Climate change-related challenges (as per TCFD recommendations)
TotalEnergies supports the objectives of the Paris Agreement, which calls for reducing greenhouse gas 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 for all with less carbon emissions concerns the society as a whole, with governments, investors, companies and consumers all playing an important role.
In tackling the climate challenge, Total, that proposes to its shareholders in 2021 to become TotalEnergies, has set itself the ambition of being a world-class player in the energy transition. 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 Group’s ambition is to reach carbon neutrality (net zero emissions) by 2050 together with society for all its operations.
|TCFD correspondence table|
|Theme||Recommended TCFD disclosures|
Disclose the organization’s governance around climate-related risks and opportunities.
|a) Describe the board’s oversight of climate-related risks and opportunities.
b) Describe management’s role in assessing and managing climate-related risks and opportunities.
In order to make an effective contribution to the climate change issue, TotalEnergies relies on an organization and structured governance. In support of the Group’s governance bodies, the Strategy and Climate division shapes the Group’s approach to climate change while working with the strategic and operational divisions of the Group’s business segments. By defining and monitoring indicators, progress can be measured and the Group’s actions can be adjusted (details of the indicators used are provided in point “Targets and metrics to measure climate-related risks and opportunities”).
Oversight by the Board of Directors
TotalEnergies’ Board of Directors endeavors to promote value creation by the Company in the long term by taking into consideration the social and environmental challenges of its business activities. It determines the Group’s strategic objectives and regularly reviews – in connection with these strategic objectives – opportunities and risks such as financial, legal, operating, social and environmental risks, as well as the measures taken as a result. It therefore ensures that climate-related issues are incorporated into the Group’s strategy and in the investment projects which are submitted to it. It examines climate change risks and opportunities during the annual strategic outlook review of the Group’s business segments. It reviews the Group’s performance each year.
At its meeting on May 4, 2020, the Board of Directors approved the Group’s new Climate ambition to get to net zero carbon emissions by 2050 together with society, and determined the relevant steps and targets for reducing the Group’s greenhouse gas emissions (GHG). These targets were supplemented in September 2020 with TotalEnergies’ announcement of absolute targets for cutting Scope 3 emissions(1), with the aim of reducing Scope 3 emissions in Europe by 30% by 2030 compared to 2015, in absolute terms, and a commitment to reduce the level of Scope 3 emissions worldwide by 2030 relative to 2015, despite growth in energy demand from its customers during the decade to come.
To carry out its work, the Board of Directors relies on its Strategy & CSR Committee, whose rules of procedure were changed 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 Group’s strategy. In this regard, the Strategy & CSR Committee met on October 28 and October 29, 2020, to review current climate issues as well as their consequences for the Company’s strategy. On this occasion, the Board of Directors engaged in a dialogue with Mrs. Christiana Figueres, the executive secretary of the United Nations Framework Convention on Climate Change (UNFCCC) between 2010 and 2016 and co-founder of the Global Optimism organization.
Furthermore, the Board of Directors decided in 2019 to change the criteria for the determination of the variable portion of the Chairman and Chief Executive Officer’s compensation, primarily by applying a quantifiable criterion related to the evolution of GHG emissions (Scopes 1 & 2) on operated oil & gas facilities (refer to the Universal Registration Document, Chapter 4, section 4.3.2). This criterion adds to those introduced in 2016 to take better account of the achievements of Corporate Social Responsibility (CSR) and HSE targets of the Group. CSR performance is assessed by considering the extent to which climate issues are included in the Group’s strategy, the Group’s reputation in the domain of CSR as well as the policy concerning all aspects of diversity. Variable compensation paid to the Group’s senior executives (around 300 people at year-end 2020) includes a criterion relating to the target of reducing greenhouse gas emissions (Scopes 1 & 2) and, since 2020, this target has also been included in the criteria for awarding performance shares to all employees of the Group. At its meeting on March 17, 2021, the Board of Directors decided to introduce a new criterion to grant performance shares related to the evolution of GHG emissions related to the use by customers of energy products sold for end use (Scope 3) in Europe.
(1) Indirect GHG emissions related to the use by customers of the energy products sold for end use (Scope 3).
Role of management
TotalEnergies’ Chairman and Chief Executive Officer, in compliance with the long-term strategic direction set by the Board of Directors, implements the strategy of the Group while making sure climate change challenges are taken into account. In particular, he relies on the President, Group Strategy-Innovation, who is a member of the Executive Committee, to whom the Senior Vice President Strategy & Climate, and his Vice President Climate report. The Vice President Climate chairs the Climate-Energy steering Committee, which mainly includes representatives of Strategy and HSE management from the various business segments.
The mission of this Committee consists of structuring the Group’s approach to the climate, and in particular to:
- propose targets for reducing greenhouse gas emissions for the Group’s operations;
- propose a strategy to reduce the carbon intensity of the energy products used by the Group’s customers;
- monitor existing or emerging CO2 markets; and
- drive new technology initiatives, in particular with industrial partners, to reduce CO2 emissions (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 the organization has identified over the short, medium, and long term.
