Table of contents:
- Climate change-related challenges
- Risk management
- Targets and metrics to measure climate-related risks and opportunities
- TCFD correspondence table
- European Taxonomy
TotalEnergies supports the objectives of the Paris Agreement, which calls for reducing greenhouse gas (GHG) emissions in the context of sustainable development and eradicating poverty, and which aims to hold the increase in the planet’s average temperature to well below 2 °C above pre-industrial levels. To achieve these targets, the world’s energy systems need to be transformed. This dual challenge consisting of providing more energy to as many people as possible with less GHG emissions concerns society as a whole, with governments, investors, companies and consumers all playing an important role.
At the heart of the climate stakes, TotalEnergies' aim is to provide energy that is more available, more affordable, cleaner and accessible to as many people as possible. In this context, the Company’s ambition is to reach carbon neutrality (net zero emissions) by 2050 together with society.
|TCFD correspondence table (Task Force on Climate-related Financial Disclosures)|
|THEME||Recommended TCFD disclosures|
Disclose the organization’s governance around climate-related risks and opportunities. a) Describe the board’s overseeing of climate-related risks and opportunities..
|a) Describe the board’s overseeing of climate-related risks and opportunities.
b) Describe management’s role in assessing and managing climate-related risks and opportunities.
In order to contribute concrete responses to the issue of climate change, TotalEnergies relies on a structured organization and governance.
Climate issues are addressed at the highest level of the organization by the Board of Directors and the Executive Committee, which have fully committed to transforming TotalEnergies into a multi-energy company and a major player in the energy transition.
At the Annual General Meeting on May 28, 2021, for the first time, the Board of Directors decided to submit to the shareholders of TotalEnergies SE for their opinion the Corporation's ambition in terms of sustainable development and energy transition towards carbon neutrality and its objectives in this area by 2030. This resolution was approved by more than 90% of the votes cast.
In support of the Company’s governance bodies, the Sustainability and Climate division shapes the approach to climate and accompanies the strategic and operational divisions of the Company’s business segments. By defining and monitoring indicators, progress can be measured and the Company’s actions can be adjusted (details of the indicators used are provided in the section “Targets and metrics to measure climate-related risks and opportunities”).
Oversight by the Board of Directors
TotalEnergies’s Board of Directors endeavors to promote value creation by the business in the long term by taking into consideration the social and environmental challenges of its business activities. It determines the Company’s strategic orientation and regularly reviews, in connection with this strategic orientation, the opportunities and risks such as financial, legal, operating, social and environmental risks, and the measures taken as a result. It thus ensures that climate-related issues are incorporated into the Company’s strategy and the investment projects that are submitted to it. It examines climate change risks and opportunities during the annual strategic outlook review of the Company’s business segments. It reviews performance each year.
The skills of the directors in the area of climate are presented in section 220.127.116.11 of the Universal Registration Document 2021. A continuing training program relating to the climate for directors has been approved in 2021 and will be rolled out in 2022. It will include the Climate Fresco (a scientific, collaborative and creative workshop designed to raise awareness of climate change and in particular its causes and consequences), as well as various modules on the following themes: Energy, Climate Change and Environmental Risks; Energy and Climate; Climate Change and Financial Risks and Opportunities; Causes and issues of global warming.
To carry out its work, the Board of Directors relies on its Strategy & CSR Committee, whose internal rules were amended first in September 2017, and again in July 2018 in order to broaden its missions in the realm of CSR and in questions relating to the inclusion of climate-related issues in the Company’s strategy. In this regard, the Strategy & CSR Committee met on October 26 and October 27, 2021, to review current climate issues and their consequences for the Corporation’s strategy. On this occasion, the Board of Directors engaged in a dialogue with Mr. Fatih Birol, Executive Director of the International Energy Agency.
The Board of Directors has also been integrating climate issues into its compensation structures for several years. In 2021, the Board of Directors decided to change the criteria for determining the variable portion of the Chairman and Chief Executive Officer's compensation by introducing two new criteria to assess his personal contribution, weighing 25% of this variable portion, namely steering the strategy of transformation towards carbon neutrality and profitable growth in renewables and electricity. CSR performance is also a qualitative criterion for evaluating personal contribution. CSR performance is assessed by considering the extent to which climate issues are included in the Company’s strategy, the Company’s reputation in the field of CSR and the policy concerning all aspects of diversity. These criteria complement the quantitative HSE criteria and those introduced in 2019 relating to changes in GHG emissions (Scope 1+2).
The variable compensation of the Company's senior executives (approximately 300 people at the end of 2021) includes a criterion linked to the achievement of the GHG emissions reduction target (Scope 1+2).
Since 2020, the criteria for awarding performance shares to the Chairman and Chief Executive Officer and to all the Company's employees also include this objective. At its meeting on March 17, 2021, the Board of Directors decided to introduce a new criterion for granting performance shares linked to changes in indirect GHG emissions from customers’ use of energy products (Scope 3)(1) in Europe (see point 4.3.2 of the Universal Registration Document 2021).
(1) GHG Protocol - Category 11.
Role of management
TotalEnergies' Chairman and Chief Executive Officer, assisted by the Executive Committee, in accordance with the long-term strategic direction set by the Board of Directors, implements the strategy of the Company while making sure climate change challenges are taken into account and detailed in the operational road maps. The work is based in particular on risk mapping, which includes climate issues.
A Sustainability & Climate division, which reports to the President, Strategy & Sustainability, a member of the Executive Committee, coordinates the Company's actions in this area.
The Climate-Energy Steering Committee, chaired by the Vice President Climate which mainly includes representatives of Strategy and HSE management from the various business segments, is responsible for structuring the Company's approach to climate issues, and in particular for:
- proposing targets for reducing GHG emissions for the Company’s operations;
- proposing a strategy to reduce the carbon intensity of the energy products used by the Company’s customers;
- monitoring existing or emerging CO2 markets; and
- driving new technology initiatives, in particular with industrial partners, to reduce GHGemissions (energy efficiency, CO2 capture and storage, for example).
|TCFD correspondence table|
|THEME||Recommended TCFD disclosures|
Disclose the actual and potential impacts of climate-related risks and opportunities on the organization’s businesses, strategy, and financial planning where such information is material.
|a) Describe the climate-related risks and opportunities that the organization has identified over the short, medium, and long terms.
b) Describe the impact of climate-related risks and opportunities on the organization’s businesses, strategy, and financial planning.
c) Describe the resilience of the organization’s strategy, taking into consideration different climate-related scenarios, including a scenario of 2 °C or less.
The risks and opportunities related to climate change are analyzed according to different timescales: short term (two years), medium term (until 2030) and long term (beyond 2030).
The identification and the impact of climate-related risks form an integral part of TotalEnergies’ global risk management processes. In particular, they cover the risks related to transition including those due to regulatory changes, such as the introduction of carbon taxes, as well as the physical risks due to the effects of climate change. The impact of these risks is analyzed for the Company’s assets and for investment projects (refer to point 3.1.1 of the Universal Registered Document 2021).
To achieve carbon neutrality, the energy mix will need to change and in view of this, climate change also provides TotalEnergies with opportunities. In the coming decades, demand for electricity will grow faster than the global demand for energy(2), and the contribution of renewables and gas to the production of electricity will therefore play an essential role in the fight against climate change. Electricity alone will not be sufficient to meet all needs, particularly those connected to transportation.
Gas and sustainable biofuels(3) will be attractive and credible alternatives to conventional fuels and the Company intends to develop them. The development of gas production is accompanied by measures to control methane and CO2 emissions (Scope 1+2). This development could be accompanied by an increasing share of biogas. The development of hydrogen could also contribute to meeting energy demand.
Helping customers improve their energy efficiency also offers opportunities and forms part of a trend that will be accelerated by digital technology. TotalEnergies wants to be innovative and bring them new product and service offerings. The Company aims to develop this approach for industrial and mobility applications.
In addition, ecosystems, and forests in particular, store carbon naturally. Consequently, their conservation and the restoration of their role as carbon sinks are crucially important in the fight against global warming. TotalEnergies therefore wants to develop its activities related to natural carbon sinks.
Finally, certain sectors, such as cement and steel, could struggle to reduce their GHG emissions. They will therefore require carbon capture, utilization and storage (CCUS) technology. Consequently, the Company intends to step up the development of CCUS.
(2) IEA, World Energy Outlook 2021.
(3) According to the sustainability and GHG gas reduction criteria defined in Article 29 of Directive (EU) 2018/2001 of 11 December 2018 on the promotion of the use of energy from renewable sources.
Impact of climate-related risks and opportunities
A vision of a Net Zero TotalEnergies in 2050, Together with Society
The work carried out over the last year has produced a clearer picture of what a Net Zero TotalEnergies in 2050, together with society, and energy transition leader would look like, inspired in particular by the International Energy Agency's Net Zero vision. Reinventing a net zero energy system means producing decarbonized electrons and molecules and developing carbon sinks to absorb the CO2 from residual hydrocarbons (for producing chemicals, for example). This observation supplements the ambition presented to shareholders in May 2021.
- Around half of the energy produced by TotalEnergies would be renewable electricity with corresponding storage capacity, or around 500 TWh/year. This would require developing around 400 GW of renewable capacity.
- Decarbonized molecules would account for around 25% of the energy produced by TotalEnergies, equivalent to 50 Mt/year, in the form of biogas, hydrogen, or synthetic liquid fuels from the following circular reaction: H2 + CO2 = "e-fuels".
- TotalEnergies would produce around 1 Mb/day of hydrocarbons (or close to four times less than in 2030, in line with the reduction outlined in the IEA's Net Zero vision) made up primarily of liquefied natural gas (around 0.7 Mb/d, i.e., 25 to 30 Mt/y). Very low-cost oil would account for the rest. This oil would be used, in particular, by the petrochemicals industry to produce around 10 Mt/year of polymers, of which two-thirds from the circular economy.
- These hydrocarbons would represent around 10 Mt/year of residual Scope 1 emissions, including methane emissions close to zero (below 0.1 MtCO2e/year), which would be fully offset by nature-based carbon sink solutions.
- These hydrocarbons would represent Scope 3 emissions of around 100 Mt/year. To get to net zero together with society, TotalEnergies would help "eliminate" the equivalent of 100 Mt of CO2 a year produced by its customers by developing:
- A carbon storage service for customers that would store 50 to 100 Mt/year of CO2.
- An industrial "e-fuels" activity that would avoid 25 to 50 Mt/year of CO2 for the Company's customers through production with 100% green hydrogen while making up for the intermittence of renewable energies to replace fossil fuels.
The Company will spend the next ten years building the projects and skills needed to make TotalEnergies a net zero energy company by 2050, together with society.
Our multi-energy offering: Ambition for 2030 and progress in 2021
To achieve carbon neutrality, the global energy mix will have to change considerably. Today, fossil energies still account for more than 80% of the mix(4). The markets for low carbon electricity and gas (natural gas, biogas and hydrogen) will need to expand, while coal will have to be eliminated and demand for oil will need to stabilize and then decline.
TotalEnergies is already carving out a position in this energy offering of the future and diversifying its energy mix by reducing the share of petroleum products and increasing natural gas, as transition fuel, and renewable electricity.
The energy mix of the Company’s sales will shift significantly as well, and could stand at 50% gas, 30% petroleum products, 15% majority-renewable electricity and 5% biomass and hydrogen by 2030.
