According to Patrick Pouyanné, chairman of the board and CEO for TotalEnergies, the attitude and culture of the company's entire workforce is aligned in its commitment to reducing emissions and fighting global climate change.
"We need to tackle methane emissions," Pouyanné said, noting TotalEnergies has cut its emissions nearly in half since 2021 by focusing on different methods including flaring, venting and fugitive emissions in current and future projects. The company has already reduced routine flaring by more than 90 percent since 2010 and has pledged to eliminate the practice by 2030, according to its website.
Discussing the energy transition, climate and sustainability at CERAWeek by S&P Global, Pouyanné added that his company took these steps by its own initiative. TotalEnergies didn't wait for the 2021 Glasgow Climate Pact in which member countries agreed to take steps to reduce greenhouse gas emissions and reach net-zero by 2050, he said. "We just set a new objective. Net-zero emissions is visible. It's a question of managing venting. The technologies are there."
Pouyanné likened the importance of reducing emissions to maintaining the highest level of safety for his workforce and the greater community.
"Methane, to me, is exactly like safety," he said. "We have to strive for zero fatalities, and we also have to strive for zero methane emissions. We're going to manage it. We have all the tools to do it."
A prominent lesson Pouyanné has learned about alternative and renewable energies like solar and wind, he said, is that they can be profitable.
"Our strategy is to build a net electricity player from production, storage and trading, down to supplying it to people - an integrated approach," he said. "A lot of utilities have an approach, I would say, that is quite low risk with lower returns. We think we can bring in this business exactly the same view that we had in the energy business in the past."
Initially, TotalEnergies developed its energy business in the 1990s by working with lower-risk, long-term contracts.
"Low risk meant lower returns, but we established the business," Pouyanné said. "Then, in 2005, we put the risk on our balance sheet. Today, in 2022, we get the rewards of this strategy because then we benefit from some of the volatility of the market. Companies like TotalEnergies can bring exactly the same vision we want to bring to the electricity and renewables business."
Daniel Yergin, vice chairman of IHS Markit, left, listens as Patrick Pouyanné, chairman of the board and CEO for TotalEnergies, speaks at CERAWeek by S&P Global.
Today, some companies are establishing their position through power purchase agreements, Pouyanné explained. "But 10 years from now, we will begin to take our share of the balance sheet of offshore wind farms in order to benefit from the volatility of the market. We can bring a new vision to manage electricity markets which I think is higher risk, yes, but higher returns," he reiterated.
In 2021, TotalEnergies spent $800 million on a maritime lease to develop a wind farm off the U.S. East Coast, "but that's not a lot of money when you think of production for 50 years," Pouyanné said. "You know what is scarce in renewables? It's the space, the land."
Electricity demand will continue to grow, Pouyanné said. He is convinced that its price will rise in the decades to come. The energy transition is about "investing in the energy of today and, in order to give affordability to our customers, also investing heavily in the investment of tomorrow," he added. "But to try to do both - to diminish on one side too quickly - is not good for our customers."
He characterized the fallout of the political turmoil in Europe as "a big wake-up call" in terms of security of supply, affordability and climate change compatibility. "We must think of those as three parts of a triangle. [We should] not say that only one is important because [if we don't], it will not be a just transition, and people will not accept it," Pouyanné concluded.
