This week I published a new report into Britain’s oil refining sector, Fuel, Refineries and the UK ETS: What Policymakers Need to Know. Its conclusions are alarming.
Britain lost two oil refineries last year – Grangemouth closed in April and Lindsey followed in August, leaving just four operating sites: Fawley, Humber, Pembroke and Stanlow. My report finds that Government policy, and in particular the UK Emissions Trading Scheme (ETS), is making it increasingly hard for the remaining refineries to compete.
This matters because liquid fuels still provide 47% of UK final energy consumption. Diesel, petrol and jet kerosene remain essential to transport, aviation, agriculture, construction and industry, with no alternatives available at scale in the near term.
Yet Britain is increasingly dependent on imports. In 2025 we imported 15.5 million tonnes more petroleum products than we exported, the largest deficit since becoming a net importer in 2013. Closing domestic refining capacity doesn’t mean we stop consuming refined products, it just means we import more, effectively outsourcing their production. Bizarrely, Government policy is actively encouraging this.
My analysis finds that the four remaining UK refineries face a net ETS cash cost of around £200 million per year. Their gross carbon-cost disadvantage relative to refiners outside carbon-pricing regimes is around £540 million per year. That’s a significant handicap in an internationally competitive, relatively low-margin business....<<<Read More>>>...