those questions in her speech. The destruction of the refinery jobs is a repetition of the Thatcherite coal mine closures and the steel plant shutdowns, with no plan for the workers, their families and the communities affected. We have long memories in Scotland. Only with the full powers of independence in areas such as energy policy will the workforce at Grangemouth and elsewhere in Scotland’s oil and gas sector get the priority and the just transition to the future that they so richly deserve.

15:36

[Euan Stainbank (Falkirk) (Lab)]

It is a privilege to serve under your chairship, Mr Western. I congratulate the hon. Member for Brigg and Immingham (Martin Vickers) on securing this important debate, and I agree with his comments regarding the strategic importance of oil refineries for their communities—if only colleagues who were previously in government had grasped that before the decision by Petroineos to close Grangemouth in November 2023 was announced.

As has been remarked by colleagues, 2026 will mark the first year since, I believe, 1850 that Scotland does not have an oil refinery. This year marked 101 years since the start of oil refining in Grangemouth, and the date that refining ceased in April 2025 was a devastating time for the community I represent, the community of my hon. Friend the Member for Alloa and Grangemouth (Brian Leishman), the whole of Scotland and the United Kingdom. I remember sitting in the Falkirk council chamber when the announcement was made. The implications were obvious immediately: the loss of many of the highest-paying jobs in the Falkirk area, and the loss of a substantial tax base for Falkirk council and the Scottish and UK Governments. The announcement was completely unexpected for those of us in opposition parties, who were not in the know.

The failure of Government, as my hon. Friend the Member for West Dunbartonshire (Douglas McAllister) has articulated on behalf of the Scottish Affairs Committee, to prepare our community or have a plan in place for a no job loss transition at Grangemouth refinery has become symbolic of a similar story happening across industrial communities for decades. It was infuriating to find out from the Scottish Affairs Committee report that, through late 2023 and 2024, when it would have mattered, many of the decision makers failed to act to prevent the unjust transition at Grangemouth.

Petroineos confirmed to the Committee in April 2025 that, in the years prior to the announcement in November 2023, the then UK and Scottish Governments had requested information from the company, and subsequently chosen not to make an investment decision that would have saved the refinery. It was engaged for years with Government and no one lifted a finger to stop the path to the closure of refinery operations. Although I wish we had grasped the reality of the situation far more clearly in the transition from opposition to entering government, I welcome the determination of Ministers to get investment into Grangemouth quickly so that we can deliver that new industry to the community.

Today—two weeks after the Chancellor allocated further Government funding to Grangemouth to speed up investment decisions—marks an exceptionally positive announcement for the area. Up to 310 jobs are coming to Grangemouth to support the construction and operation of MiAlgae, a Scottish biotech success story. That does not, however, diminish the fact that many high-paid, high-skilled jobs have been lost, and the constant worry that they and the industry will never come back is justifiably the primary emotion that still grips my community.

We have an obligation not to repeat the mistakes of the past. We do not want the workers at Grangemouth, many of whom have not found employment since the closure in April, to be lost to the middle east, America or Norway. There is still a future for high-skilled refining workers at Grangemouth. That is why I welcome the Skills Transition Centre, announced back in February, funded out of the Falkirk and Grangemouth growth deal, which this Labour Government enhanced by £10 million when we came to power. However, the college that contains the skills centre is facing an existential financial crisis. One of the three campuses that constitutes Forth Valley college—the Alloa campus, in the constituency of my hon. Friend the Member for Alloa and Grangemouth —is directly jeopardised by the 20% real-terms cut inflicted on colleges since 2021 by the SNP Government.

The pathways for local kids to grasp the new industrial opportunities coming to our community will be actively barred if Government settlements for our further education sector are insufficient. Any consolidation that followed the closure of the Alloa campus would affect the courses available for thousands of young people in Falkirk, Stirling and especially Clackmannanshire. Kenny MacInnes, the principal of Forth Valley college, rightly reminded a conference recently that the college will be an instrumental part of whatever comes next at Grangemouth. The Scottish Government must bear that and Colleges Scotland’s recently published report in mind when they set their budget next year if they ever want to speak credibly about rebuilding opportunities in my community.

[Seamus Logan]

I note the hon. Gentleman’s remarks, but is he concerned about his own Government’s commitment to this important debate, given the row upon row of empty seats on the Government Benches?

[Euan Stainbank]

I note the attendance, and I welcome the hon. Gentleman’s presence in this debate. However, when we were talking about the Grangemouth refinery at the time that it mattered, in the previous Parliament, I note there was an active lack of interest from SNP politicians, with the exception of the former Member for East Lothian, who is no longer a member of the Scottish National party. I have raised the concern, and I have asked for direct intervention from my Government about skills funding for the college during Treasury questions. I very much welcome the enhancement of the local growth deal, which enabled the skills centre to be built.

I will talk about the future of the refining sector. Since being elected I have repeatedly made the case that the best opportunity for Grangemouth is in refining biofuels, especially sustainable aviation fuel, due to its industrial role as a fuel supplier for Glasgow and Edinburgh throughout history, its equal proximity to Scotland’s two largest and busiest airports, its operational capacity and its proximity to a town that has the infrastructure necessary to host the required contractors.

