£65m bio-fuel plant plan shelved

Ineos had planned to build the plant at Grangemouth

Plans to build one of Europe's largest bio-diesel plants in Grangemouth, near Falkirk, have been shelved.

Ineos, which controls the town's refinery, said the current economic slowdown had rendered the project unviable.

It had been proposed that the £65m development would produce half a million tonnes of bio-diesel each year.

The company has also returned a £9m grant which had been earmarked for the project by the Scottish Government.

The project was announced in 2006, with the company initially planning to open the plant this year.

A spokesman for Ineos Enterprises insisted it was still committed to bio-fuels but that plans for the plant were being "put on hold" indefinitely.

He added that the firm was continuing with plans to double capacity at its bio-diesel plant at Baleycourt in France.

'Preserving jobs'

In a statement, the company said: "Given the continued and prolonged global economic downturn Ineos is focussing on tight control of costs and expenditure across its entire portfolio.

"As a consequence, ongoing 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, manufacturing industry, including chemicals and bio-fuels, is experiencing a period of unprecedented volatility and uncertainty and accurate forecasting is expected to remain extremely difficult in the short-term."

It is not yet clear what impact the decision will have on jobs in the area.

Councillor Craig Martin, convener of Falkirk Council's economic development committee, said: "We are obviously disappointed that this innovative idea isn't going ahead.

"However, we fully recognise that many businesses across the UK are being forced to rethink their operations.

"We are willing to assist Ineos in any way we can, particularly when it comes to preserving jobs."

Bio-diesel is made from renewable sources like vegetable oils.

It can either be mixed with petroleum-based diesel or, in some industrial processes, used on its own.