The investment, announced at Scottish Labour’s conference, aims to transform the facility into a hub for new industries, including bioengineering, biofuels, and hydrogen energy.

The move follows Petroineos’ decision to convert the refinery into an import terminal, resulting in significant job losses. The UK government’s commitment accompanies a £10m skills and training package, national insurance relief for employers hiring displaced workers, and existing support through a £100m growth deal.

Scotland’s First Minister, John Swinney, welcomed the UK government’s contribution, calling it “a step in the right direction,” but emphasised the need for immediate funding. He reiterated the Scottish government’s £25m commitment to a “just transition” fund, adding to its existing £87m investment, and urged further UK government support.

Mr Swinney added: “Everyone working at Grangemouth’s refinery is a valued employee with skills that are key to Scotland’s net zero future. We will continue to work constructively with the UK government to secure the site’s future.”

The £200m investment from the National Wealth Fund, a publicly-owned entity, will facilitate private sector partnerships for clean energy projects. Union leaders, including Unite and the STUC, praised the funding but stressed the importance of detailed plans and further investment to secure jobs and a sustainable future for the site. Petroineos also welcomed the commitment to Project Willow, a feasibility study for Grangemouth’s transition to a low-carbon energy hub.

The Prime Minister emphasised that oil and gas remain crucial for energy security, while highlighting the need for the UK to lead in clean energy. He also guaranteed 18 months of full pay for redundant workers. Scottish Labour leader Anas Sarwar hailed the investment as a pathway to a “clean and secure energy future,” acknowledging past failures in delivering a “just transition.”