The £200 million national wealth fund commitment to Grangemouth first proposed by Scottish Labour MPs late last year, fought for by Scottish Labour Ministers and announced by the Prime Minister in February, should be spent primarily on developing a new anchor industry for our community that complements the existing skills profile of refinery workers. Ideally, we would not give private international capital a full stake in the project. Many businesses are interested in investing in refining biofuels at Grangemouth, and they are calling for policy certainty during the transitional phase into sustainable aviation fuel.

Legislative measures such as the SAF mandate and the revenue certainty mechanism go a long way towards that, after the Government picked up the work that was delayed for far too long under the previous Administration. However, I would like the Minister to address the following points. Clarity on the revenue certainty mechanism and the pre-contractual work that can be carried out is crucial. Will the Government enable pre-contractual work to be carried out, as we did through contracts for difference, so that there are no delays once the RCM comes into effect later next year?

Project Willow mentioned a proposal to delay the hydroprocessed esters and fatty acids cap. Despite substantial questioning from me, that has not been addressed yet by Ministers at either the Department for Energy Security and Net Zero or the Department for Transport. Will the Government consider altering, delaying or lifting the cap following that recommendation? Finally, it would be useful to have an update on how the £200 million is being deployed, following the welcome announcement on MiAlgae this year.

15:44

[Lee Anderson (Ashfield) (Reform)]

It is a pleasure to serve under your chairmanship, Mr Western. Of course, we have been here before with industry in this country. I remember what happened to the coal mines back in the 1980s. I worked in the coal mines in Nottinghamshire and Derbyshire, and the whole industry was decimated by the Conservative Government at the time—

[Sir Edward Leigh]

You were a Conservative once!

[Matt Western (in the Chair)]

Order.

[Lee Anderson]

If the right hon. Gentleman wants to intervene, he is more than welcome.

What the Government did not realise at the time is that when they got rid of a coalmine—each coalmine had a football team, a rugby team, a cricket team, a community club, a miners’ welfare, a brass band and a bandstand in the local welfare grounds—it destroyed whole communities, and those communities will never come back. They will never be the same again.

Fast forward 40-odd years and we have a Labour Chancellor and Government, who we would think would protect these industries. Look at the hypocrisy in that part of the world. We have Drax power station, which used to burn coal from a nearby coalmine, just a few miles down the road. I think that was shut about 10 years ago. I remember the Energy Secretary at the time was campaigning to keep it open. How things have changed! The power station now burns wooden pellets from trees chopped down in North America—in Canada. They chop the trees down and put them on diesel-guzzling cargo ships. They then chop them up into pellets using diesel-guzzling machinery on the ship. They then come to this country, are put on diesel-guzzling cargo trains and transported to Drax power station, where we set fire to them. And we say that is renewable energy. That costs the British taxpayer about £1 million a day in subsidies. I think it has cost about £10 billion so far since we have been using wooden pellets there.

Just a few miles down the road we have the perfectly good Lindsey oil refinery, which appears to be doomed, with 400 jobs at risk and a thousand more in the supply chain. If the Government are going to use taxpayers’ money to subsidise industry or keep places open, they should look at the oil refineries, because once they have gone, they are never coming back, and we have lost the community and that sense of pride.

There are not many Government Members here, to be honest—I cannot see many—although I will thank the hon. Member for Alloa and Grangemouth (Brian Leishman) for his passionate contribution. I did not catch most of it because I am a little bit deaf; I will sit a bit closer next time.

[Brian Leishman]

I don’t know what you mean. [Laughter.]

[Lee Anderson]

We would expect this Labour Government to do a little bit more for these communities. Back in the ’80s, Labour was attacking the Tories for doing exactly the same thing: closing the vital industries. As I say, once the industry has gone, it is gone, and the skills that one generation passes on to another are gone as well. It is all well and good saying to somebody, “It’s okay, you can make windmills or solar panels,” or, “We’ll retrain you in green energy,” but they do not want that. This lot do not understand that there are still men and women in this country who want to get up in the morning and go do a proper day’s graft. They want to set the alarm clock at 10 o’clock at night, get up at half four or five o’clock in the morning and go do a proper day’s graft where they get their hands dirty. It is dangerous, dirty work, and they contribute towards their society by earning decent wages—good wages—and it keeps their communities going. If we lose that, we lose it for ever.

In the last year alone, we have lost a third of refineries, following the closure of Grangemouth, and now Lindsey is obviously doomed as well. That leaves just four refineries in the country. Why is Lindsey closing? Because it is being hit again and again with costs just to stay compliant with the UK emissions trading scheme. We know that to be compliant, refineries are required to submit verified emission reports to the UK ETS authority and to surrender sufficient allowances to meet the total emissions generated. As the hon. Member for Brigg and Immingham (Martin Vickers) said, those costs account for the highest expenditure in a refinery’s operating budget. Just let that sink in: the biggest cost to a refinery is one that has been inflicted upon it for the sole purpose of meeting net zero. In other words, it has been inflicted by this Government and the Energy Secretary.

[Seamus Logan]

I hear what the hon. Member says about oil refineries, and I share many of his concerns—you will have heard what I said—but I have also heard him and his party colleagues talking about “net stupid zero”. Does he actually believe that we should cancel all the wind farm projects and all the grid infrastructure rebuilding? Is that what he firmly believes we should do?