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 2° C or lower scenario.
Identification of climate-related risks and opportunities
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 Group’s assets and for investment projects (refer to the Universal Registration Document, Chapter 3, section 3.1.2).
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 transport. Gas and sustainable biofuels will be attractive and credible alternatives to conventional fuels and the Group intends to develop them. Controlling methane emissions and reducing Scopes 1 & 2 emissions will be essential in natural gas production; the latter could also be accompanied by increasing use of biogas and hydrogen.
Helping customers improve their energy efficiency also offers opportunities and forms part of a trend that will be accelerated by digital technology. TotalEnergies intends to innovate in order to provide them with new product and service offers that will support their energy options and their usages. The Group 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 technology (CCUS). Consequently, the Group intends to step up the development of CCUS.
(2) IEA, World Energy Outlook 2020.
Impact of climate-related risks and opportunities
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 to achieve carbon neutrality (net zero emissions) by 2050 from its production to the use of the energy products sold to its customers (Scopes 1, 2, 3), together with society.
TotalEnergies actively supports policies in favor of carbon neutrality, including carbon pricing, and mobilizes its resources not only to achieve its own ambitions but also to support countries and its customers in achieving carbon neutrality as well. TotalEnergies is committed to working alongside its customers to provide for the decarbonization of energy consumption offering an energy mix with an increasingly lower carbon intensity.
To accompany this development and achieve its carbon neutrality ambition (net zero emissions) in 2050 or sooner, for all its worldwide activities, TotalEnergies acts based on three main axes and commits to targets by 2030 for each of them:
- Achieve in 2050 or sooner carbon neutrality (net zero emissions) for TotalEnergies’ worldwide operated activities (Scopes 1 & 2) with interim targets to reduce GHG emissions (Scopes 1 & 2) of its operated oil & gas facilities from 46 Mt CO2e in 2015 to less than 40 Mt CO2e by 2025 (a 15% decrease), then for 2030, to reduce by at least 40% compared to 2015 the net emissions(3) (Scopes 1 & 2) for the oil & gas operated activities;
- Achieve carbon neutrality (net zero emissions) worldwide for indirect GHG emissions related to the use by its customers of energy products sold for end use (Scope 3) in 2050 or sooner. This axis requires for TotalEnergies working actively with its customers, since this means they will reduce their direct emissions (Scopes 1 & 2) that correspond to TotalEnergies’ indirect Scope 3 emissions and that they are also targeting carbon neutrality. TotalEnergies has set itself targets for 2030 that the average carbon intensity of energy products used worldwide by TotalEnergies customers is reduced by more than 20% compared to 2015 and that the level of the worldwide emissions of Scope 3 related to the use by its customers of energy products sold for end use is lower in absolute terms compared to the level of 2015, despite the growth in its energy production in the coming decade. TotalEnergies is the only major actor to date to have undertaken such a commitment.
- Achieve carbon neutrality (net zero emissions) in Europe(4) from the production to the use by its customers of energy products sold for end use in 2050 or sooner (Scopes 1, 2, 3). Given that, for the Company, Europe currently accounts for about 60% of TotalEnergies’ indirect GHG emissions related to the use by its customers of energy products sold by the Group for end use (Scope 3) and that Europe has set ambitious targets for 2030 towards carbon neutrality, TotalEnergies wants to actively contribute to this ambition for Europe. The Group has set the interim target of cutting indirect Scope 3 emissions related to the use by customers of the energy products sold for end use, in Europe by at least 30% by 2030, in absolute terms, compared to 2015, which represents a major step to being carbon neutral in 2050. This 30% reduction target is extended to all the Scopes 1, 2, 3 emissions in Europe.
- To structure its approach, the Group is focusing on four levers: acting on emissions, acting on products, acting on customer demand and developing carbon sinks.
(3) The calculation of net emissions takes into account natural carbon sinks like forests, regenerative agriculture and wetlands.(4) Europe refers to the European Union, Norway, the United Kingdom and Switzerland.
1) Acting on emissions
Cutting GHG emissions generated by TotalEnergies’ operations (Scopes 1 & 2) is the first step towards carbon neutrality (net zero emissions). TotalEnergies has set an interim target of reducing Scope 1 and 2 emissions from its operated Oil & Gas facilities from 46 Mt CO2e in 2015 to less than 40 Mt CO2e by 2025 (15% reduction). For 2030, the target is to reduce by at least 40% the net emissions(5) compared to 2015 (Scopes 1 & 2) for its oil & gas operated activities. TotalEnergies is aiming to reduce its direct emissions by improving energy efficiency, eliminating routine flaring, electrifying its processes and continuing efforts to reduce methane emissions from oil and gas production. In 2019, a dedicated task force of different skills in the Group was set up to help the business segments reduce GHG emissions. More than 500 initiatives for acting on these emissions were identified in 2020.
