The Group’s strategy incorporates the challenges of climate change, using as a point of reference the 2°C scenario of the International Energy Agency (IEA) and its impact on energy markets. Total’s challenge is to increase access to affordable energy to satisfy the needs of a growing population, while providing concrete solutions to help limit the effects of climate change and supplying its clients with an energy mix featuring a progressively decreasing carbon intensity.
Total focuses its action around the following priority areas:
- developing natural gas as the primary fossil energy source due to its lower carbon intensity;
- selecting and developing hydrocarbon projects based on their economic merit order, which incorporates their resistance to low price scenarios;
- developing the solar energy offer as the renewable energy of choice in the evolution of the energy mix, as well as the production of biofuels from biomass;
- improving the energy efficiency of the Group’s facilities, products and services, and maintaining efforts to reduce direct emissions of greenhouse gases (GHG);
- increasing access to more sustainable energy, for as many people as possible, particularly by means of an innovative solar energy solution; and
- stimulating initiatives in the oil and gas sector and supporting the implementation of an international framework on climate.
In 2016, the Group acquired the Belgian company Lampiris in line with the goal to expand over the entire gas value chain until the end customer. Within a few years, Lampiris became the third-largest supplier1 of natural gas, green power and energy services (e.g., insulation, boiler maintenance, wood and pellets for heating, smart thermostats) in the Belgian market and is starting to extend its business in France. In 2016, the Group also entered the complementary energy storage segment with the acquisition of the company Saft Groupe specializing in high-technology batteries. Energy storage is an essential complement to the development of intermittent renewable energies.
THE ROLE OF GAs
The percentage of natural gas in the Group’s production rose from approximately 35% in 2005 to nearly 48% in 2016, and, taking account of market developments, this percentage is expected to increase over the coming years.
The Group believes in the essential role of natural gas as one of the solutions to climate change issues. Replacing coal with natural gas at power plants could help reduce worldwide CO2 emissions by 5 Bt/y, i.e., approximately 10% of world emissions2. Strengthening the position of gas in the energy mix must however be accompanied by a greater focus on control of methane emissions. To preserve the advantage that gas offers in terms of GHG emissions compared to coal for electricity generation, it is necessary to reduce methane emissions associated with the production and transportation of gas.
Total’s methane emissions specifically associated with gas production are less than 0.5% of the Group’s marketed operated gas production. Improving measurement of these emissions and their reduction is a priority for Total in terms of environmental impact.
On this basis, since 2014 the Group has been a member of the partnership between governments and industrial companies for the improvement of tools to measure and control methane emissions set up by the Climate and Clean Air Coalition and promoted by the UN Environment Programme and the non-profit organization Environmental Defense Fund. The Group has also committed, via the Oil & Gas Climate Initiative to strenghtening its action in this area.
In its strategy for growth, Total prioritizes its projects by focusing on assets with moderate production and processing costs, while respecting the highest safety and environment standards.
Furthermore, the Group ensures sustainability of its projects and long-term strategy relative to climate change issues by incorporating into financial evaluations of its investments submitted to the Executive Committee a long-term CO2 price of $30 to $40 per ton (depending on the crude price), or the current CO2 price if this is higher in a given country. This price is consistent with promoting gas over coal in power generation and encouraging investment in research on low-carbon technologies.
Moreover, with respect to coal, the Group ceased all production activity in 2015 and all marketing activity in 2016. In 2016, the Group withdrew from a project involving construction of a coal-based facility, coal-to-olefins, in China.
DEVELOPING RENEWABLE ENERGIES
For some 15 years, Total has been committed to developing renewable energies.
The Group’s priority strategic development is solar energy, in particular through its interest in SunPower (56.73% owned by the Group as of December 31, 2016). SunPower is involved in the design and manufacture of photovoltaic cells, the construction of large turnkey solar power plants and the marketing of integrated energy solutions facilitating decentralized electricity generation.
