Draining Scotland’s capital

Predictably, the Grangemouth affair was resolved yesterday with the unions agreeing to a number of concessions deemed necessary to a “survival plan” for the plant.

Never mind the question of why the owners have been planning a £300 million investment into a business that is apparently so vulnerable that even longstanding agreements with workers are a threat to its survival.

As we wrote yesterday, there were plenty of signs that the management had engineered a “heads we win, tails the unions get the blame” situation. And it does look as though one of the targets of the game was to maximise the public’s input into the solution.

Yesterday we learnt that:

According to Ineos, the Scottish government has indicated it would support its application for a £9m grant to help finance its gas terminal plans, while the UK government has given “pre-qualification approval” for a £125m loan guarantee facility.

Many, including me, would say that a relatively small public subsidy is small price to pay for preserving thousands of jobs in and around the plant.

On the other hand, this public investment is being sucked into propping up a sunset industry when it would clearly be better employed in developing the post-oil economy that Scotland badly needs to build, and quickly, before North Sea oil and gas are a distant memory.

Having tasted milk, who is to say that Ineos won’t be back for more? Especially if, as reported, the oil refinery is losing money faster than the petrochemical plant.

I am glad for the Grangemouth workforce but, as energy policy, the rescue is only a sticking plaster. Scotland’s leaders need a plan to ensure that future public subsidies aimed at mitigating the decline of the oil and gas industry are matched by support for energy technologies that are not dependent on fossil fuels.

Otherwise Grangemouth will turn out to be the first step on the road to draining Scotland’s capital in a futile pursuit of what James Howard Kunstler christened the “fallacy of previous investment”.

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