The British chemical industry, once a hallmark of industrial prowess, is on the brink of extinction, warns Sir Jim Ratcliffe, owner of petrochemical giant INEOS.

A combination of soaring energy costs and carbon taxes has exacerbated the challenges for this sector, leading to significant operational shifts.

INEOS has ceased ethanol production at its Grangemouth site in Scotland, a decision made last week that has sent shockwaves through the industry.

The closure directly affects 80 employees, who have been redeployed across the remaining chemical operations at Grangemouth.

However, the ramifications extend deeper, with up to 500 indirect jobs likely impacted across the broader economy.

In March, INEOS announced that it would halt its ethanol production due to declining demand in Europe and pressure from increased imports.

The Grangemouth facility was one of only two plants in Europe producing synthetic ethanol, a vital component in pharmaceuticals and various biomedical applications.

Sir Ratcliffe's criticism is directed squarely at what he describes as the 'deindustrialization' of Britain, which he argues has neither benefited the environment nor prevented the offshoring of industries and emissions.

INEOS highlighted the financial unviability of the ethanol plant, primarily due to energy prices in the United Kingdom that have doubled over the last five years, standing five times higher compared to those in the United States.

Stewart Culling, CEO of INEOS Olefins & Polymers UK, specifically pointed to energy costs as a major burden.

"Ethanol production is energy-intensive, relying heavily on natural gas," he noted.

Compounding these pressures are elevated carbon costs and competition from cheaper imports from countries like Pakistan.

"We are trapped in a shrinking market with dwindling prices and escalating costs.

It's no longer tenable to maintain operations," Culling added.

The Chemical Industries Association (CIA) in Britain reaffirmed these concerns last year, warning of jeopardized future investments amid rising costs and dwindling demand.

The association reported a staggering 37% decline in industry output since January 2021, attributing this mainly to 'energy costs and related uncertainties, especially carbon.'

While UK producers have long lamented their higher energy costs relative to European counterparts, the continental industry is not immune to similar challenges.

More than 11 million tonnes of chemical production capacity closures are anticipated in the European Union between 2023 and 2024, as per the European Chemical Industry Council (CEFIC), the trade body for Europe’s chemical industry.

"Plant closures are unfolding across Europe," Culling acknowledged, urging the British government to respond decisively.

INEOS advocates for a UK strategic approach on energy policy or trade, alongside addressing carbon costs.

Ratcliffe emphasized the need for competitive global natural gas pricing and criticized the current emissions trading system as a de facto tax on UK businesses, disproportionately benefiting non-paying importers.