In November 2016, Total launched a 5-year program to equip 5,000 service stations across the world with photovoltaic panels, including 800 in France. The project corresponds to an installed capacity of around 200 MW, equivalent to the electricity used by a city with a population of 200,000.
In addition to solar energy, biomass is Total’s second strategic development area in the field of renewable energies. In general, biomass represents approximately 10% of worldwide energy consumption and is mostly used for heating or cooking purposes. Biomass is the only directly substitutable renewable alternative to fossil resources for the provision of liquid fuel for transport (biodiesel, bioethanol, biokerosene), lubricants and base molecules for chemicals (solvents or polymers).
Total also invests in startups working on ways to reduce direct GHG emissions into the atmosphere by other means. For example, through its venture capital fund Total Energy Ventures (TEV), the Group supports the development of companies offering innovative technologies or business models in such areas as renewable energies, energy efficiency, energy storage and sustainable mobility. For instance, in 2016, TEV acquired a stake in Off-Grid Electric and PowerHive, suppliers of electricity produced by solar energy in African rural areas that have no or poor grid connection.
In its scope of activities, Total has made reducing GHG emissions one of its priorities. The Group exceeded its objective of reducing GHG emissions from its operated activities by 15% from 2008 to 2015. The reduction of GHG emissions entails reducing flaring and improving energy efficiency.
|GHG emissions, in Mt CO2 eq(a)||2016||2015||2014|
|Scope 1: Operated direct GHG emissions (100% of emissions from sites operated by the Group)||39||42||44|
|Scope 1: Group share of direct GHG emissions||51||50||54|
|Scope 2: Indirect emissions attributable to energy consumption by sites||4||4||4|
|Scope 3: Other indirect emissions Use by customers of products sold for end use||420||410||430|
Reducing routine flaring has been a long-standing goal of the Group, with a commitment made in 2000 to have no continuous flaring of associated gas incorporated into the design of its new projects. Furthermore, the Group has supported the World Bank in developing and launching the Zero Routine Flaring initiative involving oil & gas companies, producing countries and international institutions. The initiative aims to support elimination of routine flaring by 2030. To ensure progression, an objective to decrease by 80% has been defined for 2020 compared to 2010, in other words to achieve an average of 1.5 Mm³/d. Total has already reduced routine flaring on its operated facilities by about 77% between 2010 and 2016.
Furthermore, as part of the Global Gas Flaring Reduction program, Total has worked alongside the World Bank for over 10 years to help producing countries and industrial players control routine flaring of associated gas.
|Global volumes of flared gas flared in Mm3/d||7.1||7.2||9.8|
|Including routine flaring in Mm3/j||1.7(a)||2.3(b)||3.4(b)|
Improving the energy efficiency of the Group’s facilities
One of the Group’s performance targets is to better control energy consumption. Internal documents (roadmaps and guides) describe the challenges and set out methodologies and action plans. Since the beginning of 2013, a Group directive has defined the requirements to be met at operated sites using more than 50,000 tons of oil equivalent per year of primary energy (approximately 40 sites). At year-end 2016, 83% of the concerned sites have reported compliance or engaged the actions to meet compliance with this directive.
Energy efficiency is a key factor for improvement of economic, environmental and industrial performance. Since 2013 the Group 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 objective for the 2010-2020 period is to improve the energy efficiency of its operated facilities by on average 1% per year. By design, the base value of the GEEI was defined as 100 in 2010 and the goal is to reach 90.4 in 2020.
|Net primary energy consumption (TWh)||146||153||153|
|Group Energy Efficiency
Index GEEI (base 100 in 2010)
Since 2010, energy efficiency has already improved by more than 9%.
In addition to the mandatory audits conducted in Europe as per transposition of the European Energy Efficiency Directive 2012/27/EU, the Group is implementing energy management systems based on ISO 50001. After the Leuna refinery and the Brunsbüttel bitumen plant (Germany), which have been certified for several years, the French energy-intensive refining and petrochemicals sites are preparing for ISO 50001 certification supported by the Group’s energy services subsidiary BHC. The certification audits are scheduled in 2017.
