Avenir énergétique : scénarios et objectifs climat. Décryptage avec Aurélien Hamelle

You said it, that's exactly right. Today the world is not moving fast enough to get on the decarbonization trajectory of the Paris Agreements, to keep warming below 2 degrees. However, when we look at energy scenarios, for instance what the International Energy Agency does, they have a central scenario called STEPS. In 2016, just after the Paris Agreement, it projected a temperature increase of 2.7 degrees by the end of the century. The same STEPS scenario in 2024, which has just been released by the IEA, projects warming at the end of the century of 2.4 degrees. We are still not below 2 degrees, but we went from 2.7 to 2.4, so we have gained 0.3 degrees of warming, equivalent to 420 billion tonnes less CO2 in the atmosphere. So it's going in the right direction – that's the important message to remember. It's not going fast enough – that's the other very important message to remember. Indeed, we have just published a new edition of the TotalEnergies Outlook, which gives different scenarios. It's not the vision of TotalEnergies; it's a contribution we make every year to the debate on the evolution of the energy mix and the levers to be activated so that we all accelerate collectively. We have three scenarios: a trends scenario, which is somewhat equivalent to the IEA's STEPS that I just mentioned, which projects existing policies and an acceleration of certain trends – it's not simply a continuation as if we were still today in 10 years. It sees primary energy demand increasing considerably, with a still significant share of fossil fuels, with still around 105-106 million barrels per day of oil on the market in 2030, slightly more than today, roughly 1% growth until 2030. There is a lot of consensus in all scenarios, including the IEA, around that. After that, scenarios can diverge. Our trends scenario sees a bit less than 90 million barrels per day on the markets in 2050. The IEA in its STEPS scenario, which is most comparable, sees a bit more than 90 million barrels per day. And then it varies: some see a bit more than 100 million barrels per day, as in Exxon's case, others see a bit less than 90. But ultimately, if we project existing trends, we see that the share of fossil fuels is still important. The good news in all this is that coal is decreasing significantly. There will be a peak in coal – some see it before 2030, maybe a bit after 2030 – and then a decline that will be gradual but will happen in coal use, coal being the most emissive of all fossil fuels. And we see the place of gas remaining in growth until 2035, a little more, and then on a very long plateau, fundamentally because gas allows decarbonizing a number of uses, including electricity generation. That's the trend scenarios, with accelerations, more renewables, more electricity. So we don't just say the world remains as it is today. When we, among others, make these scenarios, we have two scenarios that are more ambitious. The momentum scenario, which we had already published and updated, assumes that all countries that have committed to be net zero in 2050 will do so, and we also add China becoming net zero in 2060, which is what China aims to do, and they are implementing a plan that is on this path for now, perhaps faster, notably for technological and supply chain reasons and for domination of certain sectors. So if we make these assumptions, we see coal's share decreasing much faster because uses will electrify faster and electricity generation will be done less and less by coal and more and more by renewables, mainly hydro, nuclear, gas. We see oil's share also decreasing faster because transport electrification is going faster – that is the key lever for the switch from oil to electricity in mobility. In this scenario, we see around 70 million barrels of oil per day on the markets. That's a lot, but much less than today, so it's a rapid decline slope – more than 20 million barrels less. That is significant. This scenario has an implicit end-of-century warming that we modeled with help from MIT this year at a little over 2 degrees, so we are almost at Paris, not quite, if all of society does this. And there is a third scenario, the rupture scenario, which is much more ambitious, assuming much greater financing in the global South, as we now call the transition. Financing in the global South is one of the very limiting factors of the transition: financing of decarbonized energies, which cost more than coal, which is the first energy source one turns to when developing – what Europeans and Americans did a century and a half ago, what global South countries are doing today, and what India is also still doing. So there is a financing challenge. If the world manages not only to do what is already in the momentum scenario but also accelerate this financing and accelerate certain technological innovations, then this scenario leads to around 1.7 degrees of warming. We have 30 million barrels of oil per day on the markets in 2050. The IEA's NZ2 scenario, which is closest to this, sees 25-23 million barrels per day. And gas's place remains significant but decreasing in these scenarios, because gas decarbonizes electricity grids and industry; it substitutes coal in both cases and thus reduces energy-related emissions. So it's an extremely ambitious scenario in terms of financing, political will for acceleration, and technology development.