[Matt Western (in the Chair)]

Order. I remind Members that when they say “you” they are speaking to me.

[Lee Anderson]

I have heard colleagues talk about “net stupid zero” in the past. We think the targets should be scrapped; we are not against trying different sources of energy to fuel our nation. We are saying we should have a sensible transition. China has got it right: it is burning coal. China is opening coal mines and using coal-fired power stations. The irony is that China makes solar panels and windmills using electricity generated by coal-fired power stations, and then flogs them to us. We think, “That’s great! Look at this: we’re reducing the Earth’s carbon.” We are not reducing the Earth’s carbon; we are just exporting it to other countries. It is absolute madness and hypocrisy. When we are committing this nonsense, it costs our Treasury billions of pounds in receipts a year. It is absolute nonsense. When some of my hon. Friends say “net stupid zero”, that is what they are referring to. And it is stupid—it is absolute madness.

I am going to finish now, because I have had an extra minute and I know other people want to speak. I have been one of those working men who gets up in the morning at 5 o’clock and goes and does a dirty, horrible, dangerous job. I know what it is like to come home, after doing a horrible shift on a horrible job. I know what the people in these communities feel like. They do it because they love their family and their community, so they go and do some jobs that nobody in this room would ever do. This Labour Government should remind themselves what the Labour party was founded on: helping the working man in this country.

15:51

[Jim Shannon (Strangford) (DUP)]

It is a real pleasure to serve under your chairship, Mr Western. I thank the hon. Member for Brigg and Immingham (Martin Vickers) for leading the debate. The very thrust of the issue that the hon. Member for Ashfield (Lee Anderson) underlined, and that I endorse, is how it changes communities whenever disastrous decisions are taken.

The future of the UK oil refining industry has become an increasingly urgent topic as we navigate the pressures of energy security and the transition to net zero. I should have welcomed the Minister to her position; I wish her well in it. I am not sure whether today’s is a good debate for her to be answering questions, but that is by the way—we will see how it all goes. We have seen the closure of two major oil refineries this year, so it is important that we are here to discuss the future of our fossil fuel sector across the United Kingdom.

This debate is important not just for the constituencies represented by, for example, the hon. Members for Alloa and Grangemouth (Brian Leishman) and for Falkirk (Euan Stainbank), but for us in Northern Ireland as well. Our oil came from Grangemouth and Lindsey, so the impact for us in Northern Ireland will be the same as it is for everybody else. The difference will be that we will not be getting oil from within the United Kingdom and will have to buy it from outside. That concerns me greatly.

I commend the Members who have spoken. In particular, I commend the hon. Member for Alloa and Grangemouth for his passion, which he always shows in the main Chamber and here in Westminster Hall. He puts forward his case incredibly well.

The UK’s oil-refining capacity has shrunk substantially over the past 20 years or so. As of 2023, total refining capacity stood at roughly 1.22 million barrels per day, and the UK produced around 51.45 million tonnes of refined petroleum products. Some people ask how this effects the workers. Many of us have constituents who work in the oilfields—I think nearly every constituency has them; I know I have them in Strangford—and this impacts on them as well. Northern Ireland does not have any operating crude oil refinery, and all refined fuels, such as petrol, diesel and jet fuel, are imported.

Historically, some of Northern Ireland’s fuel came from refineries across the rest of the UK, with the products shipped or piped to Northern Ireland terminals. For example, Petronas, which until 2025 operated the Grangemouth refinery, supplied almost all the fuel for Northern Ireland. We have witnessed the closure of two refineries, Grangemouth and Lindsey, and Members have outlined their concerns, whether they represent the area or are here to speak on behalf of others. There is no doubt about the significant impact on where we source fuel. Events in the wider UK refining sector, such as closures or capacity losses, will have knock-on effects on fuel security, price stability and supply chain resilience in Northern Ireland. The impact will be felt by us all.

We have witnesses the United Kingdom’s reliance on imports, and there has been a significant impact in terms of job losses, and the redundancy of engineers, technicians and maintenance workers. We also have to recognise the significant loss of skill and experience. Even if things were to change in time, those people will have moved elsewhere, so how do we start again? That is, if we are able to start again, of course.

Furthermore, the closure of refineries has an impact on associated industries such as petrochemical storage and marine freight. The impact is like a domino effect: one thing happens and it knocks on right down the line. With two large domestic refining assets having closed, the UK must now import more petrol and more diesel, which completely reduces our domestic control over fuel supplies.

I believe that we are doing our bit to improve our infrastructure and to adapt to net zero goals, but what does that mean in the meantime? I do not think anybody here does not believe that there is a role for net zero, for the green environment and for green energy, but we do not want to lose the core of our ability to produce oil for our own country. The United Kingdom’s commitment to net zero remains essential to protect the environment and for our long-term energy security, and to create new green industries. However, the recent closures of the refineries at Lindsey and Grangemouth show that the transition also brings real challenges for workers and local economies—for every economy right across this United Kingdom of Great Britain and Northern Ireland—affecting all the regions and our overall industrial capacity.

