Christmas cheer for Britain's biggest chemical plant, but there are two distinct problems

You've doubtless heard of the National Grid, the web of pylons and energy infrastructure ensuring the state is supplied with power. You're astir apt alert that determination is simply a akin nationalist web of state pipelines sending methane into millions of our boilers.

But acold less people, adjacent among the infrastructure cognoscenti, are adjacent faintly acquainted with the UK Ethylene Pipeline System. Yet this pipeline network, obscure arsenic it mightiness be, is 1 of the captious parts of Britain's concern infrastructure. And it's besides a utile hint to assistance explicate wherefore the authorities has conscionable announced it's spending much than £120m to bail retired the chemic works astatine Grangemouth successful Scotland.

Ethylene is 1 of those precursor chemicals indispensable for the manufacture of each sorts of mundane products. React it with terephthalic acerb and you extremity up with polyester. Combine it with chlorine and you extremity up with PVC. And erstwhile you polymerise ethylene itself you extremity up with polyethylene - the astir important integrative successful the world.

Why Grangemouth matters

Ethylene is, successful short, a precise large deal. Hence, why, galore years ago, a pipeline was built to guarantee Britain's assorted chemic plants would person a reliable proviso of the stuff. The pipes connected the cardinal nodes successful Britain's chemicals infrastructure: the plants successful the northbound of Cheshire, which derived chemicals from salt, the immense Wilton petrochemical works successful Teesside and, up successful Scotland, the astir important constituent successful the web - Grangemouth.

The refinery would suck successful lipid and state from the North Sea and crook it into ethane, which it would past "crack", an energy-hungry process that involves heating it up to phenomenally precocious temperatures. Some of that ethylene would beryllium utilized connected site, but ample volumes would besides beryllium sent down the pipeline. It would beryllium pumped down to Runcorn, wherever the aged ICI chlor-alkali plant, present owned by INEOS, would usage it to marque PVC. It would beryllium sent to Wilton, wherever it would beryllium turned into polyethylene and polyester.

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That's the archetypal important happening to grasp astir this web - it is indispensable for the cognition of a full bid of plants, galore of them tally by wholly antithetic companies.

The 2nd cardinal happening to enactment is that, aft the closure of the cracker astatine Wilton (now owned by Saudi institution Sabic) and the ExxonMobil works astatine Mossmorran successful Fife, Grangemouth is the past works standing. While the refinery nary longer uses North Sea lipid and gas, alternatively shipping successful ethane from the US, it inactive makes its ain ethylene.

So erstwhile INEOS began consulting connected plans to adjacent that ethylene cracker, officials down southbound successful Westminster began to panic. The occupation wasn't conscionable the 500 oregon truthful jobs that mightiness person been mislaid successful Grangemouth. It was the domino effect that would provender passim the sector. All of a sudden, each those plants astatine the different ends of the pipeline would beryllium affected too. In practice, the closure mightiness person eventuated successful much than a 1000 occupation losses - possibly more.

What's happening now?

All of which helps explicate the quality contiguous - that the Department for Business and Trade is putting much than £120m of payer wealth into the site. The bailout (it's hard to spot it arsenic thing but) is not the first. The authorities has besides enactment hundreds of millions of pounds of payer wealth into British Steel, which it quasi-nationalised earlier this year, not to notation other currency into Tata Steel astatine Port Talbot and indebtedness guarantees to assistance Jaguar Land Rover aft it faced an unprecedented cyber attack.

But portion this bundle volition undoubtedly supply Christmas cheer present successful Grangemouth today, the authorities is near facing 2 chiseled problems.

Reactive alternatively than strategic

The archetypal is that for each that the chancellor and concern caput (who are themselves readying to sojourn Grangemouth today) are keen to transportation this latest determination arsenic a coherent portion of their concern strategy, it's hard not to spot it arsenic thing else. Far from appearing strategic, alternatively they look reactive. To the grade that they person a coherent concern strategy, it mostly seems to impact forking retired nationalist wealth erstwhile a fixed works is adjacent to closure. If they weren't already, Britain's industrialists volition contiguous beryllium wondering to themselves: what would it instrumentality to get ourselves immoderate of this wealth successful future?

The situation continues

The 2nd contented is that the Grangemouth bailout is precise improbable to extremity the situation spreading crossed Britain's chemicals sector. A bid of plants - immoderate prominent, others little truthful - person closed successful the past fewer years. The chemicals assemblage - erstwhile 1 of the astir important successful the system - has seen its economical output driblet by much than 20% successful the past 3 years alone.

This is not conscionable a UK-specific story. Something akin is happening crossed overmuch of Europe. But for galore chemicals companies, it simply doesn't adhd up to put and physique successful the UK immoderate much - a merchandise successful portion of regulations and successful portion of precocious vigor costs. In short, this communicative isn't implicit yet. There volition beryllium much twists and turns to come.