Well, we have some bets. We are investing massively in renewables today. We put about a third of our investments into low-carbon energies, and the bulk of that – 4 billion per year – goes to what we call integrated power, mainly renewables. We aim to produce more than 100 TWh of low-carbon electricity by 2030. That's colossal; we like to compare it to the equivalent of 500,000 barrels per day of oil in energy terms, so it's a lot. Today we produce about 1.4-1.5 million barrels per day of oil, so that's a third of what we do in oil. It took us 100 years to build that oil business, and in 10 years – by 2030 – we will have built this electricity business to the equivalent of 500,000 barrels of low-carbon electricity. 70% from renewables, so we invest a lot in that; 30% from flexible generation, which is mostly gas plants, and we insist a lot on that, and that's a point of debate in public debate. If we look at electricity grids in countries where we invest – Germany, France (special with nuclear), Spain, Portugal, UK, Texas – we invest a lot. These grids over the last 10-15 years have all decarbonized: coal has decreased in all these grids and gas has increased, because gas helps decarbonize part of generation and ensures permanent baseload with the ability to manage peaks. Renewables are intermittent, so we need batteries – we invest in batteries – and we need gas. So we invest a lot in batteries and gas plants, and in gas trading, and also in other technologies. There is great geographical variability; all geographical blocs – Europe, China, India, Southeast Asia, US, Brazil – are not going in the same directions. In Asia, what is interesting right now is that they want to decarbonize their electricity step by step, and they are looking a lot at co-firing coal with ammonia. So they want to gradually add green ammonia, made from hydrogen and water electrolysis, to coal power plants to decarbonize their electricity generation. That's a path taken by the Japanese and Chinese. You can see it in their energy policies. Others, like the US, are also betting on renewables – that's pretty universal now – but also on carbon capture and storage: capturing CO2 and storing it permanently or very long term, and also using it in construction materials. The US with the Inflation Reduction Act offers a fiscal framework that hugely favors investments in this sector. We are making investments in the North Sea in Europe but also in the US with this very favorable framework, to benefit from existing CO2 transport infrastructure in the US, capture CO2 from industrial emitters and store it in geological formations onshore or offshore. So there are different technological paths; some overlap a bit from one zone to another. We have chosen to be primarily on electricity – integrated power – with 70% renewable generation, and the rest flexible, and to integrate on certain technologies, notably carbon capture and storage for our part.

We need to see that in the energy transition, a major issue across all segments and energy vectors, and particularly for hydrogen, is the chicken-and-egg syndrome: which comes first, the producer investing or the consumer investing? Because both need to invest. Hydrogen is a production chain that doesn't exist at massive scale today. I'll say a word about it: it already exists in industrial niches. We also need people to consume this hydrogen. It turns out that we are a large energy producer, as everyone knows, but we are also a large energy consumer. We consume a lot of energy in our industrial facilities to produce oil and gas, refine petroleum products, and do petrochemicals. And we launched this tender, as you said, to supply our European refineries with 500,000 tonnes per year of green hydrogen starting in 2030. To give an idea: today the global hydrogen market, all types, is about 100 million tonnes; green hydrogen within that is 1% or even less, it's tiny. Our tender alone is half of the existing global market, which is set to grow. The big hydrogen customers are refiners – so we are a refiner – and also fertilizer producers. So we made this bet that we need to launch the market, and we need hydrogen producers who exist today to move into green hydrogen and de-risk their investment. We know we need hydrogen for our industrial facilities, and they can produce green hydrogen because they have TotalEnergies, which has been around for 100 years and will still be around in 100 years, and we have a balance sheet that reassures investors for investments over 10, 15, 20 years. So we launched that. Prices remain high, obviously much higher – about 4 to 6 times higher, sometimes more – compared to grey hydrogen, which is made from steam methane reforming. But we have a framework that supports these investments: the CO2 price in Europe. We have to pay a price per tonne of CO2, especially for our refineries, which are electro-intensive and very emissive, so they are subject to the European emissions trading system. With that, the economic case holds for this investment, but it hasn't yet erased the premium. Today it's not a market logic that prevails. And actually, this is a very relevant example: for all these decarbonized energies to develop, we need very strong and stable regulatory and fiscal support. We have a challenge today because there is a political debate that is very heated on energy transition, we see it a lot in the US and a bit in Europe. We have a great need for stability of the framework that has been built, because this stability conditions the viability of investments – once again, we are on very long timeframes that typically exceed two or three electoral cycles.

