The energy transition is well underway, but the world still uses fossil fuels to meet 81% of its energy needs. Keeping global warming well below 2°C, in line with the Paris Agreement, requires that we drastically reduce consumption of fossil fuels (coal, oil, gas) and make the world energy system evolve by building the new low-carbon energy system at a much faster pace. Our collective challenge – which became evident in 2022 – is to reconcile the energy transition with the need for energy security and concerns over its cost.
When the supply of oil or natural gas is restricted while demand continues to rise the social impact is immediate and very high, due to the resulting increase in energy prices and insecurity of supply. To meet the challenge of the energy transition and still ensure that reliable energy is available in the short term at the lowest possible cost, the world needs to invest in two energy systems simultaneously so as to: ensure the current system continues to operate responsibly, and at the same time speed efforts to build a new system centered on low-carbon energies (renewable electricity, biofuels and biogas, clean hydrogen and synthetic fuels, CCS solutions to offset residual fossil-fuel emissions). Two other levers will also deliver immediate results: replacing coal in energy use whenever possible, and investing heavily to improve energy efficiency.
That, in a nutshell, is TotalEnergies’ strategy: to continue providing the energy the world needs now, notably natural gas to replace coal, while responsibly and sustainably accelerating the transition to low carbon energy solutions.
This is how, in concrete terms, we support the goals of the Paris Agreement, which calls for a reduction in greenhouse gas emissions in the context of sustainable development and the fight against poverty, and which aims to keep the increase in average global temperatures well below 2°C compared to pre-industrial levels.
More energy, less emissions: Discover TotalEnergies’ transformation ambition by reading the editorial of Patrick Pouyanné here.
We are becoming a multi-energy company
The energy transition depends, first on electrifying energy use, which will require a massive increase in green electricity. TotalEnergies is expanding across the entire electricity value chain (intermittent renewable production, flexible gas-fired power production, storage, trading, customer sales) in a profitable way. Our goal is to build an Integrated Power business with a return on average capital employed higher than 10% and to rank among the world’s top five providers of solar and wind energy by 2030, with gross capacity of 100 GW and an interim target of 35 GW by 2025 (17 GW reached as of year-end 2022).
Second, the energy transition depends on the development of new, low-carbon energies (biofuels and biogas, clean hydrogen and synthetic fuels combining hydrogen and carbon) that TotalEnergies has the core skills to produce. We are expanding into these new markets by focusing on circular resource management and deploying less mature technologies at our own sites to test their business viability.
For natural gas, a transition energy, TotalEnergies continues to expand across the liquefied natural gas (LNG) value chain to consolidate its position as the world’s third-largest player. LNG plays a key role in the net-zero roadmaps of many coal-consuming countries. It’s also a perfect partner for intermittent renewable energies given that flexible and dispatchable CCGT plants provide a secure electricity supply in the context of weather events and fluctuations in demand.
Regarding oil, the Company is highly selective and focuses its investments on projects with a low breakeven point and low emissions. This strategy enables us to take full advantage of global oil demand, which continues to grow but should begin to decline in the medium term, due to the electrification of transport; it ensures that our businesses will remain profitable and resilient over the long term.
As they evolve, the energy markets are becoming increasingly interconnected and interdependent, particularly since electricity – the energy at the center of the transition – is a secondary energy, meaning that it depends on other energies and markets.
Our integrated multi-energy strategy and our solid financial base are strengths that allow us to be a major player in the sustainable energy the world needs and make the most of current developments including the potential price volatility they may cause.