The transition has to be carefully managed. It is the responsibility of the Minister and this Government to ensure that we are equipped to deal with the changes, for the benefit of everyone in this great United Kingdom of Great Britain and Northern Ireland. I always say that we are better together, but we have got to work together as well. We have to work together for everybody. That is what I ask the Minister: how can we make sure that we can all do it better together?

15:57

[Luke Taylor (Sutton and Cheam) (LD)]

It is a pleasure to serve under your chairship, Mr Western. I thank the hon. Member for Brigg and Immingham (Martin Vickers) for securing this important debate, and all the Members who have spoken for their contributions. I declare an interest as the chair of the all-party parliamentary group for the future of aviation, travel and aerospace—we have done a lot of work on sustainable aviation fuel—and that I met representatives of Exolum, the International Air Transport Association, LanzaJet and the Tank Storage Association in preparation for this debate.

At times of great upheaval and change, it is tempting to look to political leaders, artists or other major cultural figures to get a sense of where the world is headed. That is certainly a popular approach among historians, but I think it misses something: the often pivotal role of engineers—and I say that not just because I am one myself, or was. It is not necessary to subscribe to an entirely materialistic view of history to recognise that engineers, no matter who they work for or where they work, are often at the vanguard of the kind of technological change that enables our wider political or social ambitions to be achieved. That was true at the cusp of the industrial revolution; it was true when the white heat of technology exploded the middle class in the ’50s; and it is true now, perhaps more than ever, as we embark on the mission to undo the damage to our environment that previous technological shifts have wrought. We must secure our energy supply so that we can withstand an ever more uncertain future, and transform our late-industrial malaise into a green, prosperous and abundant economy through a truly just transition.

Data from the oil and gas industry shows that it directly supports around 26,000 jobs across the UK and indirectly supports 95,000 more. These are largely jobs in offshore drilling, rigging, catering, scaffolding, onshore fabrication yards, anchor manufacturing and vessel maintenance, and there are more. It is also estimated that there are another 84,000 jobs among the hospitality workers, taxi drivers and others who serve industrial communities and are supported by them in turn. We have seen before what happens when there is a major industrial shift and we fail to support jobs and the communities they help to keep alive—from the closure of the pits to the ongoing crisis of British Steel. We must learn lessons from past deindustrialisations to avoid similar damage to communities today.

All policy makers should dedicate themselves to avoiding the traumatic manifestations of necessary—or, at the very least, foreseeable—moments. It is vital that any job losses in this sector are mitigated by reskilling and retraining with new green investment. However, right now in 2025, we are losing our traditional refining, chemicals and existing biofuel production capability and home-grown expertise. Complexity, departmental misalignment and a lack of pragmatism in public policy are holding back the existing and future fuels sector. The Government have the power to solve those things. I hope that today we can suggest and agree some constructive next steps.

Earlier this year, Liberal Democrat colleagues and I recognised the importance of the Government’s Sustainable Aviation Fuel Bill. Sustainable aviation fuel, or SAF, will be one of the main enablers of aviation’s transition from polluting liquid fossil fuels to a future of hydrogen, battery and hybrid zero emission power plants. As part of that transition, SAF has a huge role to play in creating new green jobs and delivering on our energy security goals.

Local production creates jobs, improves resilience, reduces import dependence and stabilises prices, but without efficient resource allocation and strategic investment, future refinery closures could create severe supply bottlenecks and undermine our energy independence. It is equal parts encouraging that there is consensus among the serious political parties in this country about the need for transition and energy security, and concerning that from different ends of the spectrum, the Greens and Reform are either wilfully ignorant or unwilling to accept that supporting the oil refining industry to transition is critical.

The Greens seem willing to turn their back on any of the major technologies involved in the just transition of our fossil fuel infrastructure. They are locked into the pursuit of an ideological purity that sees those companies and producers solely as the problem and not as part of the solution. Reform’s static, stagnant and staggering belief that net zero is either bound to hurt working people or just bad in and of itself, only gives them the self-satisfied and smug smile of someone who thinks they know all the answers, but that could not be further from the truth.

[Lee Anderson]

The hon. Member talks about hurting working people. Does he not agree that the closure of the oil refineries hurts working people?

[Luke Taylor]

I completely agree. That is why we are talking about a transition. It may well bring shivers to the hon. Member’s spine to talk about transitions, but it is critical that we talk about them in a reasonable and sensible way, and about how we look forward to the future rather than to the past. Reform’s approach is equally dogmatic and damaging as that of the Green party and has already been found wanting in practice in local government.

We can only make the transition a reality if we grasp the opportunity to utilise our existing oil refining infrastructure to turn to the chemistry of the future, with a diverse set of feedstocks from a wide range of supply points. We should be working with industry on delivering that, but industry leaders tell me that on the critical steps that the Government should be taking, they are going ignored or unheard.

Let us take bioethanol, for example. At the start of 2025, the UK bioethanol sector provided 895 million litres of renewable fuel production capacity and thousands of direct and indirect jobs. It was also a significant market for British agriculture and providing critical co-products such as carbon dioxide for the NHS, and for the food and drink sector. As of December 2025, the industry has been halved, following the US-UK trade deal.