Improving the energy efficiency of the facilities is an essential part of this effort. Since 2013, TotalEnergies has used a Group Energy Efficiency Index (GEEI) to assess its performance in this area. It consists of a combination of energy intensity ratios (ratio of net primary energy consumption to the level of activity) per business. The Group’s target is to improve the energy efficiency of its operated facilities by an average of 1% per year while operating conditions become more complex. The Group’s energy efficiency improved by 10% between 2010 and 2020. The Refining & Chemicals segment, which accounts for 66% of the Group’s energy consumption, has a dedicated investment of $450 billion to this between 2018 and 2025.
TotalEnergies also uses appropriate architectures and equipment and introduces technological innovations. For example, at the Gonfreville-l’Orcher complex in France, TotalEnergies has equipped its steam cracking furnaces with 170 wireless sensors to optimize their operation and has installed 30 temperature sensors on buildings to track the efficiency of the air conditioning system. At year-end of 2020, 50% of sites using more than 50,000 toe/y(6) (around 30 sites) had adopted an auditable energy management system, such as ISO 50001 on energy management(7). Reducing routine flaring has been a long-standing Group target, and new projects are designed without it. TotalEnergies is committed to ending routine flaring at its operated facilities by 2030. Since 2010, routing flaring has been reduced by more than 90%.
To preserve the advantage of gas over coal in terms of GHG emissions from electricity generation, it is necessary to strictly reduce the methane emissions associated with the production and transportation of gas. The Group has cut its methane emissions by nearly 50% since 2010. In 2020, methane emissions in relation to Hydrocarbons Upstream activities were at 0.15% of commercial gas produced for oil and gas facilities operated by the Group(8) and less than 0.1% for gas facilities. The Group’s target is to maintain this intensity below 0.2% and 0.1%. TotalEnergies has been a member since 2014 of the United Nations Environment Program’s Oil & Gas Methane Partnership (OGMP) between governments, industrial companies, non-government organization Environmental Defense Fund and the European Commission, for the improvement of tools to measure and control methane emissions. In 2020, TotalEnergies signed up to a new phase of this partnership defining a more ambitious reporting framework extended to the entire gas value chain and non-operated scope. TotalEnergies also took several actions as part of the Oil & Gas Climate Initiative and signed the guiding principles on the reduction of methane emissions on the gas value chain(9).
(5) The calculation of net emissions takes into account natural carbon sinks like forests, regenerative agriculture and wetlands.(6) Combined-cycle natural gas power plants are power generation facilities whose gas consumption is optimized for maximum efficiency. These installations benefit from efficient energy management and do not require the implementation of a specific energy management system.(7) The ISO 50001 standard accompanies the implementation in companies of an energy management system that allows a better use of energy.(8) Refer to the OGCI methodology for methane intensity calculation.(9) Guiding Principles on Reducing Methane Emissions across the Natural Gas Value Chain.
2) Acting on products
The Group intends to gradually reduce the average carbon footprint of its energy product mix and, to do this, change this mix to ensure that gas and renewable energies figure more prominently.
Natural gas, biogas and hydrogen: allies of the energy transition
To respond responsibly to the strong rise in demand for electricity, TotalEnergies is continuing its growth in the gas sector, which produces half the CO2 emissions of coal for power generation(10). Gas is also a supplement that is essential to cope with the intermittent supply of renewables and seasonal fluctuations in demand.
The Group has continued its efforts to grow along the entire gas chain, from production to the end customer, particularly in LNG. TotalEnergies acquired Engie’s LNG assets in 2018 and those of Anadarko in Mozambique in 2019, and has launched some major LNG projects, such as Ichthys in Australia (2018) and Cameron in the United States (2019). In addition, the Group has proceeded with or benefited from the launch of major developments, like the Arctic LNG 2 project (in Russia) in 2019 and the Energía Costa Azul LNG export project (in Mexico) in 2020 (refer to the Universal Registration Document, Chapter 2, section 2.3). TotalEnergies is the LNG world’s second-ranking(11) player with a volume sold of more than 38 Mt in 2020, and it aims to increase its sales to 50 Mt per year by 2025.
In 2018, the Group also entered a partnership with the Adani group, India’s largest private conglomerate in energy and gas infrastructures, in order to contribute to the development of the natural gas market. This agreement notably concerns the development of the Dhamra LNG regasification terminal in east India. This partnership, which was extended since then, illustrates the Group’s intention to help countries that produce the greatest part of their electricity from coal to diversify their energy mix.
The growth of natural gas is expected to see a steady increase in the proportion of green gas in the existing infrastructure network, such as biogas and hydrogen, to reduce greenhouse gas emissions from the gas value chain. To step up the development of its operations, TotalEnergies created a Biogas business unit and a Hydrogen business unit in 2020. The Group’s target is to produce 4 to 6 TWh of biomethane per year between now and 2030 and supply 10% of the energy requirement of its gas power plants in Europe by 2030. In January 2021, TotalEnergies announced the acquisition of Fonroche Biogaz, French market leader in biogas production. Fonroche Biogaz designs, builds and operates methanation units in France and owns an installed gross production capacity of nearly 500 GWh of biogas. In December 2020, TotalEnergies signed a Memorandum of Understanding with Clean Energy Fuels Corp. to establish a $100 million 50/50 joint venture to develop renewable gas production projects in the United States.
