Global chemicals firm INEOS Enterprises has unveiled plans to build a new biofuels plant in the UK.

INEOS has suggested its preferred site would be at Grangemouth in central Scotland, where its sister company INEOS Refinings has an existing plant producing 300,000t of synthetic ethanol.

INEOS chief executive Harry Deans said:

“With the significant growth in demand for biofuels in the UK as a result of the Renewable Transport Fuels Obligation, it is clear biodiesel will become a major renewable fuel.”

Mr Deans said it was too early to put a figure on the proposed investment, but said it would be “world-scale”, pointing to INEOS’ recent development at its plant at Baleycourt, France.

In 2005, the company doubled capacity to 220,000t in a €70m (£48.3m) capital commitment, working in partnership with a French farming co-op to meet its demand.

Mr Deans said INEOS would not rule out a similar arrangement with UK farming organisations.

“We have worked well with farmers in France; we hope we can replicate that in the UK.”

Development at Baleycourt also included a dedicated rapeseed crushing plant.

“We may consider including a crushing facility in our UK investment,” said Mr Deans.

INEOS hoped its new UK biodiesel plant would be up and running by 2008.

Graham Meeks of the Renewable Energy Association said:

“Companies with INEOS’ presence don’t do this sort of thing lightly.

This suggests a genuine commitment to the UK biofuels sector.”

British rapeseed growers could benefit from the increased demand, he added.

“Any company looking at the biofuels market has to look at the opportunities for domestic supply, and 200,000t would create a significant opportunity for UK rapeseed, even if it made up only 25% of demand.”

But global firms’ interest in the UK biofuels industry needed to be backed up by government action, Mr Meeks said.

“The government has to play its part and make sure the structure is in place for the market in time for 1 April, 2008.”

Home-Grown Cereals Authority economist Michael Archer said:

“If INEOS were to build a crushing facility it would be the first in Scotland.

At the moment, rapeseed is usually transported to crushers at Liverpool or Hull, meaning delivered prices are £10-£15/t lower than in England.

A new plant could have an effect on the domestic Scottish market.”

ian.ashbridge@rbi.co.uk