French company becomes latest oil major to bolster its emissions reductions strategy, with promise to hit net zero across its operations worldwide by 2050
Total has today committed to delivering net zero emissions by mid-century, becoming the latest European oil major to significantly enhance its decarbonisation strategy even as the industry is rocked by historically low oil prices.
Following in the recent footsteps of European rivals Shell, BP, and Repsol, the French energy giant this morning unveiled an ambition to reach net zero emissions across all its operations and production by mid-century. It also committed to reaching net zero in the energy products used by its European energy customers in the same time period.
The plans are in line with a strategy to develop Total "as a broad-energy company", a company statement explained, where low-carbon electricity and carbon-neutrality solutions are offered alongside its traditional oil and gas offerings. It builds on a series of clean energy investments from the oil major, which has become a major renewables and clean tech investor in recent years.
Total also said it would work to reduce the average carbon intensity of its energy projects by more than 60 per cent by mid-century and promised to advocate for policies that support the delivery of net zero emissions across the wider economy, as well as help other countries and corporations achieve net zero.
The new ambitions are the outcome of a months-long collaborative investor engagement process from Climate Action 100+, the global green investor initiative that brings together investors with more than $40tn under management to push carbon-intensive firms to strengthen their climate strategies.
Paytrick Pouyanné, chairman of the Total board, said that the company was "determined to advance the energy transition while also growing shareholder value" and welcomed the "positive role" investors had played in engaging with the firm. "We recognise that the trust of our shareholders, and society more widely, is essential to Total remaining an attractive and reliable long-term investment," he said. "And only by remaining a world-class investment can we most effectively play our part in advancing a low carbon future.
"Energy markets are changing, driven by climate change, technology and societal expectations. Total is committed to helping solve the dual challenge of providing more energy with fewer emissions."
The announcement comes at a particularly fraught period for the oil and gas industry, with the IEA forecasting last month that global oil demand will fall nine per cent this year due to the coronavirus pandemic and oil prices briefly careering into negative territory.
Total said today that as part of the new strategy it intends to dramatically ramp up its investments in low-carbon energy sources. It confirmed it currently contributes 10 per cent of its capital expenditure on "low-carbon electricity" - a percentage it claims is the "highest among the majors" - but it now intends to increase low carbon power's share of investment to 20 per cent by the end of the decade. It also intends to manage 25GW of renewable capacity by 2025, it added.
Stephanie Pfeifer, member of the global Climate Action 100+ steering committee and chief executive of the Institutional Investors Group on Climate Change, said today's news was a further signal of the rapid transformation of the oil and gas sector. "Investors have secured progress on climate change from leading oil majors that would have been unimaginable only two years ago," she said. "There is still much more to be achieved, but with Europe's oil majors now working to net zero ambitions, a new standard has been set for the rest of the sector."
Helena Viñes Fiestas, global head of stewardship and policy at BNP Paribas Asset Management, which co-led the investor engagement, dubbed the agreement "one of the most significant" in the oil and gas sector to date. "The global energy system is under significant structural pressure from long-term forces such as decarbonisation and the deflationary impact of renewables, and how companies respond to the challenge of climate change will be key in determining their competitiveness in the longer-term," she said. "Total's commitment shows that it understands the scale of this challenge and its ambition on renewables and plan for reducing its carbon footprint by 2050 position it at the forefront of its peer group of European majors."
Total said its target will be revised every five years to keep up with policy changes, market developments and new technologies. Oil and gas capital expenditure allocation will be "assessed for consistency with the goals of Paris Agreement", it added.
However, the new commitment from Total and similar pledges from BP, Shell, and Repsol have prompted a mixed response from environmental campaigners with some welcoming the new net zero ambitions and others warning that the companies' continued investment in new oil and gas infrastructure is not compatible with a responsible decarbonisation trajectory.
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