TotalEnergies also has an ambition to become a hydrogen producer and distributor. In January 2021, the Group and Engie signed a cooperation agreement to design, build and operate the Masshylia project, the biggest renewable hydrogen production site in France, located in the heart of TotalEnergies’ La Mède biorefinery.
The 40 MW electrolyzer powered by solar farms is expected to produce 5 tons of green hydrogen a day, meeting the needs of the La Mède biorefinery’s biofuels production process, and preventing 15,000 tons of CO2 emissions a year. The Group is continuing to roll out hydrogen stations under the H2 Mobility Germany joint venture, with more than 90 stations in 2020.
(10) Sources: International Reference Center for the Life Cycle of Products, Processes and Services; Life cycle assessment of greenhouse gas emissions associated with natural gas and coal in different geographical contexts, October 2016, and “Review of Life Cycle Analysis of gas and coal supply and power generation from GHG and Air Quality Perspective” Imperial College London, 2017.(11) Second largest private firm. Source: WoodMackenzie: TotalEnergies LNG Corporate Report 2020 published in November 2020.
Electricity: building a world leader
TotalEnergies is continuing its integrated expansion across the electricity value chain, from power generation – from renewables or natural gas – to storage and sale to end-customers. Since 2015, TotalEnergies has allocated more than 10% of its investment to renewables and electricity(12), representing $1.5 billion per year, and it plans to increase this to more than 20% a year between 2021 and 2025. In 2018, the Group made strategic acquisitions, including Direct Énergie and its subsidiary Quadran, respectively renamed TotalEnergies and Quadran, thereby stepping up its presence in renewables (wind, solar, hydropower and biogas). In 2020, TotalEnergies acquired EDP’s residential power operations in Spain and created a solar power distribution joint venture with Adani Green Energy Limited (AGEL) in India. In January 2021, TotalEnergies announced the acquisition of a 20% stake in AGEL, thereby strengthening TotalEnergies’ strategic alliance with the Adani group in the Indian market and the Group’s positioning in renewable energies.
0GWgross power generation capacity from renewables by 2030
The Group confirms its objective to invest in order to have a gross power generation capacity from renewables of 35 GW in 2025 and will continue its development to become a major international player in renewable energies with the ambition to have developed a gross capacity of 100 GW by 2030. At year-end 2020, gross production installed capacity of renewable electricity totaled 7 GW, compared with 3 GW at year-end 2019 and less than 1 GW at year-end 2017.
This growth is the result of accelerated projects in 2020, with more than 5 GW of wind power projects in France, the United Kingdom and South Korea, more than 2 GW of solar power assets in operation in India, more than 5 GW of solar power projects in Spain and a giant 0.8 GW solar farm in Qatar. In addition, the Group aims to be carbon neutral (net zero emissions) in all electricity purchasing for operated facilities in Europe by 2025. The electricity needs of these sites are covered by renewable electricity produced by TotalEnergies.
In 2020, the Group acquired two combined cycle natural gas power plants in Spain representing total capacity of 0.85 GW, and currently has natural gas electricity generation capacity of 3.6 GW. Refer to point 2.1 of chapter 2 for further information on these acquisitions.
TotalEnergies is aiming for net electricity production of 50 TWh from natural gas and renewables by 2025. As an electricity supplier, the Group served 5.6 million customers in 2020 and aims to distribute 80 TWh of electricity to more than 9 million customers by 2025.
(12) Including gas for power generation
Decarbonizing and saving liquid energies
Technological advances and the shift in usage to lower carbon energies may cause demand for oil to stabilize and then decline over the next decade, as illustrated in the International Energy Agency (IEA)’s Sustainable Development Scenario and TotalEnergies’ Rupture scenario. The Group is changing its mix to reflect this trend. Oil products accounted for 66% of sales in 2015, 55% in 2019, and could decline to 35% in 2030. By 2050, this share could shrink to 20%, with a quarter of that from biofuels, helping TotalEnergies reduce the carbon intensity of the products it sells by 60%.
However, significant investments are still expected to be needed in the years ahead to meet demand for oil, given the natural decline in field output. The Group is focusing on the most resilient oil projects, meaning those with the lowest breakeven point. In order to ensure the viability of its projects and its long-term strategy in the light of climate change challenges, the Group has integrated, into the financial evaluation of its investments presented to the Executive Committee, a long-term oil and gas price scenario consistent with the Paris Agreement targets, using a price trajectory converging with the IEA’s SDS scenario(13) and factoring in a long-term CO2 price of $40 per ton and a sensitivity analysis of $100 per ton of CO2 as from 2030.