An immediate solution would be to transition that bioethanol to SAF, as the alcohol-to-jet technology being developed in the UK can convert it into jet fuel. Under the SAF mandate rules, however, bioethanol readily produced in the UK—sustainable enough for a car engine—has been deemed not sustainable enough for a jet engine. Will the Minister consider the request of industry to support the UK’s bioethanol industry to continue operations and simultaneously support SAF production by allowing bioethanol use under the SAF mandate? The upcoming call for evidence on the role of crops under the UK SAF mandate should be released urgently, and a pragmatic approach taken.

Similarly, opening hydrogen storage subsidies to include liquid fuel infrastructure would ensure that existing assets could play a role in the hydrogen economy. Hydrogen storage is critical, but hydrogen production and usage are also critical to our future renewable goals and to providing the supply of SAF that will be required to decarbonise aviation. DFT rules state that, to make compliant SAF in the UK, hydrogen must be green hydrogen—rightly—and cannot be supported by the hydrogen production business model, a scheme established by DESNZ to get UK hydrogen production off the ground. That alone is not controversial. However, there is no green hydrogen available in the UK that will not be supported by the HPBM, which means that a portion of SAF using these renewable molecules will be uncompliant and, essentially, very expensive fossil jet fuel, despite it actually being green. I convey to the Minister the ask from industry that the DFT and DESNZ should be urgently working together to ensure interconnectivity with hydrogen policy and SAF policy, so that SAF producers are not penalised for using domestic industry?

[Euan Stainbank]

Project Willow also recommended the delay or lifting of the cap on hydrotreated esters and fatty acids. Would the hon. Member agree with that approach being taken? This is the project and report on the future industrial options at Grangemouth.

[Luke Taylor]

I know that the hon. Member has a lot of knowledge on this issue. I think that looking at all the options that maintain capability is critical. What might come out of this is an ask for this Minister— or potentially the aviation Minister, the hon. Member for Selby (Keir Mather)—to sit down with our APPG, in which there is a lot of expertise, to talk about some of the ways that we can maintain capability but also achieve our transition and net zero goals.

A pragmatic approach could be not to apply the rules to smaller users of hydrogen—for example, where hydrogen accounts for less than 5% of feedstock—while a longer time is taken to consider the impacts for large-scale hydrogen users.

I now turn to our wider ecosystem of logistics infrastructure. Pipelines, storage and distribution networks are essential for connecting supply and demand, especially as the market shifts towards sustainable fuels and as we look to improve our energy security. For example, Exolum, which runs a 2,000 km onshore pipeline network that delivers 40% to 50% of the aviation fuel used for UK flights each year, is transforming its aviation fuel pipeline network to supply SAF.

To unlock further investment in the infrastructure and ensure a just transition, industry is calling for long-term policy signals, such as extending and increasing renewable fuel mandates; targeted incentives like business rates relief and payment holidays for new infrastructure; inclusive subsidy schemes for hydrogen storage; and fast-tracking obligations for renewable liquid heating fuels.

At present, most support for fuel infrastructure is directed towards large-scale production projects. Conversely, investment in storage and distribution infrastructure is increasingly undertaken at an operator’s own risk and often ahead of immediate market need. That imbalance is amplified by a business rates system that can disincentivise new investments and high-end capital projects—including energy transition initiatives—especially when the investment is by overseas companies likely to be looking for more cost-effective placement of funding in countries with more generous and strategic policies. How will the Minister ensure that policy and investment frameworks can support storage and distribution infrastructure, thereby enabling the development of a future-ready energy system, capable of responding to evolving market conditions and minimising supply chain risks?

The Liberal Democrats urge the Government fully to grasp the opportunities that our industrial capacity and workforce capability offer our country, to lead the world in a transition to next-generation fuels and energy. It is in our blood and our tradition as a country to grapple with these big technological questions, so it should be up to us to show what real leadership on the just transition looks like—not just because great feats of engineering are impressive in their own right, which they are, but because a whole generation of people whose lives and careers have been shaped by our oil refineries and wider energy sector, and future generations, are counting on that leadership. In recent years, the Conservatives abandoned it. We urgently need to get it back and provide stability for the communities most affected.

Home-grown, local renewable energy and fuels can be clean, cheap and popular, and they embed resilience. The Government must work with industry because striving for theoretical perfection, rather than ambitious but deliverable policy, risks choking the sector and neutering this revolution. Our engineers and industry stand ready to deliver, as they have done time and again, the greener economy that we need and that communities up and down the country deserve.

16:09

[Harriet Cross (Gordon and Buchan) (Con)]

It is a pleasure to serve under your chairmanship, Mr Western. I congratulate and thank my hon. Friend the Member for Brigg and Immingham (Martin Vickers) on securing this timely and important debate. I pay tribute to him for his work in standing up for workers, not just at Prax Lindsey but across his constituency and his region—his energy estuary. I also thank the Father of the House, my right hon. Friend the Member for Gainsborough (Sir Edward Leigh) for his wise words. We can support all energies; it is not an either/or. We must not run down the oil, gas and liquid fuel sector just for the want of achieving a target.