This movement to lower-carbon products will allow the Company to reduce the lifecycle carbon intensity of energy products sold by at least 20% by 2030.
TotalEnergies aims at an oil production peak this decade and then decreasing to around 1.4 Mb/d in 2030. It aims to increase gas production by around 50% between 2015 and 2030 (from 1.3 Mboe/d to 2 Mboe/d) and raise electricity generation to 120 TWh in 2030 from 1.7 TWh in 2015.
In 2021, the Company’s energy production increased by nearly a quarter in relation to 2015.
The Company is reducing its sales of petroleum products to align with production by 2030, or around 1.4 Mb/d. Sales of gas and electricity will rise sharply, doubling for gas and by a factor of 20 for electricity over the 2015-2030 period.
The lifecycle carbon intensity of our products
In 2021, TotalEnergies continued to reshape its mix thanks to increased sales of LNG (up 10% at 42 Mt in 2021 vs. 2020) and electricity (up 20% at 57 TWh in 2021 vs. 2020) and a 10% decrease in petroleum product sales. The lifecycle carbon intensity of products sold continued to improve with a 2% decline (excluding the impact of COVID-19).
Levers to decarbonize the energy mix of the Company are the following.
Growth in electricity will account for nearly two-thirds of the decrease in carbon intensity between 2015 and 2030. The second lever involves reducing sales of petroleum products and increasing production of gas (especially LNG) and sales of products based on biomass.
Lastly, carbon sinks and lower emissions from the Company's facilities will each contribute around 5% of the decrease in carbon intensity.
(4) Source: IEA Key World Energy Statistics 2021.
Electricity – Becoming a world leader in renewable electricity by integrating the value chain from production to sales
TotalEnergies wants to become one of the top five worldwide producers of renewable electricity (solar and wind). In five years, the Company has invested more than $10 billion, primarily in photovoltaic electricity and offshore wind, for an average of $2 billion per year. In 2021, TotalEnergies lifted its investments in electricity and renewables to more than $3 billion, or 25% of its net investments.It intends to finance investments of more than $60 billion in renewable power generation capacity by 2030.
The Company makes profitable investments, meaning projects with a return of more than 10%(5). The mix combines regulated markets with deregulated markets integrated across the entire electricity value chain. As a result, the Renewables & Electricity business's EBITDA(6) exceeded $1 billion in 2021.
In the past four years, the Company's gross installed capacity for renewable power grew from 0.7 GW in 2017 to more than 10 GW in 2021. The objective is to have 35 GW of gross capacity in 2025 and 100 GW in 2030. The 2025 figure is based on projects that have been identified or are in development. The Company's goal is to increase electricity production from 21 TWh in 2021 to 120 TWh in 2030.
TotalEnergies’ broad international footprint gives it a competitive advantage for identifying and developing profitable renewables projects. For that reason, TotalEnergies created a "Renewable Explorers" network in 2021 in some 60 host countries.
Since 2015, TotalEnergies has been building a portfolio of flexible power generation using combined-cycle gas turbine (CCGT) plants, with a capacity of 4 GW at end-2021. These plants complement the development of renewables by supporting the grid during periods of peak demand or when there is not enough sunshine or wind. Ultimately, the CCGT units are targeted for decarbonization, either by changing from gas to biomethane or hydrogen or by sequestering their emissions through carbon capture and storage (CCS).
Further accelerating our positions in photovoltaic solar energy in 2021
TotalEnergies’ solar portfolio expanded rapidly in 2020 and again in 2021, notably in India and the United States. This growth will continue, as solar energy accounts for three-quarters of the 35 GW the Company wants to develop by 2025.
Continued scaling up in offshore wind in 2021
Offshore wind offers high utilization rates with significant development potential and better acceptability than onshore wind, notably in Europe. TotalEnergies sees strong growth potential in offshore wind energy, especially since it can leverage its teams’ expertise in managing and operating offshore megaprojects.
The offshore wind projects portfolio's total capacity exceeds 10 GW, of which two-thirds fixed-bottom and one-third floating.
Launch in 2021 of several stationary electricity storage projects to support renewables
Electricity storage solutions are necessary to offset the intermittence of solar and wind projects, make the most of daily volatility in the electricity markets and ensure grid stability. In this segment, TotalEnergies benefits from the technological expertise of Saft, which also aims to make the most of this fast-growing market.
(5) Return on equity, including partial divestments.
(6) Adjusted EBITDA (Earnings Before Interest, Tax, Depreciation and Amortization) corresponds to the adjusted earnings before depreciation, depletion and impairment of tangible and intangible assets and mineral interests, income tax expense and cost of net debt, i.e., all operating income and contribution of equity affiliates to net income.
Natural Gas, Transition Fuel
For TotalEnergies, natural gas is a key transition energy. It plays a major role in power generation thanks to its flexibility and capacity for responding to the strong growth in demand fueled by the electrification of uses. Natural gas releases half the greenhouse gas emissions of coal in power generation and, when used as a substitute, makes it possible to achieve substantial reductions as is already in the case in the United States and United Kingdom. Obviously, for gas to play this role, all the participants in the value chain – businesses and States – must pull together to fight methane emissions, as was underlined at the COP26 meeting in Glasgow with the commitment from 105 States to reduce methane emissions by 30% by 2030. TotalEnergies has committed to reducing methane emissions by 80% by 2030(7).
Main strengths of gas
- Widely available resources, well redistributed worldwide thanks to LNG.
- A simple and immediate solution for decarbonizing electricity and industry, especially in high energy consuming sectors like steel and cement manufacturing.
- An ideal partner for renewables, which are intermittent and seasonable by nature.
- A core component of numerous coal-consuming countries’ roadmaps for getting to net zero.
- A source for massively developing blue hydrogen with carbon capture and storage (CCS) technologies.
- Increase the share of natural gas in the sales mix to 50% by 2030.
- Strengthen the Company’s position among the Top 3 in LNG.
- Cover the entire gas value chain, from production and trading to gas-fired power plants and retailing.
- Reduce the gas value chain’s emissions and eliminate methane emissions.
- Work with local partners to promote the shift from coal to natural gas.
Ranking among the top three worldwide in low carbon LNG by 2030
Once liquefied, natural gas can be transported and delivered to places of use. Global demand for liquefied natural gas (LNG) has seen strong growth, rising by 9% a year between 2015 and 2021. With 42 Mt sold in 2021, TotalEnergies is the world's second largest non-state-owned LNG company. It aims to sell 50 Mt per year by 2025, i.e. to maintain a stable global market share of 10%. In 2021, 99% of the Company’s LNG sales went to countries that have committed to carbon neutrality.
Reducing our LNG value chain's emissions intensity
This growth requires an exemplary strategy for greenhouse gas emissions. In reducing emissions across the LNG chain, the priority is on methane. The Company is also working on improving liquefaction plant performance, notably in the United States, in Qatar and in Russia, with energy efficiency projects, electrification using renewable solar and wind energy, and native carbon capture and storage. Lastly, TotalEnergies is renewing its fleet of LNG carriers with new vessels that emit on average 40% less CO2 than older ships.
(7) See "Eliminating our Methane emissions" later in this chapter.
Petroleum products: adapting to demand
Demand for petroleum products is expected to stagnate and then decline between now and 2030 thanks to technological progress and evolving uses. By 2050, demand will have dropped significantly. Petroleum products will have to meet increasingly stringent requirements on limiting the emissions related to their extraction and use.
TotalEnergies is reducing the share of petroleum products in its sales mix, from 65% in 2015 to 44% in 2021, with a targeted 30% in 2030.
The objective is for the Company’s petroleum product sales not to exceed its oil production, which itself will peak during the decade before declining, or around 1. Mb/d in 2030.
Investments remain necessary to satisfy demand, given the natural decline in field output. The Company gives priority to oil projects with low technical costs (typically below $20/b) and a low breakeven point (typically below $30/b). All new projects are assessed for their contribution to the average carbon intensity of their category in the Upstream portfolio. All approved projects must help reduce this intensity. New hydrocarbon developments are limited to the least emitting fields. In 2021, for example, TotalEnergies decided to exit Venezuela, considering that production of the Orinoco Belt’s heavy oils did not meet its greenhouse gas emissions objectives.
The Tilenga and EACOP projects in Uganda were approved with a low technical cost of $11 per barrel and CO2 emissions significantly below those of the current portfolio (13 kg CO2 per barrel vs. 18 kg CO2 per barrel).
Late 2021, the Company broadened its presence in Brazil’s offshore Atapu and Sépia fields, which represent low-cost, low-emissions reserves.
In addition, TotalEnergies respects exclusion zones and good environmental practices. TotalEnergies will not explore for oil in the Arctic Sea ice and will not approve any capacity increases in Canada's oil sands.
In September 2021, TotalEnergies signed major multi-energy agreements in Iraq covering the construction of a new gas network and treatment units, the construction of a large-scale seawater treatment unit and the construction of a 1 GW photovoltaic power plant.
Promoting circular management of resources
TotalEnergies joined the Platform for Accelerating the Circular Economy (PACE) in 2022. This initiative launched by the World Economic Forum and now hosted by the World Resources Institute aims to speed the transition to a more circular economy. The Company pledges to double the circularity of its businesses within the next ten years. It contributes to the circular economy at different points in the value chain: through purchasing, sales and production, as well as through the management of its own waste.
Over their lifecycle, biofuels emit over 50% less CO2e than their fossil equivalents (in accordance with European standards), making them a key element in the decarbonization of liquid fuels. TotalEnergies currently has a biofuel production capacity of 500 kt per year, primarily at the La Mède refinery in France. Its goal is to increase that to 2 Mt by 2025 and 5 Mt by 2030, sustainably produced.
Today, more than 90% of the biofuels in the market are first generation, meaning they are made from virgin vegetable oils or sugar. TotalEnergies is investing in advanced biofuels projects based on animal fat or used oils, thereby limiting the competition for and impact on arable land. These advanced biofuels will add to the range of first-generation biofuels. Looking further out, the Company is investing in R&D into so-called second- and third-generation biofuels based on micro-algae, but they still raise numerous technological challenges.
TotalEnergies has converted its La Mède refinery in France into a world-class biorefinery to meet its ambition of being a biofuel market leader. The facility produces hydrotreated vegetable oil (HVO - a precursor for renewable diesel and sustainable aviation fuel), bionaphtha (a precursor for renewable polymers) and bioLPG (renewable liquefied gas) for use in mobility or heating.
The agricultural feedstock used to make these products complies with sustainability and traceability requirements concerning carbon footprint, non-deforestation and land use. The Company has made a commitment to stop sourcing palm oil in 2023 and aims to increase the share of used cooking oil and animal fat in feedstock to 50% by 2025. TotalEnergies’ future Grandpuits zero-crude complex will also produce biofuel.
Biogas, produced from the anaerobic digestion of organic waste, is a renewable gas comprised primarily of methane. Compatible with existing transportation and storage infrastructure, it has a key role to play in decarbonizing gas products and reducing greenhouse gas emissions through the development of a circular economy. The Company aims to produce 2 TWh per year of biomethane starting in 2025 and more than 5 TWh per year by 2030 worldwide.
In early 2021, TotalEnergies became a major player in biogas in France by acquiring Fonroche Biogaz, with 500 GWh/year of installed capacity. In late 2021, TotalEnergies and Clean Energy Fuel Corp.(8) broke ground for their first biomethane production unit in Friona, Texas. The output will be used as an alternative fuel for mobility, thereby helping to decarbonize road transportation. The facility will use livestock manure to produce more than 40 GWh per year of biomethane; as a result, 45 kt of CO2e emissions will be avoided each year.