TotalEnergies is also reducing the average carbon content of its lineup thanks to biofuels. To comply with European Union standards, biofuels must emit less than 50% the CO2 equivalent generated by equivalent fossil fuels across their lifecycle(14). For more than twenty years, TotalEnergies has been a pioneer in biofuels and aims to become a major force in this market, with sales growth of more than 10% a year by 2030. To make that ambition a reality, TotalEnergies seeks to develop synergies with existing assets, such as its La Mède refinery, which was converted into a biorefinery in 2019. The oils processed at La Mède, which has annual hydrotreated vegetable oil (HVO) production capacity of 0.5 Mt, are certified sustainable(15) according to European Union criteria. TotalEnergies has also set up a specific organization on top of this certification by selecting a limited number of responsible partners, with a requirement to join the RSPO (Round table on Sustainable Palm Oil(16)), the signing by these suppliers of the Group’s Fundamental Principles of Purchasing (refer to point the Supply chain section) and specific, more stringent checks of sustainability and respect for human rights. In September 2020, the Group announced a project to convert the Grandpuits refinery into a zero-crude complex including a biofuel production plant, which is expected to be commissioned in 2024.
In 2020, TotalEnergies incorporated 2.2 Mt of sustainable biofuels(17) in Europe, of a global volume distributed by the Group of 3 Mt.
For more than ten years, TotalEnergies’ R&D teams have developed technologies that have broadened the range of usable resources, while also meeting the need for sustainability. The BioTFuel consortium, for example, is working on the development of lignocellulose (plant waste).
(13) IEA, World Energy Outlook 2020.
(14) European Directive RED, Renewable Energy Directive.
(15) The sustainability of the oils processed at the La Mède biorefinery is guaranteed by an ISCC (International Sustainability & Carbon Certification) type certificate of sustainability recognized by the European Union.
(16) International initiative created in 2004 with the aim of promoting the production and use of sustainable palm oil.
(17) Physical volume of biofuels in equivalent ethanol and esters according to the rules defined by the European RED Directive, excluding volumes sold to third parties by Trading.
3) Acting on demand
TotalEnergies wants to make carbon neutrality (net zero emissions) an ambition shared with its customers. To shape demand, it is guiding its customers towards lower-carbon energy solutions and reducing its offering of products with competitive low carbon alternatives. TotalEnergies has made a commitment to stop selling fuel oil intended for electricity generation by 2025.
In the area of electric vehicles, the Group has made a commitment to come up with integrated solutions, from energy supply to a complete charging service. TotalEnergies addresses the needs of individuals (BtC) as well as businesses (BtB) and public authorities (BtG). In September 2020, TotalEnergies and Groupe PSA (now Stellantis N.V.) announced the creation of a joint venture called Automotive Cells Company (ACC) to develop and produce high performance electric vehicle batteries.
In 2018, TotalEnergies acquired G2Mobility, renamed TotalEnergies EV Charge, a French leader in smart charging solutions. In 2020, the Group obtained a concession for 20,000 charge points in the city of Amsterdam, acquired London’s largest charging network for electric vehicles, with over 1,600 charge points installed, and will operate the public network of 2,300 charge points in Paris for a period of ten years. As of the end of 2020, TotalEnergies operated more than 18,000 charge points on business premises, on the roadside and within public and private facilities such as car parks, hotels and shopping centers. The Group aims to operate 150,000 charge points in Europe by 2025. TotalEnergies has also launched a range of fluids for electric and hybrid vehicles.
Natural gas for vehicles, distributed in the form of compressed natural gas (CNG) or liquefied natural gas (LNG), offers an alternative to electricity for reducing transportation-related CO2 emissions, particularly when it includes biogas. In Europe, the 2017 acquisition of Netherlands-based PitPoint allowed TotalEnergies to accelerate its rollout, particularly for trucks and transporters. In North America, TotalEnergies in 2018 acquired a 25% stake in Clean Energy Fuels Corp.(18), one of the leading providers of gas fuel for HGVs.
In shipping, the Group has signed a contract with CMA-CGM, the first shipping company to equip its transcontinental container ships with LNG-powered engines. In November 2020, the first LNG bunkering was carried out, the largest refueling operation in the world using LNG as a marine fuel. In addition, in June 2020, TotalEnergies joined the Getting to Zero coalition to support the decarbonization of the shipping industry. The aim of this coalition is to contribute to the target set by the International Maritime Organization of reducing greenhouse gas emissions in shipping by at least 50% by 2050 relative to 2008.
In 2020, the Group also joined the Coalition for the energy of the future, which aims to step up the development of energy sources and technologies to address the challenges of sustainable mobility within the transport and logistics industry.
Through the TotalEnergies Ecosolutions program, the Group is developing innovative products and services that perform above market standards on the environmental front. At year-end 2020, 86 products and solutions bore the TotalEnergies Ecosolutions label. The CO2e emissions avoided throughout the lifecycle by the use of TotalEnergies 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 2.1 Mt CO2e in 2020.
(18) Company listed on the NASDAQ, 24.84% interest on December 31, 2020.
4) Developing carbon sinks
The preservation and restoration of natural carbon sinks (forests, wetlands, etc.) and carbon capture and storage (CCS) will be key for the planet to achieving carbon neutrality (net zero emissions).