In 2025 alone, we have lost two of the UK’s six remaining refineries, with thousands of well-paid workers losing their jobs in the supply chain. Grangemouth and Prax Lindsey have closed, but not because we need any less petrol, diesel, jet fuel or heating oil—just as we will not need any less ethylene after the Mossmorran plant closed in Fife, or any less oil and gas when this Government wilfully shut down the North sea, destroying jobs in communities such as mine in Aberdeenshire.

As the Minister knows, we will simply become more dependent on foreign imports, lose billions of pounds in tax receipts that could support our public services, and destroy hundreds of thousands of skilled jobs in parts of the country that need them the most. We will, as the Minister also knows, strangle our domestic production and then import more products from countries with far higher emissions. We will offshore our carbon, offshore our jobs and offshore our security, all so that the Secretary of State can boast of global leadership at COP. No one is going to want to follow our lead if we make ourselves poorer and less secure. We will become a warning, not an example, to the rest of the world. It is ideology over national interest. As Labour’s friends in the unions say, it amounts to exporting jobs in order to import virtue.

The production at Prax Lindsey will now be replaced by imports from other countries. Ineos will retain its ethylene and propylene production at Grangemouth, but will now import ethane on huge diesel-chugging container ships from across the Atlantic. Perhaps the Minister would like to explain how that is going to reduce global carbon emissions.

Rian Chad Whitton has produced a fantastic report for the Prosperity Institute in which he explains in detail how high energy costs and carbon taxes are crippling heavy industry in the UK, but particularly our refineries. We spend a lot of time in this House talking about electricity—as we should, because our electricity prices are the highest in the world, and this Government are locking us and our constituents into higher prices for longer in the upcoming allocation round 7 auction—but what we often miss in our debates is that only a small proportion of our current energy consumption is from electricity. The vast majority of it comes from other fuels such as natural gas, and that is particularly true for our heavy industry and refining sector.

When refineries use natural gas to produce their products, they are subject to a carbon tax on every unit of CO₂ they release. Refineries have no choice but to use natural gas, because no other fuel can do the job that natural gas does in their processes. Many other countries charge a much lower carbon tax, or—when it comes to our competitors for refined products, such as in the US, India or the Gulf—charge no carbon tax at all. The carbon tax imposed on our industry through the emissions trading scheme makes it significantly harder for refineries to do business in the UK, increases costs for consumers and makes our industry less competitive.

Hon. Members do not have to take my word for it; they can listen to the UK chair of ExxonMobil, which runs the Fawley refinery in Southampton. At the Energy Security and Net Zero Committee recently, he said:

“the majority of…petrol and diesel imported into this country, is produced in the US, Saudi Arabia, Kuwait and India…They have lower energy costs, lower labour costs and zero CO₂ costs…Fawley refinery this year will spend between £70 million and £80 million on CO₂ costs alone. In the next four or five years that will increase to £150 million. You tell me of another industry where you can afford to have a £150 million cost burden on a single producing unit and expect it to remain competitive for the long term. It is an absolute catastrophe waiting to happen”.

In his report for the Prosperity Institute, Rian calculates that at Prax Lindsey, in the constituency of my hon. Friend the Member for Brigg and Immingham, the cost of the carbon tax alone amounted to 120% of the operating profit. How on earth can any refinery survive in that environment?

Things would be bad enough, but Ministers are not intent on making them even worse. Their decision to align the UK carbon tax with the EU’s more expensive one has increased the price that our industry pays by about 70% in the space of just a year. Why are they doing this? Ministers talk about EU alignment as if it is inevitable, but it is not. They control the market. They choose how many allowances they release. They could choose not to align with the EU and keep control of our own carbon market.

Increasing the carbon tax is a political choice that is already causing production costs to soar at refineries in Pembroke, Fawley, Stanlow and the Humber, and that has increased the cost of everybody’s electricity bill, too. Labour Members should know that electricity bills have increased by £2 billion this year alone because of the Government’s choice of alignment. The carbon tax is charged on gas-fired power generation too, and it is passed straight through to our constituents in wholesale electricity prices. That is exactly why the Conservatives have said that we will axe the carbon tax as part of our cheap power plan, to cut everybody’s electricity bills instantly by 20%.

The soaring carbon tax is crippling the refining sector. Will the Minister explain how refineries are supposed to survive when the Government are planning to increase the carbon tax between now and 2050? Is it the Government’s plan to have a carbon tax of £147 a tonne in 2030, as set out in the National Energy System Operator report? If not, will she disown her party’s claim that the NESO report shows that the clean power 2030 plan is achievable? Will the Government scrap their plan to align with the EU carbon tax scheme, which would lock us into ever higher carbon prices with no control? Will the Minister commit to increasing the number of free allowances given to the refining sector to shield it from at least some of the burden?

Refining is viable only when the raw product to refine is abundant and cheap. We cannot run a refinery on warm words about net zero and promises of green jobs that never materialise. We need crude oil and natural gas, so let us consider what is happening to the domestic oil and gas sector under this Government. Production is down, and falling at an accelerating rate; the cessation of production and decommissioning is being brought forward; investment is going overseas; 1,000 jobs a month are being lost from producers, operators and the supply chain, and no exploration wells were drilled in the UK North sea last year, for the first time since the 1960s. Why is this happening? Because the Government have banned new licences and continue—choose to continue—to keep the energy profits levy and tax UK oil and gas production at a higher rate than any other comparable basin. How can UK companies possibly compete when paying tax at 78%? There are no longer windfall prices or windfall profits, so why are companies still having to pay windfall taxes?