In early 2022, TotalEnergies and Veolia joined forces to produce biomethane from Veolia waste and water treatment facilities operating in more than 15 countries, with the goal of producing up to 1,5 TWh of biomethane a year by 2025.
Hydrogen is an energy carrier between primary energy source and final application that does not generate any CO2during its lifecycle if it was produced in a decarbonized process. Growing generation of decarbonized electricity is creating opportunities to produce green hydrogen via electrolysis of water using decarbonized electricity. In addition, the development of carbon storage is paving the way for the development of blue hydrogen using natural gas.
The European Union's objectives of installing more than 40 GW of electrolyzers powered by renewable electricity to produce up to 10 Mt of renewable hydrogen a year by 2030(9) help accelerate decarbonized hydrogen projects, particularly for industries where decarbonization and/or electrification are difficult. TotalEnergies is working with its suppliers and partners to decarbonize all of the hydrogen used in its European refineries by 2030. This represents a reduction in CO2 emissions of 3 Mt per year. Further out, the Company aims to pioneer mass production of clean and low carbon hydrogen to serve demand for hydrogen fuel as soon as the market takes off.
TotalEnergies, working with Engie, is developing the Masshylia green hydrogen project at the La Mède biorefinery. The project will be powered by solar and wind farms with an overall capacity of close to 300 MW. Its 125 MW electrolyzer will produce more than 10 kt/y of green hydrogen to meet the needs of the biorefinery and help reduce its emissions by 140 kt of CO2 a year.
At the Zeeland refinery, the Company plans to capture carbon from the steam methane reforming unit (SMR) that produces hydrogen from natural gas. It is also developing a 150 MW electrolyzer intended to be linked to an offshore wind field. In all the Company has six projects in progress in Europe.
Synthetic or e-fuels
The production of synthetic fuels from renewable hydrogen and captured CO2 is a promising avenue for decarbonizing transportation. The pace at which these e-fuels scale up will depend on the development of green hydrogen. Besides being low carbon themselves, they offer the advantage of recycling CO2. E-fuels are one of the solutions for getting to net zero via carbon capture and utilization technologies.
TotalEnergies is staking out a position in this market, notably to help decarbonize the aviation industry with sustainable aviation fuel. In early 2022, TotalEnergies joined a Masdar and Siemens initiative in the United Arab Emirates to build a pilot unit for producing green hydrogen that will be used to convert CO2 into sustainable aviation fuel.
Bioplastics and recycled plastics
The circular economy for plastics is based on three axes:
- Axis 1. Mechanical recycling, which is the most mature technology in the market. Mechanical recycling processes materials from selective sorting and collection centers and is suited to the needs of industries such as automobile manufacturing and construction. The Company's Synova subsidiary, with a production capacity of 45 kt at end-2021, is involved in this part of the value chain. It aims to produce 100 kt as from 2025.
- Axis 2. Advanced recycling, which can process waste that cannot be recycled mechanically and serve other markets, such as food-grade plastics. The Company currently produces polymers from advanced recycling at the Antwerp complex using TACoil produced by partner Plastic Energy, with which it has joined forces to build a production unit at Grandpuits. TotalEnergies is also partnering with Honeywell to promote advanced recycling of plastics in Europe and the United States.
- Axis 3. Bioplastics. The Company provides customers with biopolymers made from biofeedstocks based on vegetable oils or used cooking oils processed at the La Mède biorefinery (and Grandpuits tomorrow), as well as polylactic acid (PLA), a fully recyclable and compostable bioplastic based on starch or sugar produced by its joint venture with Corbion at the PLA plant in Rayong, Thailand and future unit at Grandpuits in France.
In 2021, the Company produced 60 kt of recycled and bioplastic. It aims to produce 30% recycled or biopolymers by 2030, or one million tons.
(8) TotalEnergies holds a capital share of 19.09% of Clean Energy Fuels Corp., U.S. Company listed on NASDAQ (as of 31 December 2021).
(9) Source: A hydrogen strategy for a climate-neutral Europe, European Commission, 2020
The world’s energy mix needs to change if the objectives of the Paris Agreement are to be achieved. As a broad energy company, therefore, TotalEnergies has factored this development into its strategy and set itself the ambition of achieving carbon neutrality (net zero emissions) by 2050, together with society.
TotalEnergies promotes a policy of reducing GHG emissions based on the following principles in order of priority:
- avoid emissions;
- reduce them by using the best available technologies;
- offset the residual emissions thus minimized.
TotalEnergies sets the intermediate targets by 2030:
At the global level
1. Achieve by 2050 or earlier carbon neutrality (zero net emissions) for TotalEnergies' operated activities (Scope 1+2) with intermediate targets of:
- reducing GHG emissions (Scope 1+2) of its operated facilities from 46 Mt CO2e in 2015 to less than 40 Mt CO2e by 2025 ;
- reducing net emissions(10) of GHG (Scope 1+2) for its operated activities by at least 40% by 2030 compared to 2015, thus bringing net emissions to between 25 Mt and 30 Mt CO2e.
These objectives for operated emissions include emissions related to the growth strategy in electricity deployed since 2015, which led to the development of a flexible power generation portfolio based on CCGT plants. These CCGT emissions, virtually nil in 2015, stood at 4 million tons in 2021 and could amount to more than 6 million tons in 2025.
2. Achieve by 2050 or earlier carbon neutrality (net zero emissions) for indirect GHG emissions related to its customers’ use of energy products (Scope 3), together with society. This axis requires TotalEnergies to work actively with its customers, since this means they will reduce their direct emissions (Scope 1+2) that correspond to TotalEnergies’ indirect Scope 3 emissions.
The Company's intermediate targets for 2030 are to reduce:
- Scope 3 GHG emissions related to its customers' use of energy products to less than 400 Mt CO2e, which is a level lower than in 2015, despite the growth of its energy production in the coming decade;
- Scope 3 GHG emissions from the petroleum products sold worldwide by more than 30% compared to 2015.
- the average carbon intensity of energy products used by customers by more than 20% compared to 2015. By 2025, the target reduction is at least 10%.
3. Achieving carbon neutrality (zero net emissions) of energy products throughout the value chain (from production to use by customers) by 2050 or earlier (Scope 1+2+3), together with society. Given that, for the Company, Europe currently accounts for about half of GHG emissions related to the use by its customers of energy products (Scope 3) and that Europe has set ambitious targets for 2030 towards carbon neutrality, TotalEnergies wants to actively contribute to this ambition.
The Company has set itself the following intermediate objectives for 2030:
- reducing GHG emissions from energy products throughout the value chain (from production to use by its customers) (Scope 1+2+3) by at least 30% relative to 2015;
- reducing Scope 3 GHG emissions relating to customers’ use of the energy products in Europe by at least 30% in absolute terms, relative to 2015, which represents a major step toward carbon neutrality by 2050.
(10) The calculation of net emissions takes into account negative emissions from natural sinks like forests, regenerative agriculture and wetlands.
(11) Europe refers to the European Union, Norway, the United Kingdom and Switzerland.
Our levers to achieve our ambition of net zero emissions
To get to net zero by 2050, together with society, TotalEnergies is transforming into a multi-energy company and deploying specific action plans to reduce its emissions and achieve its short- and medium-term objectives.
The Company is taking action to:
- Reduce emissions from its operated industrial facilities (Scope 1+2) by more than 40% by 2030 and disclose the progress made at its operated and non-operated facilities.
- Reduce the indirect emissions related to its products (Scope 3), together with society – i.e., its customers, its suppliers, its partners and public authorities – by helping to transform its customers’ energy demand.
1) Reducing Our Scope 1+2 emissions, using the best available technologies
TotalEnergies' primary responsibility as an industrial operator is to reduce the emissions resulting from its operations.
In early 2019, TotalEnergies announced its aim to reduce emissions from its operated facilities to less than 40 million tons by 2025 and set itself the target of cutting Scope 1+2 net emissions (including carbon sinks) for its operated activities by at least 40% in 2030 relative to 2015.
These objectives for operated emissions include emissions related to the growth strategy in electricity deployed since 2015, which led to the development of a flexible power generation portfolio based on CCGT plants. These CCGT emissions, virtually nil in 2015, stood at 4 million tons in 2021 and could amount to more than 6 million tons in 2025.
The main driver for achieving these objectives is to develop emissions-reduction projects at the Company’s industrial sites using best available technologies. This means improving energy efficiency, reducing flaring and methane emissions, supplying sites with renewable electricity and deploying carbon capture and storage for residual emissions. To achieve the net emissions objective, nature-based projects (NBS - Nature Based Solutions) will help offset a limited share (5 to 10 Mt CO2e per annum) of emissions by 2030.
Since late 2018, a dedicated team for reducing greenhouse gas emissions, known as the CO2 Fighters, has been tracking GHG emissions across the Company. It’s tasked with encouraging a low-carbon mindset within the Company, initiating energy efficiency projects, accelerating the electrification process at facilities and helping to introduce greener forms of energy consumption.
The team has overseen more than 400 emissions reduction projects, most of which have cost less than $10 per ton of CO2. By 2025, 160 upstream projects and more than 200 downstream projects will yield reductions in Scope 1+2 emissions of 2.5 million and 4.5 million tons of CO2 respectively.
A reduction target for 2030 in step with the 2030 objectives of Net Zero 2050 countries
TotalEnergies set its target of a 40% reduction in net emissions (Scope 1+2) from its operated facilities between 2015 and 2030 with an eye to the European Union’s objectives for 2030 and the objectives of countries with a net zero by 2050 pledge as part of the Paris Agreement.
To qualify the level of this ambition, the Company called on two independent third parties known for their expertise in energy and decarbonization to analyze the greenhouse gas emissions reduction objectives for 2030 of countries committed to net zero by 2050 as of COP26 in Glasgow: Carbone 4, a consultancy specialized in low-carbon strategy in France and the Center on Global Energy Policy at Columbia University in the United States.
These objectives, taken from each country’s nationally determined contributions (NDCs), cover direct emissions on their territory, comparable to Scope 1 for businesses.
Carbone 4 makes a distinction between two scopes:
- Countries that explicitly mention their net zero by 2050 ambition in their NDC, having set a 2030 target consistent with that ambition.
- All countries that have publicly announced their net zero by 2050 ambition, notably at COP26, including those that have not updated their NDC since then.
The more restricted scope includes the 35 most ambitious countries(12), which have committed to reducing the net emissions(13) by 39 to 40% between 2015 and 2030. The broader scope includes 43 countries(14) committed to a 28 to 31% reduction over the same period.
In its study(15), Columbia University’s Center on Global Energy Policy puts the reduction commitment for all countries with a net zero by 2050 pledge at 27% between 2015 and 2030.
The European Union’s ”Fit for 55” objective of a 55% decrease between 1990 and 2030 corresponds to a 37% decrease between 2015 and 2030(16).
The IEA’s NZE scenario
In its 1.5 °C scenario, the IEA is aiming for carbon neutrality by 2050, which requires a 39% reduction in net emissions from energy between 2015 and 2030 (from 34 to 21 billion tons of CO2e).
Our progress in 2021
Scope 1+2 emissions decreased from 41.5 Mt in 2020 to 37.0 Mt (excluding COVID-19 effect) in 2021 thanks to 120 emissions-reduction initiatives carried out across the Company and portfolio management aligned with our strategy (divestment of the Lindsey refinery in the United Kingdom and the halt of Grandpuits in France).