TotalEnergies has launched a new activity based, on preserving and restoring the capacity of ecosystems to act as carbon sinks. This activity is owned by a business unit created in 2019 and dedicated to investments in natural carbon sinks, composed of experts in the environment, forestry and agronomy, with an annual investment budget of $100 million from 2020 onwards, and the goal of creating a sustainable capacity of sequestration of at least 5 Mt CO2e per year by 2030.
Several agroforestry projects in Australia, South America and Africa are soon to be launched or are in the process of being negotiated with partners. These projects, located in both tropical and temperate regions, systematically include the value chains for local farm and forest production, in cooperation with local communities, to reduce the causes of deforestation and changing land use at source.
Furthermore, CCS will be essential for several industries, especially those that emit massive amounts of CO2 due to the nature of their business (cement, steel, refining etc.). TotalEnergies has earmarked up to 10% of its R&D budget for this. Several projects have represented significant advances including the Northern Lights project in Norway, in which the Group is involved alongside Equinor and Shell and the final investment decision for which was made in 2020. This project, for which initial investment of the partners totaled more than €600 million, is expected to have a global storage capacity of up to 1.5 Mt CO2 per year.
TotalEnergies stepped up its R&D program in 2019 by entering partnerships with the National Carbon Capture Center in the United States and IFPEN in France. The Group has also launched a development study for a major pilot industrial scale project in Dunkerque, a project to produce methanol from CO2 and hydrogen in Germany, with the start-up Sunfire, and a feasibility study of an industrial system to capture and reuse the CO2 produced by the LafargeHolcim cement works in the United States(19).
(19) Svante Inc., LafargeHolcim, Oxy Low Carbon Ventures LLC and TotalEnergies.
Sector initiatives and international framework
TotalEnergies is committed to various sector initiatives on the main challenges raised by climate change. Indeed, tackling climate change requires cooperation between all actors, from both public and private sectors.
In terms of carbon pricing, in 2014, TotalEnergies joined the U.N. Global Compact’s Paying for Carbon and Caring for Climate call, which encourages companies to consider a CO2 price internally and publicly support the importance of such a price via regulation mechanisms suited to the local context. In particular, TotalEnergies advocates the emergence of a balanced, progressive international agreement that prevents the distortion of competition between industries or regions of the world. Drawing attention to future constraints on GHG emissions is crucial to changing the energy mix. TotalEnergies is therefore encouraging the setting of a worldwide price for each ton of carbon emitted, while ensuring fair treatment of “sectors exposed to carbon leakage” (as defined by the EU). In addition, TotalEnergies is working with the World Bank as part of the Carbon Pricing Leadership Coalition (CPLC). In June 2017, TotalEnergies became a founding member of the Climate Leadership Council, an initiative that calls for the introduction of a “carbon dividend”, with a redistribution mechanism to the US population.
In terms of sector initiatives, in 2014, TotalEnergies was actively involved in launching and developing the Oil & Gas Climate Initiative (OGCI), a global industry partnership. At year-end 2020, this initiative involved 12 major international energy players. Its purpose is to develop solutions for a sustainable low emissions future. Launched in 2017, the OGCI Climate Investments fund, which has access to over $1 billion over ten years, invests in technology that significantly cuts emissions. Examples of investments include a large-scale industrial CO2 capture and storage project (Net Zero Teesside Project), methane emission detection and measurement services by satellite (GHGSat), by aircraft (Kairos Aerospace) and by drone (SeekOps Inc.) and a technology that incorporates CO2 as a feedstock in the production of polyols used in polyurethanes, which are plastics that have multiple uses (Econic Technologies).
The Group also plays a role in various international initiatives that involve the private and the public sectors to bring about (non-exhaustive list):
- the end of routine flaring of gas associated with oil production within the World Bank’s Zero Routine Flaring by 2030 initiative;
- greater transparency, while taking into account the recommendations of the G20 Financial Stability Board on climate, and of the Task Force on Climate-related Financial Disclosures (TCFD); and
- 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.
The list of trade associations of which TotalEnergies is a member and the lobbying Ethics Charter that governs these memberships are published on TotalEnergies.com. The Group cooperates with these associations mainly on technical and scientific matters, but certain associations sometimes take public stances on climate change. TotalEnergies assesses the main trade associations to which it belongs in order to check that they are in line with the Group’s stance on the climate. This alignment is reviewed according to six key points: their scientific position, the Paris Agreement, carbon pricing, the role of natural gas, the development of renewables and the development of CCS. Following the reviews in 2019 and 2020, TotalEnergies decided not to renew its membership of the American Petroleum Institute, the American Fuel & Petrochemical Manufacturers and the Canadian Association of Petroleum Producers.
TotalEnergies also 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)(20), and Toulouse School of Economics. TotalEnergies offers training and makes presentations at several universities, thereby taking part in the debate.
(20) The Joint Program on the Science and Policy of Global Change.