Several Marketing & Services sites in France obtained ISO50001 certification in 2015: the Solaize research center, the Saint-Martin d’Hères site, along with 7 depots and 193 service stations. In Exploration & Production, Total ABK (Abu Dhabi) also obtained this certification in early 2016.
Total uses the most appropriate architectures and equipment and introduces technological innovations. For example, on offshore production barges, offshore platforms and onshore facilities, heat recovery systems at gas turbine exhausts have been implemented thereby avoiding the need for furnaces or boiler systems. For some offshore projects, such as Martin Linge (Hild) in the Norwegian North Sea, an “all-electric” facility has been put in place. Electricity is produced onshore then transported undersea to the platform, resulting in higher efficiency compared to electricity generated on an onshore platform.
Improving the environmental footprint of products and services
Approximately 85% of GHG related to the use of oil and gas are emitted during the customer usage phase, compared to 15% during the production phase3. For this reason, in addition to the measures taken by Total at its industrial sites, the Group believes that improving the environmental footprint of its products is a key factor in the fight against climate change.
The Group offers its customers solutions (products and services) for responsible energy use. In terms of energy services, Total draws in particular on the know-how of its Tenag joint venture in Germany (49% owned) and BHC Energy in France acquired in 2014. These service companies work mainly for European customers, as well as in Africa and the Middle East. They use results obtained in-house to give industrial customers advice on improving their performance and energy efficiency.
Through the “Total Ecosolutions” program, the Group is also developing innovative products and services that perform above market standards on the environmental front, in particular in terms of reducing energy use, GHG emissions and the impact on human health. At year-end 2016, 96 products and services bore the “Total Ecosolutions” label. They relate to a variety of sectors, including mobility, agriculture, buildings, packaging, infrastructure and industrial manufacturing. Some of the products result in reduced energy consumption, such as Total Excellium fuel, Total Quartz Fuel Economy lubricant, and the Azalt® ECO2 and Styrelf® ECO2 bitumen ranges. Others, such as the new BioLife range of special fluids derived from raw materials from fully certified renewable sources, enable a significant reduction in environmental impact (compared to the fossil equivalent).
The CO2 eq emissions avoided throughout the life cycle by the use of “Total Ecosolutions” products and services, compared to the use of benchmark products on the market and for an equivalent level of service, are measured annually based on sales volumes. This represented 1.75 Mt CO2 eq in 2016.
In addition to its efforts on facilities and solutions offered to its customers, since 2012 the Group has provided support for its employees in France on improving the energy efficiency of their homes through advice and help with the necessary investment. Since the beginning of this offer, 2,167 energy renovation works were supported by the Group and in 2016 5,300 packs of five LED bulbs were distributed free to employees.
Progressing in carbon capture, usage and storage technologies
Development of carbon capture usage and storage technologies (CCUS) has been a long-standing Group commitment, in particular through its Lacq pilot project conducted from 2010 to 2013 (oxycombustion capture and storage in a depleted reservoir). The Group systematically studies opportunities to re-inject the CO2 contained in the deposits it exploits and is looking at use of CO2 to improve hydrocarbon recovery. Building on these experiences, Total believes it is important to continue its R&D efforts in various fields including maturity of capture technologies, availability and location of storage capacities, CO2 usage, technical feasibility on the scale needed and reducing costs of technologies. With this goal in mind, Total intends to devote up to 10% of its R&D investments to CCUS and has initiated work alongside its peers, within the Oil & Gas Climate Initiative, on the issues of marketability, capture technologies and world storage capacities.
ACCES TO ENERGY
The World Bank estimate for the number of people without access to electricity has exceeded 1.3 billion. In 2011, Total therefore launched a range of innovative solar energy solutions, accessible to as many as people possible, led by its flagship project Awango by Total.