These data include the commissioning of two combined cycle gas turbine plants.
(12) EU-27, United States, Japan, Canada, Australia, United Kingdom, South Korea, Argentina and South Africa
(13) Including sequestration capacity of forests
(14) Restricted scope + Brazil, Colombia, Israel, United Arab Emirates, Peru, Thailand, Malaysia and Vietnam.
(15) "Tallying updated NDCs to gauge emissions reductions in 2030 and progress toward Net Zero" published on March 2, 2022
(16) EU-27. Adding in Norway, the United Kingdom and Switzerland, the reduction ambition is 39% between 2015 and 2030.
Improving the efficiency of the Company's facilities
A portion of the direct emissions from the Company's facilities corresponds to energy losses through flaring, venting(17), etc. or fugitive emissions. This part is a minority (about 15%) but should be reduced as a priority. The second, more important part (about 85%) corresponds to energy use, either by combustion, for example to generate electricity, or within industrial processes, and is the subject of the Company's energy efficiency improvement projects.
Restricting routine flaring is a priority for reducing GHG emissions. Since 2000, TotalEnergies has made a commitment to discontinue routine flaring on its new projects. As a founding member of the World Bank’s “Zero Routine Flaring by 2030” initiative since 2014, the Company has pledged to end the practice altogether by 2030. Routine flaring has been reduced by 90% since 2010, and the Company has set a new target to bring the level below 0.1 million cubic meters per day as from 2025.
Occasional, or non-routine, flaring connected with operational issues or the start-up of facilities has also been addressed with action plans, as has safety flaring, which is used to protect facilities. In Argentina and Bolivia, for example, the Company has reduced safety flaring by half, thanks to continuous monitoring of gas flows and optimized flaring parameters.
Using less energy
Improving energy efficiency means reducing the quantity of energy used to produce a given amount of energy, so emissions are reduced as well.
Exploration & Production is enhancing energy efficiency through projects to reduce the quantity of gas its facilities use to produce the energy they need.
Refining & Chemicals, for which energy consumption is a key factor in production costs, is continuing its efforts of recent years to improve energy efficiency as part of an investment plan totaling $450 million over the period 2018-2025.
Improving energy efficiency also entails finding new ways to use waste heat from units. Several refineries, including Leuna in Germany, have mapped and quantified their sources of waste heat. Research is underway to see how heat from nearby industrial and municipal ecosystems can be put to use.
The Company has made a firm commitment to embracing digital technology at its sites as a driver in improving energy performance. As of the end of 2021, 26 out of the 46 operated sites using more than 50,000 toe/year were equipped with an auditable energy management system using for instance ISO 50001 certification for their energy management system(18).
Decarbonizing electricity purchases (Scope 2)
In 2020, with its "Go-Green" project, TotalEnergies decided to aim for net zero emissions for all electricity purchases at its operated sites in Europe by 2025. All electricity needs at the Company’s industrial and commercial sites, as well as its offices, will be met by renewable power obtained through the Company’s regional generation capacity in Europe; a similar strategy has been adopted in the United States. Taken together, this will represent around 7 TWh/year.
- In Europe, electricity will be provided by solar farms acquired in Spain in 2020, offering capacity of 5 GW and production of 10 TWh/year by 2025. 6 TWh/year will be routed to European sites under a PPA(19). The Electricity Trading teams will manage the contract with Refining & Chemicals and excess production will be sold to third parties.
- For the United States, in 2021 the Company acquired a portfolio of 2.2 GW in solar projects and 0.6 GW in battery storage projects to cover 100% of electricity needs at operated industrial sites, including the Port Arthur refining and petrochemical complex and the La Porte and Carville petrochemical sites.
As a result, the Company is on track to reduce Scope 2 emissions across its operated scope by more than 2 million tons of carbon annually as of 2025.
(17) Venting: emissions associated with the venting of gases, on an occasional or continuous basis, at certain facilities, such as water treatment, hydrocarbon loading and unloading, glycol dehydrators and pneumatic devices fueled by natural gas.
(18) The ISO 50001 standard accompanies the implementation in companies of an energy management system that allows a better use of energy.
(19) Power Purchasing Agreement.
Tend towards at zero methane emissions
Methane is a greenhouse gas with a global warming potential 25 times higher than that of CO2 over 100 years. In 2021, the IPCC assessed methane’s contribution to current warming at 0.5 °C since pre-industrial times. COP26 highlighted the major role that methane emissions reduction must play in limiting global warming, both in its final conclusion (the Glasgow Climate Pact) and through the Global Methane Pledge, a commitment by 105 countries, led by the United States and the European Union(20), to reduce their methane emissions by 30% from 2020 levels by 2030.
The Company has been working on reducing its methane emissions for several years. It halved its operated methane emissions between 2010 and 2020. In line with the Glasgow agreements, the Company is setting new targets for the decade to come: reductions from 2020 levels of 50% by 2025 and 80% by 2030.
The Company is also maintaining its target of keeping methane intensity(21) below 0.1% across its operated gas facilities.
Achieving those objectives requires improved measuring capability and redoubled efforts on emissions sources.
Measuring methane emissions more accurately
Methane emissions have numerous and dispersed sources. TotalEnergies is a pioneer in detecting and quantifying emissions across the entire value chain.
- The Company operates a site for testing methane emissions measurement technology. Known as the TADI complex(22), it is unparalleled in Europe; only one comparable site exists worldwide, in the United States(23).
- In addition, TotalEnergies is speeding up deployment of its drone-mounted methane detection technology, AUSEA(24), at all of its operated sites starting in 2022.
The Company is also enhancing its reporting as part of OGMP 2.0, the second phase of the United Nations Development Programme’s Oil & Gas Methane Partnership. OGMP 2.0 outlines a reporting framework that encompasses the entire gas value chain and non-operated scope, including a breakdown of emissions by source, information on inventory methodologies and the use of airborne measurement campaigns.
In late 2021, TotalEnergies was awarded Gold Standard(25) status by the OGMP. It will implement the necessary continuous improvement measures to maintain this level for methane emissions measurement and reporting.
Abating emissions at each source
Methane emissions are primarily attributable to venting (more than half the total) and flaring(26) (a quarter of the total); the rest are fugitive emissions (i.e., leaks at valves, flanges and couplings) or the product of incomplete gas combustion at our facilities (turbines, furnaces, boilers, etc.).
In order to tend towards zero methane emissions, stronger action will be taken on each of these emission sources:
- Reductions in venting: projects to reroute vents to the gas export system or the flare and to reduce instrument gas on producing assets. In 2021, the decline from the year before linked to reductions in venting came to 6,000 tons per year (projects in Gabon and the U.K.).
- Reductions in flaring: In 2021, the decrease in flaring from 2020 reduced emissions by 1,800 tons per year.
- Leak reduction: annual campaigns to identify and repair leaks at all operated sites will be deployed starting in 2022. In 2021, emissions declined by 4,000 tons as a result of leak reduction efforts, including a significant upgrade to the OML58 facility in Nigeria.
Moreover, all new projects include strict design criteria for preventing methane emissions: no instrument gas, no continuous cold venting and the systematic use of closed flares. All of these practices have been implemented at the CLOV site in Angola, Moho-Nord in the Republic of the Congo and Egina in Nigeria.
(20) These 105 countries represent 70% of the global economy and account for nearly half of the planet’s anthropogenic methane emissions.
(21) The intensity of methane emissions in relation to the commercial gas produced, expressed in a volume/volume ratio.
(22) TotalEnergies Anomaly Detection Initiative.
(23) METEC, Colorado State University.
(24) Airborne Ultra-light Spectrometer for Environmental Applications.
(25) International Methane Emissions Observatory (IMEO) report under OGMP2.0
(26) Emissions associated with incomplete gas combustion, based on a standardized estimate of 2% of volumes flared.
Capturing and storing carbon at our facilities
Reducing emissions at the facilities also means developing industrial processes for carbon capture, transport and storage (CCS, Carbon capture and storage), a field in which TotalEnergies wields critical expertise in large-scale project management, gas treatment and geoscience.
The Company has been contributing to the development of CCS solutions in the Norwegian Sea since 1996 to reduce emissions from the Sleipner(27) and Snøhvit natural gas fields. The CO2 associated with that natural gas, known as native CO2, is isolated and injected into the subsurface. From 2010 to 2013, TotalEnergies developed a pilot project in Lacq, France, involving a complete CCS chain, in which carbon from a steam generator was captured using oxy-combustion technology (a European first) and then transported and stored in an depleted reservoir.
This experience in CCS opens the door to large-scale projects for reducing carbon emissions resulting from hydrogen production at the Company’s refineries in Europe. Current CO2 storage projects are located in the North Sea to take advantage of its significant potential, particularly in depleted fields operated by TotalEnergies. Moreover, the regulatory environment within the E.U. is favorable to such projects. Not only will they provide a way to reduce the Company’s own emissions, but thanks to additional capacity, it can also offer CO2 emissions storage to its customers to reduce their Scope 1 and the Scope 3 emissions of the Company.
The 2021 budget for the entire CCS system was $100 million and TotalEnergies is now aiming to expanding storage capacity of about 10 Mt CO2/year by 2030.
- In Norway, the Company, together with Equinor and Shell, launched Northern Lights, the first large-scale carbon transport and storage project. Approved by the Norwegian government in 2020, the project is currently in the construction phase. It will allow industrial emitters in Norway and elsewhere in Europe to store their emissions.
- In the Netherlands, TotalEnergies and its partners are studying the Aramis project designed to develop a logistics chain and hub in the port of Rotterdam to transport CO2 to depleted offshore fields, some of which are operated by TotalEnergies.
- In the United Kingdom, the Company is working with its partners on the Northern Endurance Partnership transport and storage project, which aims to decarbonize the Teesside and Humberside industrial regions.
(27) TotalEnergies sold its interest in this field in 2016.
Working with our partners on non-operated assets
TotalEnergies’ Scope 1+2 emissions based on equity share amounted to 54 million tons of CO2e in 2021. Half of those emissions were attributable to its interests in sites it operates(28); interests in sites operated by its partners, primarily upstream, accounted for the other half.
For those non-operated assets, the Company acts by exerting its influence and by sharing best practices with its partners. In 2021 TotalEnergies helped to prepare action plans for reducing emissions at its non-operated Refining & Chemicals assets (notably Naphtachimie in France, HTC in South Korea and Satorp in Saudi Arabia). As with its operated assets, the Company takes steps to improve energy efficiency, electrify operations using green electricity, reduce flaring and manage methane emissions.
In 2021, TotalEnergies joined forces with Novatek to reduce the intensity of the LNG chain, and conducted an energy efficiency audit of the Lavéra petrochemical facility in France.
In Norway, TotalEnergies is a partner in the Johan Sverdrup field, which came onstream in 2019 and has an emissions intensity of less than 2 kilograms of CO2e/boe thanks to the use of green electricity supplied from shore, and the Oseberg field, where an electrification project was initiated in 2021. It is also studying plans to electrify the Snøhvit LNG plant alongside the operator, Equinor. In the United Arab Emirates, where TotalEnergies is the biggest international operator, its non-operated onshore assets were powered with green electricity as of January 1, 2022, and with the partner, ADNOC, the Company is reviewing an electrification project for the offshore fields. Photovoltaic solar projects are also in the works at the non-operated Refining & Chemicals facilities in Saudi Arabia, Algeria and South Africa.