Resilience of the organization’s strategy
Regulations designed to gradually limit fossil fuel use may, depending on the GHG emission limits and time horizons set, negatively and significantly affect the development of projects, as well as the economic value of certain of the Group’s assets.
As part of the annual preparation of its long-term plan, TotalEnergies makes long-term energy demand forecasts (oil, gas and electricity). In September 2020, the Group presented the update of its TotalEnergies Energy Outlook. TotalEnergies performs sensitivity tests to assess the ability of its asset portfolio to withstand an increase in the price per ton of CO2. In 2020, these tests show that a long-term CO2 price of $40/t(21) applied worldwide would have an estimated negative impact of around 6% on the discounted present value of the Group’s assets (upstream and downstream). In addition, the average reserve life of the Group’s proved and probable reserves is 18 years and the discounted value of proved and probable reserves beyond 18 years is estimated at 15% of the discounted value of the Group’s upstream assets.
In keeping with its aim to reach carbon neutrality (net zero emissions) by 2050, TotalEnergies has reviewed its oil 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. TotalEnergies has decided to take into account only proved reserves for impairment testing on these two assets – contrary to general practice which considers proved and probable reserves. In addition, TotalEnergies has announced that it will not approve any new projects to increase capacity on the Canadian oil sands assets.
(21) $40/t as from 2021, or the current price in a given country if it is higher than $40/t.
|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 Group 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 material investment project, including in the exploration, acquisition and development of oil and gas resources as well as other energy sources and technologies, is assessed for consistency with the goals of the Paris Agreement, using the following criteria:
- The economics of the project are analyzed in a hydrocarbon price scenario compatible with the goals of the Paris Agreement (Brent at $50/b according to the IEA SDS scenario and Henry Hub at $2.5/Mbtu), also considering a CO2 price of $40/t(22). A sensitivity analysis is performed with a CO2 price of $100/t as of 2030.
- For oil and gas projects, the GHG emissions intensity (Scopes 1 & 2) of sanctioned projects is compared, depending on their nature, to the average GHG emissions intensity of the assets of upstream production or those of various downstream units (LNG plants, refining, petrochemicals). The objective is for new investments to contribute to reducing the Company’s average GHG emissions intensity (Scopes 1 & 2) in their category.
- For projects related to other energies and technologies (biofuels, biogas, CCS, etc.), GHG emission reductions are assessed for their contribution to the Group’s emissions reduction.
In 2020, 8 significant investments (Absheron – Azerbaidjan, Mero-3 – Brazil, Tilenga/EACOP – Ouganda, Grandpuits – France, Port Arthur condensate splitter – United States, Energia Costa Azul – Mexico, Northern Lights – Norway, Fonroche Biogaz – France) were evaluated according to these criteria:
- The sanctioned projects have a profitability above the internally defined threshold, in a scenario compatible with the goals of the Paris Agreement, with the exception of the Northern Lights project, which in its initial phase requires a carbon price above $100/t CO2, its profitability being satisfactory in the subsequent expansion phases that will allow for larger volumes to be stored for low marginal investments.
- The GHG emissions intensity (Scopes 1 & 2) of upstream and downstream oil and gas projects is below the average intensity for their category, with some Upstream projects having an emissions intensity that increases over time as production declines, which will require additional emissions control measures.
(22) $40/t as from 2021, or the current price in a given country if it is higher than $40/t.
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.
The Group also assesses the vulnerability of its facilities to climate hazards so that the consequences do not affect the integrity of the facilities, or the safety of people. More generally, natural hazards (climate-related risks as well as seismic, tsunami, soil strength and other risks) are taken into account in the construction of industrial facilities, which are designed to withstand both normal and extreme conditions. The Group carries out an assessment of the possible repercussions of climate change on its projects. These analyses include a review by type of risk (e.g., sea level, storms, temperature, permafrost) and take into account the lifespan of the projects and their capacity to gradually adapt. These internal studies have not identified any facilities that cannot withstand the consequences of climate change known today.
Integration of climate-related risks into global risk management
The risks related to climate issues are fully integrated in TotalEnergies’ global risk management processes.
The Audit Committee takes part in the annual review of the results of the climate and environmental reporting process. In addition, these results are audited by an independent third party.
Targets and metrics to measure climate-related risks and opportunities
|TCFD correspondence table|
|Theme||Recommended TCFD disclosures|
|Metrics & targets
Disclose the metrics and targets used to assess and manage relevant climate-related risks and opportunities where such information is material.
|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 (Scopes 1, 2, 3), TotalEnergies has set targets and introduced a number of indicators to steer its performance.
It should be noted that decrease in the Group’s GHG emissions (Scopes 1, 2, 3) in 2020 is partly related to the impact of the COVID-19 pandemic on the TotalEnergies’ activities, hence the mentioned evaluation of the decrease excluding the COVID-19 effect.