In 2014, Total decided to join the call of the UN Global Compact, 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. Total also works alongside the World Bank as part of the Carbon Pricing Leadership Coalition (CPLC): in 2016 the Group was appointed co-chair of one of the CPLC working groups (Convening Leadership). In particular, Total 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. Total therefore encourages 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). To this end, six oil & gas industry leaders, including the Group’s Chairman and Chief Executive Officer, called for the setting up of carbon pricing mechanisms at the UN Framework Convention on Climate Change in June 2015.
According to the IEA, the electricity-generating sector is the sector that must contribute most to the decrease of CO2 emissions in the world by 2035 in order to remain within the 450 ppm of CO2 scenario (electricity generation contributes more than 65% to the emission reduction effort, compared to 11% for the industrial sector, 16% for transport and 4% for the construction sector). Substituting coal with gas in the electricity-generating sector is one fastest and cheapest way of reducing worldwide CO2 emissions. This solution is immediately available and offers the necessary flexibility to electric networks, supplementing intermittent energies. As a result, Total supports standards that impose emission ceilings on electricity generation, such as those in force in the United Kingdom.
In 2014, Total was actively involved in launching and developing the Oil & Gas Climate Initiative (OGCI), a global industry partnership. At year-end 2016, this initiative involves 10 major international energy players. Its purpose is to share experiences, advance technological solutions and catalyze meaningful action in order to assist the evolution of the energy mix in a manner that takes into account climate change issues. In 2016, the OGCI worked in particular on CCUS and on reducing methane emissions. In November 2016, at a panel discussion with international energy and climate experts, the executives of the member companies published the second OGCI report also announcing the creation of an investment fund of $1 billion over 10 years. This OGCI Climate Investments fund will finance startups and projects demonstrating high potential in terms of reducing greenhouse gas emissions. Initial priority will be given to deploying large-scale solutions for CCUS, reducing methane emissions throughout the gas value chain in order to increase its development, and improving energy efficiency, in both transport and industry.
Total is the technical partner of the Breakthrough Energy Coalition (a $1 billion fund), and in this capacity should help identify investment priorities and evaluate viable technologies.
Total also actively participates in the debate on climate issues and has long-term partnerships with key stakeholders. For example, Total funds research programs in France conducted by the ADEME, Paris-Saclay and the Climate Economics Chair at Paris-Dauphine University, as well as the Massachusetts Institute of Technology (MIT) in the United States. Total has also been an active member of the World Business Council for Sustainable Development since 2014. Lastly, Total offers training and makes presentations at several universities, thereby taking part in the debate.
About transparency, Total supports the voluntary recommendations of the industry-led Financial Stability Board (FSB) Task Force on Climate-related Financial Disclosures (TCFD).
"Climate change has to be and is integrated into Total’s strategy. Transparency on climate and long-term issues through adequate reporting and disclosure is key for investors and other stakeholders; that’s why Total decided in 2016 to publish on a voluntary basis its first dedicated annual “Climate Report” and we encourage other companies to do so. I have signed a letter supporting and commenting the initiative and look forward to Total working with the Task Force on the most efficient ways to implement its recommendations so that investors obtain comparable data while businesses remain responsible for defining which information about climate-related risks and opportunities is material and should be disclosed in financial fillings and which additional information they choose to report on a voluntary basis.” Patrick Pouyanné, Chairman of the Board and Chief Executive Officer.
ADAPTING TO CLIMATE CHANGE
The Group ensures that it 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 hazards but also seismic risks, tsunami risks, subsidence, etc.) are taken account of in the design of industrial facilities enabling them to withstand normal and extreme conditions. The Group routinely assesses the possible consequences of climate change for its future projects. The assessments include a review for each hazard type (sea level, storms, temperature, permafrost, etc.) and consider the lifespan of projects and their capacity to progressively adapt. Studies conducted have not identified any facilities that are not able to withstand the currently known consequences of climate change.