For the first time in 2021, TotalEnergies released the methane emissions from its non-operated assets. The operators of those assets were each asked to provide their emissions data, itemized by source(29). Those operators differ in their measuring and reporting capabilities, but the Company is working with them in a commitment to continuous improvement, with the aim of reaching the highest reporting level in the OGMP 2.0 framework.
(28) 27 million tons on an equity share basis, 37 million tons of CO2e on a 100% share basis.
(29) Thirteen sources using the methodology in the OGMP 2.0 reporting framework.
Offsetting residual emissions with natural carbon sinks
The model for managing areas must be integrated and shared with the local population. Within this framework, operations may comprise a variety of techniques (conservation, afforestation-reforestation, agroforestry, agricultural transition, blue carbon, etc.) and appropriate types of contracts (purchase contract, sustainable financing mechanism, impact funds, financed project, etc.). The goal is to combine and balance the value of agricultural and forestry revenues with the value of co-benefits for the population, soil, biodiversity, and the water cycle and that of carbon credits. When this is done, the local standard of living improves and the causes of degradation and deforestation, which are major sources of greenhouse gas emissions, recede. The Company works with experienced partners to manage the long-term approach required and the risks involved in these complex projects. The projects are certified in accordance with the highest standards, including Vera VCS and CCB.
Backed by an average annual budget of $100 million between 2020 and 2030, TotalEnergies aims to build up a stock of 100 million credits(30) and develop the annual capacity to produce at least five million credits a year as from 2030. The Company does not intend to trade these carbon credits but rather to gradually use its stock and annual production to neutralize its residual Scope 1+2 emissions as from 2030. As of end-2021, TotalEnergies’ stock stood a little under 7 million certified credits. The cumulative budget for all of the signed operations amounts to nearly $350 million over their lifetime, for an anticipated aggregate volume of credits of 23 million in 2030 and 31 million in 2050.
(30) One credit corresponds to one ton of sequestered CO2.
2) Reducing Scope 3 emissions, together with society
The Scope 3 emissions of an integrated multi-energy company
One major focus of TotalEnergies’ strategy is to shape its customers’ consumption habits. About 90% of petroleum product emissions occur when those products are used (Scope 3, GHG Protocol - Category 11), while only about 10% are generated in their production (Scope 1+2).
Our objectives for 2030
TotalEnergies has set a target by 2030 of reducing its global Scope 3 emissions related to the use by its customers of the energy products sold to below 2015 levels, even though over the same period the Company plans to produce and sell 30% more energy products due, in particular, to growth in sales of LNG and electricity.
On the other hand, to anticipate the decline in oil demand by the end of the decade, the Company has initiated a voluntary strategy to adapt its downstream refining and distribution activities to bring them back to its oil production level. Accordingly, the Company has committed to a new objective by 2030: to reduce Scope 3 emissions from petroleum products sold worldwide by more than 30% between 2015 and 2030.
The sharp rise in sales of electricity (a twentyfold increase over the period 2015-2030) will make it possible to decarbonize the Company’s energy mix without adding to indirect Scope 3 emissions (GHG Protocol - Category 11).
Gas is a key transition fuel that allows customers to replace the higher emitting coal they use and that TotalEnergies does not produce or sell (the Company voluntarily withdrew from coal in 2016). TotalEnergies will increase twofold its sales of LNG over the period 2019-2030. Reducing sales of petroleum products by more than 30% and boosting sales of biofuels to three times their current level will help reduce Scope 3 emissions in absolute terms over the 2015-2030 period.
This Scope 3 trend over the 2020-2030 period varies by region, in line with evolving global energy demand (TotalEnergies having very little presence in North America):
- In support of the European Union’s ambitions on the path toward carbon neutrality and in light of Europe’s weight in its Scope 3 emissions in 2015 (256 million tons out of 410 million tons), the Company has set a specific target of reducing its Scope 1+2+3 emissions in Europe by 30% in absolute terms over the same period, as the reduction in sales of petroleum products will focus particularly on Europe.
- At the same time, the Company intends to provide populations in developing countries with the energy they need to raise their living standards. It is increasing its energy supplies in these regions with a priority on natural gas and renewable energies.
Together with our customers– mobility
TotalEnergies is actively striving to make net zero emissions an ambition it shares with its customers. The primary avenue for effectively advancing the energy transition is to gradually change the forms of energy its customers use. With that in mind, the Company is pursuing a marketing strategy focused on the lowest-carbon products and scaling back its offerings for certain applications where competitive low-carbon alternatives are available. As of 2018, transportation generated approximately 17% of global greenhouse gas emissions(31). The Company’s belief is that the mobility of the future does not call for a single solution, but an array of complementary solutions.
Road transportation undoubtedly offers a wider range of solutions for decarbonization than any other form of transport. TotalEnergies’ strategy is to establish operations in four major new types of road mobility:
1. Winning recognition as a major player in electric mobility
As their driving range increases, electric vehicles (EVs) offer a future-oriented solution, accounting for 9% of total vehicle sales in 2021. TotalEnergies is acting on two key links in that value chain to spur adoption of EVs by its customers:
- Deployment of charging infrastructure:
- 150,000 charge points worldwide by 2025.
- 300 service stations on motorways and major roads and 600 urban service stations with high power chargers (HPC) by 2030 to support e-mobility travel in Europe. This works out to one HPC every 150 km, for optimal coverage on long-distance trips.
- TotalEnergies is transforming and adapting its presence in cities by developing an e-mobility network in Europe and Asia.
- Production of affordable, high-performance batteries: Automotive Cells Company (ACC), a joint venture founded by TotalEnergies and Stellantis in 2020, is set to emerge as a global player in the development and manufacture of automotive batteries beginning in 2023. With Saft, TotalEnergies is giving the new company the benefit of its expertise in R&D. The batteries produced by ACC will power nearly one million EVs a year, or 10% of the European market. Mercedes-Benz joined ACC in September 2021. This is a major investment to contribute to the development of electric vehicles in Europe.
2. Expanding the distribution of biofuels
At year-end 2021, internal combustion vehicles still accounted for more than 98% of the land vehicles on the road worldwide. Sustainable biofuels can reduce those vehicles’ CO2 emissions. In 2021, TotalEnergies distributed 3 million tons of sustainable biofuels(32) worldwide. Government policies to promote carbon neutrality are boosting demand for these renewable products, especially in Europe. The Company will be part of that change, and aims to sell 7 to 8 million tons in 2025.
3. Supporting our customers’ energy transition thanks to NGV
Natural gas vehicle (NGV) fuel, marketed in the form of compressed natural gas (CNG) or liquefied natural gas (LNG), offers a transitional pathway for reducing CO2 emissions. This fuel is now available at 600 of the service stations in the TotalEnergies global network. The incorporation of biogas, if there is enough available production, may make it possible to decarbonize NGV, CNG and LNG in the future. In February 2021, TotalEnergies inaugurated France’s largest NGV and bio-NGV service station in Gennevilliers.
4. Promoting low-carbon solutions for trucks
Truck manufacturers are developing electric vehicles for daily journeys of less than 500 km and are also working on very high-power batteries that can extend truck’s driving range. TotalEnergies is supporting that process by expanding its network of high-power charge points. Its goal is to have a charging station every 150 kilometers throughout Western Europe, with charging solutions available to trucking professionals directly at their home site. In addition, several truck manufacturers are looking at hydrogen as an attractive alternative for longer trips. With this in mind, TotalEnergies entered into a partnership with Daimler Trucks in 2021 dedicated to hydrogen infrastructure for trucks in France, Germany and Benelux.
The maritime sector accounts for 90% of all goods transportation and 3% of global carbon emissions. Although heavy fuel oil remains the most common fuel for ship propulsion, the use of LNG, a bridge energy, can reduce CO2 emissions by 20%. In the medium term, decarbonized liquid fuels (such as e-fuel or biofuels) and the use of hydrogen or ammonia will make it possible to reduce those emissions still further. TotalEnergies is working with major shipping companies to define the most appropriate fuels for achieving their decarbonization roadmaps.
In March 2021, TotalEnergies signed an agreement with MSC Cruises to supply some 45,000 tons of LNG annually to future cruise ships. In April 2021, TotalEnergies completed the first bunkering of the CMA CGM Jacques Saadé, the world’s largest container ship powered by LNG, at Dunkirk. In July 2021, CMA CGM and TotalEnergies initiated a feasibility study for France’s first bioLNG production project.
As part of its LNG sales, the company assesses the "GHG emissions of the value chain of the LNG products sold", i.e. the amount of GHGs emitted from the production of the gas to its final use.
TotalEnergies is developing sustainable aviation fuels (SAFs). SAFs include biofuel produced from waste and residues sourced from the circular economy (animal fats, used cooking oil, etc.) as well as synthetic E-Jet fuel for aviation. SAFs will substantially reduce CO2 emissions from air transportation. TotalEnergies is involved in many initiatives to produce and market sustainable aviation fuel in partnership with companies in the aviation industry. These biofuels can already be used as a drop-in fuel with standard jet fuel up to 50%, without any need to modify existing logistics infrastructure, aircraft or engines. With the start-up of production at La Mède in 2021 and Normandy in 2022, TotalEnergies is in a position to meet demand from its customers and the requirements of French legislation, which calls for aircrafts to use at least 1% biojet fuel effective January 1, 2022.
(31) Source: Climate Watch, World Resources Institute, 2018.
(32) Physical volume of biofuels in equivalent ethanol and esters according to the rules defined by the European Union’s RED Directive, excluding volumes sold to third parties by Trading.
Residential, commercial and industrial uses
By the end of 2021, TotalEnergies sold electricity and natural gas to nine million residential and commercial customers in Europe. TotalEnergies is aiming for nearly 13 million sites (B2B and B2C) across every market segment in 2025. The Company gives preference to power from renewable sources and has developed a range of differentiated offerings for residential and business customers.
- For residential customers in Europe, TotalEnergies offers tailored solutions with its Green renewable power service, with rates that are locked in for one year, alongside conventional service offerings. It also helps consumers find energy savings with ConsoLive, a tool that lets them measure their electricity use in real time; ConsoLive’s 40,000 current users have reduced their power consumption by an average of 13%.
- For businesses, TotalEnergies is signing a growing number of corporate power purchase agreements, or CPPAs, that rely on renewable energy. The Company also offers customers the option of adding solar power to their sites. In France, TotalEnergies is the market leader in solar power on buildings, having been awarded projects totaling more than 250 MW in the French Energy Regulatory Commission’s CRE 4 call for tenders since 2017.
Portfolio management that is firmly focused on low-carbon energy
TotalEnergies’ marketing units now deploy a strategy designed to prioritize markets that offer the highest margins per ton of CO2 emitted, and streamline their portfolios accordingly. The Company emphasizes customized solutions that create a direct relationship with the customer, and its goal is to eliminate low-margin sales to resellers, an area in which it lacks a significant competitive advantage.
In the aviation industry, TotalEnergies is focusing on high-value-added airport facilities while maintaining its global presence.
As of 2025, the Company will no longer be selling heavy fuel oil for power generation, and it is already steering its customers toward alternatives, such as natural gas, biofuels and renewable energies..