I think we need to clarify that we are creating a model that is fundamentally different from what has existed, and it is a perfect hybridization between the business of electricity producer and seller and our historical business of producer, transformer, and seller of oil and gas products. Why do I say that? Because, as I told you, on the low-carbon electricity generation side, 70% will be renewable, but what's very important is the integrated model. The segment we are developing is integrated power: renewables, batteries, gas plants that produce electricity (flexible means of generation), trading, and distribution to industrial clients and especially in Western Europe to residential clients. By integrating along this value chain, we are able to manage electricity price volatility, just as we do in oil and LNG – that's our traditional business. And it's true that oil and gas companies are good at managing market and price risks; we've been doing it for 100 years, it's inherent in the oil market, and we see it a lot right now with high oil price volatility, and it's inherent in the LNG market. So we are now bringing that model into the electricity chain, and it's a model that will allow us to generate a 12% return on capital employed by 2030. 12% ROE is higher than traditional utility electricity generation – but they don't have the same cost of capital, so it's not abnormal, and the two models can coexist. Moreover, 12% return is what you get on oil investments when the barrel is at $60. So we are in a universe of profitability that is not unknown to oil companies. The barrel today is very volatile, but currently around $70, and it often is at $60 or less for extended periods. So the profitability of the integrated electricity model we are building compares well with the classic oil model – yes, a fully integrated margin model, not just renewables but integrated across the entire chain.

It's true that this is an expert debate that can lose non-initiates. But today, when we make scenarios – again, trends from existing policies – and we see where that leads us with hypotheses of acceleration and penetration of electric vehicles and less coal, we see a significant growth of about 1% per year in primary energy demand by 2050. And because we have this energy system as it is today with inefficiencies linked to energy conversions, we need conversions when transforming energy into other forms, and generally we have at least two or three steps before it reaches final use. It is true that by electrifying, you have inherent efficiency gains. So when we look at more ambitious scenarios in terms of collective capacity to decarbonize electricity generation and electrify more and more uses – not only in mobility but also in industry and buildings – we actually see that the quantity of primary energy needed decreases in net-zero-type scenarios, like our rupture scenario. But on the other hand, the energy service increases because you have very little efficiency loss, very little conversion loss when you electrify maximally. So when you generate electricity, distribute it, and use it, the energy service increases. So what we see in the scenarios is interesting: primary energy demand in the most ambitious scenarios decreases, but final energy overall quantity increases because the energy service has better efficiency. That must not be lost sight of, because even in these scenarios we are not in a logic of absolute degrowth; we are in a logic of much greater efficiency, but in fact, consumption of more energy on a planetary level. Why? Because today the global South, India, is starting its development trajectory with a growing population, aspirations for living standards, GDP, education, and health access similar to what we had in the West and what we saw in Southeast Asia and China. So all that will drive increasing energy demand anyway. But effectively, as we transition maybe accelerating from a trend scenario to another over the next 10-15 years, we will need to be more and more attentive to this final energy consumption. So in summary: not necessarily less energy, but less carbonized energy as we electrify uses and society – less carbon and more efficient, more efficient.

See you soon.