The Government’s short-term and idealistic policies on the North sea have an impact everywhere: they impact jobs, livelihoods, households, businesses and industries across the country. Does the Minister understand the anger and frustration in communities like mine in Gordon and Buchan, and throughout the energy sector, at the Prime Minister’s words about the EPL last week? People are losing their livelihoods and their ability to support their families because of the Government’s political choice to shut down the oil and gas sector. To hear that the Prime Minister does not even understand the policy that he is imposing, which is causing so much harm, is a complete slap in the face for energy communities across the country. Can the Minister confirm for the record that the Prime Minister was wrong to say that the windfall tax kicks in when there are excessive profits? Will she confirm that there is no longer any windfall left to tax?

[Euan Stainbank]

When the hon. Lady’s party was in power, in February 2024, in response to a question from the former Member for East Lothian, her then party leader said that the future of the Grangemouth refinery was “obviously a commercial decision”, essentially excluding themselves from taking any action. Does she agree or disagree with the former Prime Minister’s characterisation, considering what we have heard from the Conservative Benches—and I agree—about how oil refineries are strategically important? It was not a commercial decision, and something could have been done when her party was in office.

[Matt Western (in the Chair)]

I am sure the hon. Lady will give the Minister enough time for her speech.

[Harriet Cross]

I absolutely will, so I will end on that point. I thank the hon. Gentleman for his intervention. I find the what-aboutery from Government Members extraordinary. They seem to think that because something has happened in the past, it is okay for something else to happen now. The Government are shutting down the UK oil and gas sector because they keep taxing it. Jobs such as those lost at Grangemouth are being lost every single week across the country as a result. If the hon. Member thinks that is okay, he should say so, but I do not think it is okay, and that is why I am fighting against it.

16:20

[The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Katie White)]

It is a pleasure to serve under your chairmanship, Mr Western. I have really enjoyed the debate, which has been full of passion and emotion. I heard the anger, including in what my hon. Friend the Member for Alloa and Grangemouth (Brian Leishman) said, but I also heard that there is a lot of commonality in some of our values and on the transition that we are trying to achieve together. I have genuinely enjoyed listening and I have noted lots of points. There were a lot of questions; I will endeavour to get through them, but if I do not, we may need to follow up in writing to hon. Members.

I thank the hon. Member for Brigg and Immingham (Martin Vickers) for securing this important debate, and I am grateful to all hon. Members for their contributions. This is a timely opportunity to discuss a matter of strategic significance for our nation’s energy security: the future of the UK refining sector. The industry has helped to underpin our economy and our resilience for decades, and its future deserves our full attention. The Minister for Energy is in Grangemouth today, and I will say more about that later.

Our refineries play a crucial role in ensuring a stable supply of the essential fuels that keep our transport networks running, our industries operating and consumers supplied with the energy they rely on every day. The sector is more than just a fuel; it drives growth in key sectors, supports thousands of skilled jobs in communities and sustains supply chains for chemicals, plastics and manufacturing. Refineries also play a critical role in the wider downstream oil sector. The Humber refinery in the constituency of the hon. Member for Brigg and Immingham is the UK’s only source of anode-grade petroleum coke, which is essential for electrical vehicle production. The Fawley refinery contributed to the global covid-19 response by supplying the specialist halobutyl rubber used to seal vaccine vials.

Importantly, UK refineries are also investing in their own future through decarbonisation and diversification by deploying carbon capture or producing low-carbon fuels to support our transition to net zero. Demand for refined products will continue, even beyond 2050, and the UK’s refineries will remain essential for hard-to-abate sectors such as heavy industry, aviation and maritime. That is why, as my hon. Friend the Minister for Energy made clear in June, the Government are absolutely committed to securing the long-term viability of the UK’s refining sector, and, as set out in the autumn Budget, we are reviewing critical policies to address the challenges that the sector faces.

Those challenges are real. In the 1970s, the UK operated 18 refineries; today, as has been said many times during the debate, only four remain. Falling demand for traditional fuels, global competition from mega-refineries in the middle east, India and Africa, changing trade dynamics and ageing assets all put pressure on UK operations. But with challenge comes opportunity, and the Government are determined to seize the opportunities by driving innovation, supporting investment and ensuring that the refining sector continues to play a vital role in our economy and for our energy security for decades to come.

The Government have already taken significant steps to support the refining sector and the wider fuel sector, and we are committed to do more. We have driven the shift to low-carbon fuels through the renewable transport fuel obligation, and this year we went further with the sustainable aviation fuel mandate, backing cleaner fuels for aviation. The Humber refinery already produces SAF at commercial scale, while Fawley and Stanlow are among the projects backed by our advanced fuels fund, which provides grants to accelerate the next generation of transport fuels. Refineries are playing a key role in driving the UK SAF industry forward, strengthening energy security with a home-grown supply. We are also de-risking investment in SAF production through the revenue certainty mechanism. We are working with industry to cut emissions through carbon capture and low-carbon hydrogen at major clusters such as Viking and HyNet. We will set out a clear plan for industrial decarbonisation to keep the UK competitive.