Developing CO2storage services
Under the scenarios prepared by the IEA, the volume of CO2 captured and stored using CCS processes could total 5 to 7 billion tons of CO2e annually by 2050, compared to just 40 million tons today. Developing that business therefore represents a major challenge for the decades ahead to get to net zero by 2050.
TotalEnergies’ CCS projects are helping to reduce its own emissions, but via additional available capacity, they will also help it develop services for transporting and storing carbon on behalf of industrial customers intent on reducing their emissions. The North Sea is an ideal setting for such projects, offering significant storage potential close to major industrial centers. TotalEnergies is taking part in several large-scale initiatives in the North Sea.
The Company’s goal is to provide its customers with storage capacity of more than 10 Mt CO2/year by 2030, with the ambition of lifting capacity to more than 50 Mt CO2/year by 2050.
Through the Ecosolutions program, the Company is developing innovative products and services that perform above market standards on the environmental front. At year-end 2021, 104 products and solutions bore the TotalEnergies Ecosolutions label (vs. 86 at year-end 2020). The CO2e emissions avoided throughout the lifecycle by the use of Ecosolutions products and solutions, compared to the use of benchmark products on the market for an equivalent level of service, are measured annually based on sales volumes. This represented 2 Mt CO2e in 2021.
Together With Our Partners
Navigating the energy transition and capping global warming are global challenges. TotalEnergies can meet those challenges only by actively enlisting its partners, specifically by lobbying governments and industry associations, and its suppliers’ entire ecosystem.
Support for the “Fit for 55” package
TotalEnergies supports the pledges made by nations worldwide to combat global warming as part of the Paris Agreement. Within the European Union, TotalEnergies supports the “Fit for 55” package, and particularly some key components that are aligned with its strategy and positions:
- Broader use of carbon pricing.
- A massive expansion of renewable energies.
- The deployment of infrastructure (charging stations, hydrogen).
- The development of low-carbon and renewable fuels for the transportation industry.
In support of those commitments by the European Commission, it has set a target in Europe of reducing Scope 1+2+3 emissions by 30% between now and 2030.
Mobilization of professional associations
TotalEnergies is a member of many professional associations and has published a list of its affiliations since 2016. The Company typically cooperates with these organizations on technical matters, but some take public stances on other issues, such as climate. The Company ensures that these organizations hold positions aligned with its own, and regularly reviews each organization’s stance on the climate.
Since 2019, TotalEnergies has conducted an annual assessment of the climate-related public positions of the main professional associations of which it is a member. For those with such positions, the Company examines whether they are aligned with its own, based on the six principles from its Advocacy Directive:
- scientific position,
- the Paris Agreement,
- carbon pricing.
- the development of renewable energies and technologies aimed at decarbonizing
- the role of natural gas,
- the carbon offset mechanisms.
During the 2019 and 2020 reviews, the positions taken by the American Petroleum Institute (API) were deemed “partially aligned” with the Company's own positions. After voicing its points of disagreement with the API, and after continuing to promote its positions within the organization, in early 2021 TotalEnergies announced its decision not to renew its membership because of continued divergences over the role of natural gas and methane emissions (the API supports the rollback of the U.S. regulation on methane emissions), support for electric vehicles and the principle of carbon pricing.
TotalEnergies has likewise withdrawn from two other organizations whose positions are not aligned with its own: American Fuel & Petrochemical Manufacturers (AFPM) and the Canadian Association of Petroleum Producers (CAPP).
Additionally, TotalEnergies participates in organizations and initiatives devoted specifically to the fight against climate change.
In 2014, for example, the Company helped launch and develop the Oil & Gas Climate Initiative (OGCI). Comprising 12 major national and international energy operators, this global industry partnership is committed to developing solutions for a sustainable, low-carbon future. In 2021, the OGCI’s members, which collectively account for more than one third of the world’s oil and gas production, embarked on a new strategy for reaching net zero Scope 1+2 emissions by 2050. In addition, OGCI Climate Investments, a fund launched in 2017 to invest $1 billion over 10 years, provides funding to tech start-ups connected with the energy transition.
The Company is also engaged in other international initiatives involving the private and public sectors (non-exhaustive list):
- the World Bank’s “Zero Routine Flaring by 2030” initiative aimed at stopping the routine flaring of the gases associated with oil production;
- for enhanced transparency, taking into account the recommendations of the G20 Financial Stability Board on climate, and of the Task Force on Climate-related Financial Disclosures (TCFD);
- for the development of new state-of-the-art energy companies, since 2017, within the Breakthrough Energy Coalition (BEC), a group of investors created by Bill Gates in 2015, and since 2016 within the Breakthrough Energy Ventures, a $1 billion fund created in 2016 by the BEC;
- to reduce methane emissions, as a member of the United Nations Development Programme’s Oil & Gas Methane Partnership (OGMP) since 2014.
Support for carbon pricing
Carbon pricing is a major tool for reaching net zero. For more than a decade, TotalEnergies has advocated the adoption of carbon pricing, and applies an internal carbon price when evaluating its own projects.
By integrating an energy source’s carbon content in its price, carbon pricing makes the most emission-intensive sources more expensive. In particular, putting a price on carbon gives all players an incentive to shift faster from coal to renewable energies and natural gas for electricity production. Over the long term, it also offers a way to channel investment to research into low-carbon technologies and carbon capture and storage.
The launch of China’s emissions trading scheme (ETS) in 2021, the increase in the price per ton of carbon following reforms to the European ETS market and the return of the United States to discussions on climate all augur positively for the development of carbon pricing. According to the World Bank’s Carbon Pricing Dashboard, more than 21% of global emissions are now covered by 64 carbon pricing systems worldwide.
Since 2014 the Company has been supporting a range of international initiatives that call for the implementation of regulatory mechanisms tailored to local conditions. TotalEnergies is a founding member of the Climate Leadership Council (CLC), which promotes a balanced approach to carbon pricing in the United States in which the revenue is redistributed to the American people in the form of a Carbon Dividend. TotalEnergies also supports the World Bank’s Carbon Pricing Leadership Coalition (CPLC).
Lastly, TotalEnergies actively participates in the debate on climate issues, thanks especially to its long-term partnerships with university chairs, such as the Climate Economics Chair at Paris-Dauphine University, the climate change research program of Massachusetts Institute of Technology (MIT)(33), and Toulouse School of Economics. TotalEnergies also offers training and makes presentations at several universities, thereby taking part in the debate.
(33) The Joint Program on the Science and Policy of Global Change.
3) Progress in 2021
The credibility of the Company’s ambition for 2050 hinges on its ability to show the progress it has made so far, and it is firmly committed to doing that by publishing its 2021 results in meeting its targets online, often in advance:
- Emissions from operated facilities have declined by approximately 20% since 2015. This includes 4 Mt of emissions from CCGT power plants following on the implementation of the Company’s new strategy in electricity to have flexible generation capacity; the decline for operated oil & gas activities thus actually came to 30%.
- For indirect emissions associated with customers’ use of its products:
- Scope 3 emissions worldwide have fallen since 2015. In Europe, those emissions fell by 14% (excluding the COVID-19 effect). On oil products alone the emissions fell by 19% (excluding the COVID-19 effect).
- The lifecycle carbon intensity indicator for the energy products sold felt by 10% since 2015 (excluding the COVID-19 effect), making TotalEnergies the leader among its peers in decarbonizing its energy mix.
Very active management over the last few years has made the Company's portfolio more resilient. More than 35% of its future oil and gas production will come from low-breakeven assets that were not in the portfolio at the end of 2014.
The portfolio benefits from a low breakeven point in line with the strategic objective of less than $30/b (Company's organic breakeven point before dividend below $25/b in 2021), ensuring competitive resources.
In particular, in the upstream segment, TotalEnergies has the lowest production cost per barrel and carbon intensity per barrel of oil equivalent (operated Scope 1+2) among its peers, at around $5/boe and 17 kg CO2/boe, respectively. In addition, the average life of the Company's proved and probable oil and gas reserves is 18 years and the discounted value of its upstream assets beyond 2040 represents less than 15% of their total value. In June 2020, TotalEnergies also reviewed its upstream assets that can be qualified as "stranded", meaning with reserves beyond 20 years and high production costs, whose overall reserves may therefore not be produced by 2050. The only projects concerned are the Fort Hills and Surmont oil sands projects in Canada. TotalEnergies has decided to take only proved reserves into account for impairment testing on these two assets – contrary to general practice which considers proved and probable reserves – and to approve no new projects for increasing the capacity of these Canadian oil sand assets.
The Company's strategy of focusing new oil investments on low carbon intensity projects also led it to exit from extra heavy crude oil assets in Venezuela's Orinoco Belt in 2021.
The characteristics of TotalEnergies' portfolio cushion the risk of having stranded assets in the future if a structural decline in demand for hydrocarbons occurs due to stricter global environmental regulations and constraints and a resulting change in consumer preferences.
In addition, TotalEnergies assesses its portfolio's resilience, including for new material investments, on the basis of relevant scenarios and sensitivity tests. Each material investment – including in the exploration, acquisition and development of oil and gas resources, as well as in other energies and technologies – is reviewed in relation to the objectives of the Paris Agreement; each new investment enhances the resilience of the Company's portfolio.
CO2 price sensitivity
Even if carbon pricing does not currently apply in all of the Company's host countries, TotalEnergies includes a minimum carbon price of $40/ton in its investment criteria (or the current price in a given country, if higher), with the assumption of a linear increase to $100 per ton as from 2030. Beyond 2030, an annual increase of 2% is applied. Assuming a carbon price of $200/ton as from 2020 and an annual increase of 2% thereafter (i.e., a $100/ton increase from the base scenario), TotalEnergies estimates a negative impact of around 9% on the discounted present value of its assets (upstream and downstream).
Sensitivity to oil and gas prices
In relation to the reference scenario used to review investments (Brent at $50/b), application of the IEA's NZE price scenario would lower the discounted present value of the Company's assets (upstream and downstream) by around 17%.
In addition, to ensure robust accounting of its assets in the balance sheet, the Company uses an oil price trajectory that converges in 2040 with the price in the IEA's SDS scenario ($202250/b) and that converges after 2040 with the price retained for 2050 in the IEA's NZE scenario ($202225/b) to calculate impairment of its upstream assets. The prices retained for gas stabilize between now and 2025 and until 2040 at lower levels than today and converge with the IEA's NZE scenario in 2050.
|TCFD correspondence table|
|THEME||Recommended TCFD disclosures|
Disclose how the organization identifies, assesses, and manages climate-related risks.
|a) Describe the organization’s processes for identifying and assessing climate-related risks.
b) Describe the organization’s processes for managing climate-related risks.
c) Describe how processes for identifying, assessing, and managing climate-related risks are integrated into the organization’s overall risk management.
Process to identify and assess risks related to climate change
Climate-related risks form part of the risks that are analyzed by the TotalEnergies Risk Management Committee. This committee relies on risk-mapping work. In addition, the Risk Committee (CORISK) assesses investment projects, risks and corresponding climate-related issues before they are presented to the Executive Committee.
Each significant investment project is evaluated in light of the objectives of the Paris Agreement, and on the basis of the following criteria:
- Project cost is analyzed in a hydrocarbon price scenario compatible with the Paris Agreement (Brent at $50/b and Henry Hub at $2.5/Mbtu) and with a carbon price of $2030100/t in 2030 and beyond.
