The Future of Energy With Stephane Michel

Thank you, Stephen. Good afternoon, I'm pleased to be with you today.

Yes, as you mentioned, Total has become TotalEnergies last April. The reason is simple: the energy world is reinventing itself, so the company has to reinvent itself. Behind that name change there is much more than just what some opponents could call greenwashing. It's a reality—the idea that we have to transform ourselves into a broad energy company, doing oil and gas as we have for nearly a century, but also adding power, especially renewable energy, as well as biofuel, biogas, and hydrogen. We want to bring to our customers all those energies, with the idea that they need to be at the same time clean, affordable, and reliable. The three dimensions are key and have to work together. Clean because of climate change, reliable because security of supply is very important—it had been a bit forgotten but is crucial—and affordable because energy is essential for consumers. The challenge is to bring those three together, and that's what TotalEnergies is trying to do, as in the past but in a broader way due to climate change.

We are not starting from nowhere. We have been working on this subject for ten years now. Today we already have a portfolio of 10 gigawatts of renewable assets already producing—in France, Europe, the US, Latin America, India, Asia. That's a big portfolio built in a few years. More importantly, we have a pipeline of future development, both solar and wind projects, onshore and offshore. With that pipeline we believe we can bring on stream six gigawatts per year from 2022 to 2025 to reach 35 gigawatts of production by 2025. That's a reality we are doing as we speak. Between 2025 and 2030, our ambition is to bring on stream 12 gigawatts per year—doubling the speed. We are confident we can grow from our existing platforms in the US, India, Spain, and invest in new countries through our 'renewable explorer' in 50 different countries where TotalEnergies is strong. For offshore wind, we have assembled a portfolio of 10 gigawatts today. With all that, we will reach 100 gigawatts and be among the top five companies.

Renewable energy projects are long-term with long-term revenue, so they can be financed largely with debt. With a usual ratio of 70% debt and 30% capital, the $60 billion becomes $18 billion in equity over 10 years—about $1.8 billion per year, which is easy for TotalEnergies to finance. We have decided to spend around 25% of our capex per year on renewables. Our capex is in the range of $13 to $16 billion, so we allocate $3 to $3.5 billion per year to renewables. We have the cash to finance that growth, and we could even go further given our financial means. All that was planned in a $50–60 environment, so with current prices we have no problem.

Yes, for sure. Our largest country for potential development is the US. We also have India with a partnership with the Adani Group, through our joint venture Ayana Green Energy. Then in Europe we have Spain, France, and we want to develop further in Germany, and in the UK with offshore wind. In Asia we are already in Taiwan with offshore wind, have concessions in Korea, projects in Japan, and things to do in China and Australia. The world is moving to renewable energy. One region missing is Africa, where we are very strong upstream and downstream today. But to develop renewables you need a strong grid, which is not always the case there. We are convinced it will come at a later stage, and we want to develop there when the industry is mature.

Batteries are clearly a key solution to address intermittency. The other solution is gas—CCGTs—because they can be dispatched whenever needed and are a good complement to renewables, as they are the lowest-CO2 fossil fuel power plants. So with our renewables development, we want to develop both batteries and CCGTs depending on the market. Hydrogen is a different game. Our strategy has two axes: first, we are a large taker of hydrogen for our refineries (300,000 tonnes per year) and we want to decarbonize that by producing green hydrogen for our own consumption by 2030. Second, we have large projects elsewhere in the world to produce green hydrogen and export it to consumers. That only makes sense at scale. You could compare the future hydrogen industry to what LNG was in the 1960s—if it takes off like that, we clearly want to be part of the game.

There are two types of hydrogen: green hydrogen, produced with electrons from renewables (a good fit with our solar and wind), and blue hydrogen, produced from gas where the CO2 must be stored. So yes, we want to develop carbon storage facilities—not only for hydrogen production but also to store our own emissions from LNG plants or refineries. Beyond that, we want to offer that service to our customers, enabling them to transport and store their CO2. For example, we are a partner in the Northern Lights project in Norway, which will transport and store CO2 under the seabed.

Yes, for sure. You will need oil and gas for many decades to come. Even in net-zero scenarios by 2050, there is still production of oil and gas. We want to be part of that by focusing on low-cost oil—that's why our strategy has been to focus on the Middle East in the last seven or eight years, and on deep offshore with finds in Brazil. Gas is the transition fuel, the best complement to renewables to mitigate intermittency with the lowest CO2 emissions. So we want to develop gas, especially LNG, as a transition fuel.

Today gas prices are high because there is risk about supplies factored in. However, storage in Europe is better than last year at the same time, and high gas prices have led to decreased consumption in Asia. So the market fundamentals do not justify current gas prices, but there is large uncertainty due to the Ukraine situation, embedding a risk premium. The evolution will depend on what happens in Ukraine—that's anybody's guess. What is clear is that gas is likely to remain at its current level for the foreseeable future.

Yes, I would. Energy is life. If you are looking for a purpose in what you do, providing energy is among the most interesting industries—think mobility, etc. The question is how you do it. When we transformed from Total to TotalEnergies, it was also for our future employees to see that we are not only an oil and gas company but a broad energy company with a mission to provide the best energy possible. We see peers like Qatar Energy rebranding similarly. It is not necessarily shared by others, especially in the US, but we are convinced we are right to attract young talent.

The ambition is 2050, and our company's ambition is also 2050. We will work so that our 2030 objectives are consistent with that ambition. If we achieve our 100 gigawatts target, invest in hydrogen and other technologies, we will be in a situation to move toward net zero by 2050. But energy is about both production and consumption. In Glasgow, people mostly spoke about production, but part of the answer is how consumers change—electric vehicles, aviation fuel—if consumers don't follow, nothing changes. So yes, I believe France will reach the 2050 target, and many other countries too, but it requires work on both production and consumption.

Thank you very much.