Green campaigners applaud scrapping of £65m biofuel plant

Published Date: 28 November 2008
By Jenny Haworth
Environment Correspondent

PLANS to build a huge biofuel plant at Scotland's oil refinery have been shelved.
Ineos, which operates the refinery at Grangemouth, has blamed the economic climate for the decision to scrap the £65 million plans.It would have seen about 1.2 million tonnes of biodiesel created at the plant by 2010.The decision has been welcomed by Friends of the Earth Scotland, which has concerns over the environmental impact of biofuels.Ineos announced its plans two years ago and said it wanted the site to become a world leader in the production of biofuels made from food crops. It was to build a new plant at the massive refinery site to handle the new production – and had attracted £9 million from the Scottish Government's Regional Collective Assistance fund.The Ineos site manager, Gordon Grant, said: "Earlier this month we indicated to the Scottish Government that we would not be progressing with the biodiesel plant in Grangemouth."Biodiesel produced from food sources is very uncertain at the moment and this, coupled with the economic climate, makes it difficult in terms of being able to fund the project. We are just not in a position to go forward, as we simply don't have the money to put the investment in."Ineos says it has not used any of the grants given to it for the project and the cash has been returned to the Scottish Government.Union bosses at the plant, who organised a strike over pensions earlier this year, said the project could have added about 30 jobs at the site.Mark Lyon, the Unite convener, said: "It is yet another disappointment in a long line of disappointments and broken promises since Ineos took over the site."Michael Connarty, the MP for Falkirk East, said: "I think this was inevitable and had been on the cards for some time. Biofuels are becoming politically embarrassing, but I believe the reason for the plant being cancelled had more to do with finance than anything else."A spokesman for Ineos Enterprises said the group was still committed to biofuels, but plans for the plant were being "put on hold" indefinitely.In a statement, the company said: "Given the continued and prolonged global economic downturn, Ineos is focusing on tight control of costs and expenditure across its entire portfolio."As a consequence, plans to invest in new additional bio-diesel capacity across Europe are on hold until Ineos has a clearer picture of the economic outlook. "Across Europe, industry, including chemicals and biofuels, is experiencing a period of unprecedented volatility and uncertainty, and accurate forecasting is expected to remain extremely difficult in the short term."Duncan McLaren, the chief executive of Friends of the Earth Scotland, said: "We welcome the clarification that this proposal is now off the table."He said even biofuels that lead to some emissions savings can create conflicts over food security or biodiversity.BACKGROUNDBIOFUELS were once thought to harbour huge potential in the fight to reduce damaging greenhouse gas emissions produced by conventional fuels.Although burning these fuels releases carbon dioxide, growing the plants for biofuels absorbs a comparable amount of the gas from the atmosphere. However, energy is used in farming and processing the crops, and this can make biofuels as polluting as petroleum-based fuels. Another prominent issue is biodiversity, with the fear that a major adoption of biofuels will reduce habitat for animals and wild plants. Rainforests could be replaced with palm oil plantations, critics claim. Also, if increased amounts of food crops are used for fuel, it could push up food prices, affecting supplies to poorer nations.The big hope is so-called second-generation biofuels, which will turn the waste products from plants into fuel, and therefore not have an impact on biodiversity or food supply.