- For new oil and gas projects (greenfield and acquisitions), the intensity of Scope 1+2 GHG is compared, depending on their nature, to the intensity of the average GHG emissions of upstream production assets or that of various downstream units (LNG plants, refineries). For additional investments in existing assets (brownfield projects), the investment will have to lower the Scope 1+2 emissions intensity of the asset in question The goal is for each new investment to contribute to lowering the average intensity of the Company's Scope 1+2 GHG emissions in its category.
- For projects related to other energies and technologies, such as biofuels, biogas, CCS, the reduction in GHG emissions reductions is reviewed to assess its contribution to lowering the Company’s emissions.
In 2021, 12 significant investments were evaluated on these criteria:
- Oil and gas projects:
- Greenfield projects: Mero 4 (Brazil) and Block 10 (Oman);
- Brownfield projects: Tommeliten Alpha (Norway) and Al Shaheen Phase 2 (Qatar);
- Acquisitions: Atapu (Brazil), Sepia (Brazil), Ratawi (Iraq), Waha (Libya)
- New energy projects: BioBéarn project (France), Del Rio biogas project (United States)
- Carbon sink projects: Batéké natural carbon sink (Republic of Congo), Blue Mountain natural carbon sink (Peru).
Furthermore several renewable electricity projects, which are compatible by nature with these criteria, were approved, such as offshore wind projects Round 4 UK, Scotwind (United Kingdom), Yunlin (Taiwan), five onshore wind projects in France with a total gross capacity of nearly 200 MW, and several solar energy projects in France, Spain, Iraq and the US for approximately 3 GW of gross capacity.
For projects greenlighted in 2021:
- profitability exceeds the internally defined threshold, in a scenario compatible with the Paris Agreement’s objectives, with the exception of natural carbon sink projects, which are evaluated on the basis of the actual cost of a ton of CO2;
- the Scope 1+2 GHG intensity is below the average intensity of their category for new oil and gas projects and reduced for brownfield projects, keeping in mind that additional measures to control emissions will be needed since the emissions intensity of certain upstream projects increases over time as production declines.
Upstream gives precedence to value creation and cash generation over volume and puts a priority on developing low-cost (typically below $20 per barrel for operating and investment costs) or low-breakeven (typically $30 per barrel including tax) and low-emissions projects (typically less than 20 kg CO2/b).
In accordance with the Company's new biodiversity ambition (see Chapter 4.2), all new investment projects must also meet the ""zero net deforestation criterion.
Processes to manage risks related to climate change
In its decision-making process, the risks and associated climate issues are assessed prior to the presentation of the projects to the Executive Committee. If the level of risk requires it, they are subject to mitigation measures. TotalEnergies, in accordance with its Safety Health Environment Quality Charter, is committed in particular to managing its energy consumption and develops processes to improve its energy performance and that of its customers.
In terms of adaptation to climate change, two types of risks exist: physical risks and transition risks. The physical risks correspond to physical impacts of climate change such as the increase in occurences or severity of extreme weather phenomena. The transition risks are risks related to regulations, laws, technologies or market events linked to the transition (refer to point “Strategy”). The Company takes physical risks into account during the design phase of its new facilities. The climate hazards taken into account include the latest available IPCC data and the facilities TotalEnergies builds are designed to withstand extreme weather events. The analyses include a review by type of hazard (sea level, storms, temperature, permafrost, etc.) and take into account the lifespan of the projects and their ability to adapt gradually. The design of current projects incorporates the data published by the IPCC concerning the increase in climate hazards. For existing facilities, their vulnerability to climate hazards is reassessed re-evaluated in a continuous improvement process according to the evolution of scientific knowledge of the precise impacts of climate change, so that their consequences do not affect either the integrity of the facilities or the safety of people. More generally, natural hazards (climatic hazards, but also seismic hazards, tsunamis, soil conditions, etc.) are taken into account. The internal studies conducted have not identified any facilities that cannot withstand the consequences of climate change known to date.
Integration of climate-related risks into global risk management
The risks related to climate issues are fully integrated in TotalEnergies’s global risk management processes.
The Audit Committee annually reviews the Statement of Non-Financial Performance, which includes the performance as per the Company's climate and environmental reporting. In addition, these results are audited by an independent third party.
|TCFD correspondence table|
|THEME||Recommended TCFD disclosures|
Metrics & targets
|a) Disclose the metrics used by the organization to assess climate-related risks and opportunities in line with its strategy and risk management process.
b) Disclose Scope 1, Scope 2, and, if appropriate, Scope 3 greenhouse gas (GHG) emissions, and the related risks.
c) Describe the targets used by the organization to manage climate-related risks and opportunities and performance against targets.
In order to support its ambition of carbon neutrality (zero net emission) at a global scale (Scope 1+2+3), together with society, TotalEnergies has set targets and introduced a number of indicators to steer its performance.
It should be noted that the decrease in the Company’s GHG emissions (Scope 1+2+3) in 2020, and to a lesser extent in 2021, is partly related to the impact of the COVID-19 pandemic on TotalEnergies’s activities, hence the references to estimates excluding the COVID-19 effect.
These data as well as the related risks are also reported to the CDP(34) once a year, and TotalEnergies’s response to the CDP Climate Change questionnaire is posted on the TotalEnergies website. For its 2021 reporting on 2020 activities, the Company received an A-.
(34) The CDP is a non-profit organization that offers environmental reporting services for investors, enterprises, city authorities, States and regional authorities.
In June 2017, the TCFD (Task Force on Climate-related Financial Disclosures) of the G20’s Financial Stability Board published its final recommendations on information pertaining to climate to be released by companies. These recommendations include additional details for certain sectors, such as energy. TotalEnergies publicly announced its support for the TCFD and its recommendations and has implemented them since its 2017 annual report.
TotalEnergies continued discussions by taking part in the Oil & Gas Preparer Forum, which published, in July 2018, the best practices on the disclosure of climate-related information and on the implementation of TCFD recommendations by the four companies that are members of the Forum(35).
In 2019, TotalEnergies also took part in the first Task Force set up by the EFRAG (European Financial Reporting Advisory Group) Reporting Lab on Climate-related disclosures, which aims to identify the best practices in this area. This Task Force published the results of its work in February 2020.
In accordance with the latest TCFD recommendations published in October 2021(Guidance on Metrics, Targets and Transition Plan), a series of indicators and targets specific to climate risks is also being studied to facilitate reconciliation with financial performance data.
(35) Eni, Equinor, Shell and TotalEnergies, with the support of the WBCSD (World Business Council for Sustainable Development).
The Taxonomy regulation (EU) 2020/852 (« the Regulation ») establishes a classification system common to the European Union, the objective of which is to identify the economic activities considered as sustainable, with reference to six environmental objectives.
These six environmental objectives defined at article 9 of the Regulation are as follows:
- climate change mitigation;
- climate change adaptation;
- the sustainable use and protection of water and marine resources;
- the transition to a circular economy;
- pollution prevention and control;
- the protection and restoration of biodiversity and ecosystems.
Within the meaning of article 3 of the Regulation, an economic activity shall qualify as environmentally sustainable where that economic activity:
- contributes substantially to one or more of the environmental objectives set out in Article 9,
- does not significantly harm any of the environmental objectives set out in Article 9,
- is carried out in compliance with the minimum safeguards laid down in Article 18 of the Regulation; and
- complies with technical screening criteria that have been established by the Commission.
The delegated regulation (EU) 2021/2139 of 4 June 2021 supplementing regulation (EU) 2020/852 of the European Parliament and of the Council establishes the technical screening criteria for determining the conditions under which an economic activity qualifies as contributing substantially to climate change mitigation or climate change adaptation. It also determines, for each of the environmental objectives listed in article 9 of the Regulation, the technical screening criteria for assessing whether that economic activity causes no significant harm to one or several of those environmental objectives.
The minimum safeguards of article 3 of the Regulation are procedures implemented by an undertaking to ensure the alignment with the OECD Guidelines for Multinational Enterprises and the UN Guiding Principles on Business and Human Rights, including the principles and rights set out in the eight fundamental conventions identified in the Declaration of the International Labour Organisation on Fundamental Principles and Rights at Work and the International Bill of Human Rights.
In order to acknowledge "the role of natural gas as an important technology in reducing greenhouse gas emissions"(36), the delegated regulation (EU) 2021/2139 of 4 June 2021 plans a supplementing delegated regulation on the activities related to natural gas, that is in the process of being approved at the date of publication of this Universal Registration Document 2021.
At the date of publication of this Universal Registration Document 2021, only the technical screening criteria relating to the first two environmental objectives - climate change mitigation and climate change adaptation - have entered into force. The technical screening criteria relating to the other four environmental objectives that will be established through delegated regulations are still being negotiated or drafted.
(36) Refer to (28) of delegated regulation (EU) 2021/2139 of 4 June 2021.
Article 8 of the Regulation requires undertakings(37) to include in their “consolidated non-financial statement information on how and to what extent the undertaking’s activities are associated with economic activities that qualify as environmentally sustainable under Articles 3 and 9 of this Regulation”.
In particular, the undertakings concerned shall disclose the following:
- the proportion of their turnover derived from products or services associated with economic activities that qualify as environmentally sustainable;
- the proportion of their capital expenditure and the proportion of their operating expenditure related to assets or processes associated with economic activities that qualify as environmentally sustainable.
The delegated regulation (EU) 2021/2178 of 6 July 2021 supplementing Regulation (EU) 2020/852 specifies the content and presentation of information to be disclosed by undertakings concerning environmentally sustainable economic activities and specifying the methodology to comply with that disclosure obligation.
The delegated regulation specifies the following definitions:
- a taxonomy-eligible economic activity (“Eligible Activities”) is an economic activity that is described in the delegated regulation (EU) 2021/2139 of 4 June 2021, irrespective of whether that economic activity meets any or all of the technical screening criteria laid down in this delegated act;
- a taxonomy-non-eligible economic activity is any economic activity that is not described in the delegated regulation (EU) 2021/2139 of 4 June 2021;
- a taxonomy-aligned economic activity is an economic activity that complies with the requirements laid down in Article 3 of the Regulation.
The disclosures obligations provided for in the delegated regulation are spread over several stages:
- article 10 of the delegated regulation (EU) 2021/2178 of 6 July 2021 requires non-financial undertakings to disclose in 2022, only the proportion of taxonomy-eligible and taxonomy-non-eligible economic activities in their total turnover, capital and operational expenditure and the qualitative information referred to in the regulation relevant for this disclosure.
- The indicators disclosed (turnover, CapEx, OpEx) in the section “Eligibility of TotalEnergies' activities” of this Statement of Non-Financial Performance only report the proportion of taxonomy-eligible economic activities. They only relate to data for the 2021 financial year without comparative information for the 2020 financial year.
- from 1 January 2023, the reporting will be completed with the disclosures of the proportion of the three indicators associated with taxonomy-aligned economic activities. The indicators disclosed in 2023 will relate to data for the 2022 financial year without comparative information for the 2021 financial year. However, for information purposes, the section “Alignment of TotalEnergies' activities” also presents a preliminary assessment of the proportion of taxonomy-aligned activities on the turnover and CapEx indicators.
(37) Undertakings which are subject to the obligation to publish a non-financial statement or a consolidated non-financial statement pursuant to Article 19a or Article 29a of Directive 2013/34/EU.
Eligibility of TotalEnergies' activities
TotalEnergies has calculated the proportion of its eligible and non-eligible economic activities under the Regulation on the basis of the provisions of the delegated regulation (EU) 2021/2139 of 4 June 2021 and the delegated regulation (EU) 2021/2178 of 6 July 2021.