Indicators related to climate change(a)
|Scope 1 operated
Direct GHG emissions at operated sites
|of which Europe : EU 27 + Norway + United Kingdom + Switzerland||MtCO2eq||21
|Breakdown by segment|
|Upstream hydrocarbons activities(I)||MtCO2eq||16||18||18||19|
|Integrated Gas, Renewables & Power, excluding gas upstream activities||MtCO2eq||3||3||2||-|
|Refining & Chemicals(II)||MtCO2eq||17||20||21||22|
|Marketing & Services(III)||MtCO2eq||< 1||< 1||< 1||< 1|
|Breakdown by GHG type|
|N2O||MtCO2eq||< 1||< 1||< 1||< 1|
|Scope 2 operated(IV)
Indirect emissions from energy use at operated sites
|of which Europe : EU 27 + Norway + United Kingdom + Switzerland||MtCO2eq||2
|Scopes 1 & 2 from operated oil & gas facilities(I) + (II) + (III) + (IV)||MtCO2eq||35.8
|Scope 1 equity share
Direct GHG emissions based on equity share
Other indirect GHG emissions related to the use by customers of energy products sold for end use
|of which Europe : EU 27 + Norway + United Kingdom + Switzerland||MtCO2eq||190
|Methane emissions from Group operated activities||kt CH4||64||68||79||94|
|Intensity of methane emissions from operated oil and gas facilities for Upstream hydrocarbons activities||%||0.15||0.16||0.19||0.23|
|Intensity of methane emissions from operated gas facilities for Upstream hydrocarbons activities||%||< 0.1||< 0.1||< 0.1||< 0.1|
|Carbon intensity indicators||Unit||2020||2019||2018||2015|
|Carbon intensity of energy products used by the Group’s customers (71 g CO2e/MJ in 2015)||base 100 en 2015||90
|Intensity of GHG emissions (Scopes 1 & 2) at operated facilities for Upstream hydrocarbons activities||kg CO2e/bep||18||19||20||21|
|Net primary energy consumption (operated scope)||TWh||147||160||143(d)||153|
|Group energy efficiency indicator (GEEI)||base 100 in 2010||90.2(e)||88.0||88.4||90.8|
|Flared gas (Upstream hydrocarbons activities operated scope) (including safety flaring, routine flaring and non-routine flaring)||Mm3/d||4.2||5.7||6.5||7.2|
|Of which routine flaring||Mm3/d||0.6||0.9||1.1||2.3(f)|
* Valuation of these indicators excluding COVID-19 effect (a) Refer to the "Reporting scopes and methods" section.(b) The Group usually follows the oil industry reporting guidelines published by IPIECA which are conform to the GHG Protocol methodologies. In this document, only item 11 of scope 3 (use of sold products), which is the most significant, is reported. Emissions for this item are calculated based on sales of finished products for which the next stage is end use, in other words combustion of the products to obtain energy. A stoichiometric emission factor is applied to these sales (oxidation of molecules to carbon dioxide) to obtain an emission volume.(c) Indicator developed in 2018, with 2015 as the baseline year.(d) Excluding primary energy consumption of Direct Énergie gas power plants.(e) The change in this indicator between 2019 and 2020 can be explained by a lower refinery utilization.(f) Volumes estimated upon historical data.
These data as well as the related risks are also reported to the CDP(23) once a year (See TotalEnergies’ response to the CDP Climate Change questionnaire). For its 2020 reporting on 2019 activities, the Group received an A-.
(23) The CDP is a non-profit organization that offers environmental reporting services for investors, enterprises, city authorities, States and regional authorities.
Carbon intensity indicator of the products used by its customers
TotalEnergies wishes to fully address the issue regarding the emissions of energy products used by the Group’s customers and reports all of the emissions associated with these products in the form of a carbon intensity indicator. This indicator measures the average GHG emissions of these products throughout their lifecycle, from production to end use by the Group’s customers per energy unit.
This indicator takes into account:
- as the numerator:
- the emissions connected to the production and conversion of energy products used by the customers on the basis of the Group’s average emission rates;
- the emissions connected to the use of energy products used by the customers. For each product, stoichiometric emission factors(24) are applied to these sales to obtain an emission volume. Non-fuel use products (bitumen, lubricants, plastics, etc.) are not taken into account;
- negative emissions stored thanks to CCS and natural carbon sinks.
- as the denominator: the quantity of energy sold, given that electricity is put on an equal footing with fossil fuels taking account of average load factors and efficiency rates.
(24) The emission factors used are taken from a technical note from the CDP: Guidance methodology for estimation of Scope 3 category 11 emissions for oil and gas companies.
TCFD correspondence table
In June 2017, the TCFD(25) 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(26).
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.
(25) Task Force on Climate-related Financial Disclosures.
(26) Eni, Equinor, Shell and TotalEnergies, with the support of the WBCSD (World Business Council for Sustainable Development).
TotalEnergies Energy Outlook
To define an energy mix that would meet the world’s energy needs while reducing greenhouse gas emissions, TotalEnergies analyzed the scenarios prepared by the International Energy Agency developed up through 2040 and developed its own long-term scenarios to 2050 in its TotalEnergies Energy Outlook.