[Sir Edward Leigh]

The hon. Lady is giving a paean of praise for refineries, so why are the Government taxing them out of existence?

[Katie White]

I am glad that the right hon. Gentleman intervened, as I was going to come on to his points—in particular, his interesting point about the national interest. I say to him gently that I feel we are working in the national interest, but the national interest includes energy security as well as respecting the science of climate change, which is happening. As he is the Father of the House, I genuinely listened to his points, but I was a little disappointed—[Interruption.] He can laugh all he likes, but I listened to his points. He talked about the UK being responsible for less than 1% of emissions. That is the case in terms of nation states, but I think the UK’s impact in the world is so much larger, whether through people following our policy decisions, the impact of our banking sector or our consumption of goods, which has also come up a lot.

We are looking at how we manage the transition, and we want to do it in a way that respects the science, but I am also competitive about where Britain can take advantage of these industries. We want to make sure that we have these industries, including the wind turbines that the right hon. Gentleman mentioned, but we also want to look at how we can make the transition justly and fairly. I will come on to that later in my speech.

Last month, the UK ETS Authority confirmed that current benchmarks will stay in place for the 2027 scheme. That decision gives refineries and other energy-intensive industries the certainty that they need. By maintaining those benchmarks, we are providing stability and breathing space, helping businesses plan, manage costs and prepare for future changes to the scheme.

We are also reviewing compensation for energy-intensive industries. We announced in the autumn Budget that we are assessing the feasibility of including refined products in the carbon border adjustment mechanism, so that imported goods face an equivalent carbon price and the sector’s efforts to decarbonise will not be undermined by carbon leakage. This is the refining sector’s top priority, which the Government are committed to exploring as one of several levers to support the sector’s long-term future. These measures demonstrate our commitment to supporting investment, driving innovation and ensuring that the refining sector remains competitive and resilient as we transition to a low-carbon economy.

Looking ahead, the Government are taking further steps to secure the long-term future of the UK refining sector and to ensure a just transition. The Department for Energy Security and Net Zero has established a dedicated team to work across Whitehall and with industry. A number of Members asked about working across Whitehall; we will continue to do that, to ensure that we maximise the impact. This will guide how we manage the transition, protect energy security and support jobs and local communities.

We will continue to engage closely with the fuel industry to identify practical measures that can strengthen the sector. That is why, in June, we convened the first ministerial—[Interruption.]

[Matt Western (in the Chair)]

Order. Can I have a certain decorum from other Members while the Minister is speaking?

[Katie White]

Thank you, Mr Western.

That is why, in June, we convened the first ministerial roundtable with the refining industry in more than a decade, providing a clear signal of our commitment to partnership and dialogue. As announced in the autumn Budget, we will shortly launch a call for evidence to inform the UK’s long-term strategy for the downstream oil sector. That will seek industry views on the opportunities and barriers to transition, the risks facing the sector and the types of support needed to deliver and manage a competitive transition. These actions underline our determination to work hand in hand with industry. I thank the Scottish Affairs Committee for its recent report, and my hon. Friend the Member for West Dunbartonshire (Douglas McAllister) for sharing it.

The refining sector has faced long-standing challenges, and recent closures underline the scale of change. Petroineos’s decision to end refining at Grangemouth was disappointing. As my hon. Friend said, while the difficulties there were well known, there was no Government plan in place before we took office. Within weeks of doing so, we worked with the Scottish Government to put together a £100 million package to support the community and invest in the local workforce, along with tailored support to secure good alternative jobs. When we came into government, there was no overall plan for Grangemouth from either the SNP or the Tories. We have put one in place.

We are committed to securing Grangemouth’s long-term industrial future. We are working closely with the Scottish Government, the Office for Investment and Scottish Enterprise to attract future investment and transform the area into a clean energy and sustainable technology hub. This effort is already delivering results. We have received over 100 inquiries to date, and the investment pipeline is supported by the £14.5 million in funding announced at the Budget, alongside the National Wealth Fund’s £200 million for co-investment opportunities at Grangemouth.

Today, I can confirm that, along with the Scottish Government, we have made £3 million available for MiAlgae, an innovative biotechnology company that produces sustainable omega-3 rich products, which will create over 130 direct jobs at the site and 310 jobs across Scotland over five years. These steps demonstrate our commitment to a managed transition by supporting communities, attracting investment and ensuring that sites like Grangemouth—

[Matt Western (in the Chair)]

Order. The Question is—

[Sir Edward Leigh]

On a point of order, Mr Western. You are a fellow member of the Panel of Chairs. Can we make it clear to our colleagues that it is normal courtesy for the Minister to allow the proposer of a motion some time to wind up, if only a minute? That did not happen on this occasion.

[Matt Western (in the Chair)]

The right hon. Member is absolutely right that it is a courtesy, but my understanding—I think he will understand this, too—is that it is not an obligation. On this occasion it was not possible for the Minister to do that, given the number of interventions that we had, as well as the full contributions from all the Members who chose to speak.

Question put and agreed to.

Resolved,

That this House has considered the future of the oil refining sector.

16:30

Sitting adjourned.