The table below thus presents the proportion of its eligible and non-eligible economic activities of TotalEnergies on three financial indicators: turnover, capital expenditure ("CapEx") and operating expenditure ("OpEx"), within the meaning of the Regulation, on the scope of entities exclusively controlled and consolidated by TotalEnergies SE.
The table also presents, in a voluntary approach, proposed by the delegated regulation of 6 July 2021, a proportional view of the indicator’s turnover and CapEx, including the contribution of joint ventures and associates in which TotalEnergies SE has significant influence, accounted for by the equity method (see Note 18 of the Consolidated Financial Statements of the Universal Registration Document 2021).
Given the size of the Company and the adopted development model using partnership to develop its strategy in the electricity and sector renewables, the proportional view is more relevant for TotalEnergies than the consolidated view.
These indicators also take into account the draft delegated regulation related to natural gas.
|Eligible Activities 2021||Controlled scope||Proportional view|
|Renewables and electricity||2,4 %||8,9 %||5,0%||2,6%||21,7%|
including Electricity generation from natural gas*
|Refining and chemicals||7,4%||2,7%||9,1%||8,5%||4,1%|
|Other eligible activities||0,1%||1,8%||0,6%||0,1%||1,6%|
|TOTAL NON ELIGIBLE||90,1%||86,6%||85,3%||88,8%||72,6%|
*as per the draft delegated regulation (applicable from 1 January 2023).
Eligible activities of TotalEnergies
TotalEnergies' eligible activities focus solely on the climate change mitigation objective.
- For the Integrated Gas, Renewables & Power segment, main Eligible Activities are as follows:
- Renewable energy activities include the electricity generation from renewable sources (wind, solar, bioenergy and hydroelectricity), the manufacture, installation, maintenance and repair of renewable energy technologies, as well as the manufacture of rechargeable batteries, battery packs and accumulators (see sections 18.104.22.168 and 22.214.171.124 of the Universal Registration Document 2021).
- Activities related to the production of biogas by anaerobic digestion of bio-waste (see section 126.96.36.199 of the Universal Registration Document 2021).
- Electricity generation from natural gas, corresponding to the portfolio of combined cycle gas turbine (CCGT) power plants (see section 188.8.131.52 of the Universal Registration Document 2021).
- For the Refining & Chemicals segment, main Eligible Activities are as follows:
- Activities related the production of biofuel for transportation and the production of biogas (see section 184.108.40.206 of the Universal Registration Document 2021).
- Activities related to the manufacture of basic organic chemicals and the manufacture of basic plastic materials cover a significant portion of the Company's petrochemical activities. Some of these activities may constitute "transitional activities" within the meaning of the European taxonomy regulation, as long as they meet the technical review criteria of the delegated regulation (EU) 2021/2139 of 4 June 2021, in particular in the fields of biopolymer production and mechanical or chemical recycling of plastics (see section 220.127.116.11 of the Universal Registration Document 2021).
- For the Exploration & Production segment, main eligible activities are those related to carbon sinks: CO2 capture and storage and the development of natural carbon sinks (see points 18.104.22.168 and, 22.214.171.124 of the Universal Registration Document 2021).
- For the Marketing & Service segment, main Eligible Activities are those related to new energy mobility infrastructures: construction and operation of infrastructure enabling low-carbon road transport and public transport, such as electric charging stations and hydrogen fueling stations (see section 2.5.1 of the Universal Registration Document 2021).
The analysis of the texts has led TotalEnergies to consider that, among its activities, are notably not eligible under the taxonomy regulation:
- Electricity marketing activities, if the electricity is not produced by the Company (see section 126.96.36.199 of the Universal Registration Document 2021).
- The construction and operation of infrastructures for the distribution of energy from natural gas, such as NGV stations and marine natural gas supply infrastructures (see point 2.5.1 of the Universal Registration Document 2021).
- Activities related to the use of means of transportation (road, sea) if the vessels or vehicles are dedicated to the transport of fossil fuels (see 188.8.131.52 of the Universal Registration Document 2021).
Definition of financial indicators and methodology
The proportion of Eligible (non-eligible) Activities in the turnover, the CapEx and the OpEx (the « Eligibility Ratios ») is calculated by dividing respectively the turnover, the CapEx and the OpEx associated with the Eligible (non-eligible) Activities of the Company (the numerator) by the total turnover, CapEx and OpEx of TotalEnergies (the denominator).
The financial indicators, on which the Eligibility Ratios of the controlled scope are founded, are determined from the financial data used for the preparation of the consolidated financial statements of TotalEnergies SE, established in compliance with the IFRS international accounting standards.
- Turnover corresponds to Revenues from sales as presented in the consolidated statement of income (see point 8.2 of the Universal Registration Document 2021), i.e. consolidated external sales excluding excise taxes.
- CapEx corresponds to the additions to tangible and intangible assets, i.e. to the cost of construction or acquisition of new properties, plants and equipments and intangible assets recognized in the consolidated balance sheet (see point 8.4 of the Universal Registration Document 2021), including in connection with a business combination. These additions are considered before depreciation, amortisation and any re-measurements, including those resulting from revaluations and impairments, and excluding fair value changes. It includes rights of use under new lease agreements but excludes acquisitions of shares in equity affiliates and non-consolidated companies, as well as loans granted to these companies.
- OpEx corresponds only to direct non-capitalized costs that relate to research and development, short-term lease, building renovation measures and maintenance and repair. These costs are included in the Other operating expenses in the consolidated statement of income (see point 8.2 of the Universal Registration Document 2021).
The Eligibility Ratios calculated using the proportional view are based on the turnover and CapEx financial indicators but extend the scope of the contributing entities, for the numerator like the denominator, to the joint ventures and associates in which TotalEnergies SE has significant influence, accounted for by the equity method up to the amount of the interest held by TotalEnergies.
The methodology for determining Eligible Activities, the precise definition of financial indicators and all the criteria and assumptions used have been documented in an internal manual. Depending on future changes in regulations and interpretations of definitions, TotalEnergies intends to complete and clarify the calculation of eligibility ratios.
Alignment of TotalEnergies' activities
For information purposes and early compared to the implementation of the European regulation in the process of being approved, the tables below present the proportion of the eligible activities and a preliminary assessment of the proportion of the aligned activities on the turnover and CapEx indicators, on the scope of the activities controlled by TotalEnergies, as well as a proportional view, proposed by the delegated regulation of 6 July 2021, including the contribution of joint ventures and associates in which TotalEnergies SE has significant influence, accounted for by the equity method. They take into account the draft delegated act on the activities related to natural gas.
These data have been assessed on the basis of year 2021 with a reminder of the estimate for year 2020.
|Controlled scope - 2021||Eligible activitiess||Aligned activities|
|Renewables and electricity||2,4 %||8,9 %||1,3 %||8,0 %|
including Electricity generation from natural gas*
|1,1 %||0,9 %||0,0 %||0,0 %|
|Refining and chemicals||7,4 %||2,7 %||0,1 %||0,3 %|
|Other eligible activities||0,1 %||1,8 %||0,1 %||1,8 %|
|TOTAL 2021||9,9 %||13,4 %||1,5 %||10,1 %|
* as per the draft delegated regulation (applicable from 1 January 2023).
|Proportional view - 2021||Eligible activitiess||Aligned activities|
|Renewables and electricity||2,6 %||21,7 %||1,6 %||21,1 %|
including Electricity generation from natural gas*
|1,0 %||0,6 %||0,0 %||0,0 %|
|Refining and chemicals||8,5 %||4,1 %||0,2 %||0,5 %|
|Other eligible activities||0,1 %||1,6 %||0,1 %||1,6 %|
|TOTAL 2021||11,2 %||27,4 %||1,9 %||23,2 %|
|TOTAL 2020||11,2 %||16,5 %||2,4 %||9,2 %|
* as per the draft delegated regulation (applicable from 1 January 2023).
This classification, defined by the Taxonomy, confirms the 2021 growth of the eligible and aligned CapEx of the Company, which represent about a quarter of the total investments.
With regard to the assessment of the regulatory criteria named "Substantial Contribution":
- the majority of the Eligible Activities related to renewables have a substantial contribution to the objective of climate change mitigation as soon as they qualify as eligible.
- the electricity generation from natural gas meets this criteria for plants, the emissions of greenhouse gases (GHG) of which are lower than 100 gCO2e/kWh or in transient configurations, for plants whose permit is granted before 31 December 2030, if:
- the GHG emissions of the activity are lower than 270 gCO2e/kWh or the average annual GHG emissions over 20 years are lower than 550 kg CO2e/kW
- a duly documented management commitment is taken for a switch to 100% renewable and decarbonated gas before end 2035,
- the activity in question replaces a preexisting coal or liquid fuel activity and
- a comparative assessment will have demonstrated that no 100% renewable alternative was possible.
- the manufacture of biofuels for use in transports complies with that criteria if the process uses a biomass that is not food-and feed crops that complies with the sustainability criteria of the Renewable Energies Directive (RED) and that allows savings in GHG emissions due to the manufacturing of these biofuels of at least 65% compared to fossil fuels.
- the manufacture of basic organic chemicals complies with that criteria if:
- he GHG emissions (manufacture) by product are lower than a threshold, or
- those products are manufactured from renewable feedstock and the life-cycle GHG emissions, verified by a third party, are lower than the equivalent chemical manufactured from fossil fuel feedstock.
- the manufacture of plastic in primary form complies with that criteria if it is:
- fully manufactured by mechanical recycling of plastic waste or
- where mechanical recycling is not technically feasible or economically viable, fully manufactured by chemical recycling and the life-cycle GHG emissions of the manufactured plastic, verified by a third party, are lower than the life-cycle GHG emissions of the equivalent plastic in primary form manufactured from fossil fuel feedstock or
- derived wholly or partially from renewable feedstock if its life-cycle GHG emissions, verified by a third party, are lower than the life-cycle GHG emissions of the equivalent plastics manufactured from fossil fuel feedstock.
- the manufacture of biogas by anaerobic digestion of bio-waste complies with that criteria if the methane leakage and the traceability of the feedstock and digestates are under control and if the share of food-and feed crops is lower than 10%.
The GHG emissions used correspond to the best available estimates at this stage and have not been verified by a third party.
With regard to the regulatory criteria named "Do no significant harm" any of the environmental objectives, TotalEnergies relies on the HSE division and the HSE departments within the Company’s entities which seek to ensure that both applicable local regulations and internal requirements of One MAESTRO reference framework and the Company’s additional commitments are respected (see page “Environmental challenges”) to analyze if its Eligible Activities comply with this criteria. A census has been performed on the Eligible Activities of TotalEnergies in 2021, establishing, by activity, a preliminary assessment of the risk of non-compliance with that criteria. For the activities localized outside Europe, a detailed analysis is necessary and on-going to ensure that the applicable regulations and local practices are compatible with the requirements of the European regulation.
With regard to the regulatory criteria named "Minimum Safeguards", TotalEnergies is committed to respecting internationally recognized human rights and standards, wherever the Company operates, in particular the Universal Declaration of Human Rights, the Fundamental Conventions of the International Labor Organization (ILO), the U.N. Guiding Principles on Business and Human Rights, the OECD guidelines for multinational enterprises and the Voluntary Principles on Security and Human Rights (VPSHR) (see page “Business ethics”). The Company refers to those standards in the analysis of the compliance of its Eligible Activities.