France Total Increases Spending on Renewable Energy, Seeks Strong Electricity Growth, Energy News, ET EnergyWorld

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PARIS / LONDON: Frenchman Total on Wednesday announced it would increase its annual investments in renewables and electricity by 50% by reducing its dependence on oil, emulating its European rivals in a bid to become a major power producer In the face of bleak long-term oil demand prospects, Total is stepping up the push towards alternative sources of income, with particular emphasis on the supply of electricity and the development of its renewable energy activity .The French group, which has cut its annual spending from $ 15 billion to $ 12 billion as it battles the fallout from the coronavirus pandemic, said growth will also come from its gas production over the next few years. years.

“The diversification of activities … increases resilience and offsets the volatility of oil prices,” said Chairman and CEO Patrick Pouyanne during a web presentation, as the group defined its objectives during its investor day 2020 The change in Total, which has said it wants to be one of the top five renewable energy producers in the world, echoes the plans of its competitors, including Royal Dutch Shell and BP, to significantly reduce emissions and boost their businesses. clean energy.

Total, which has so far maintained its dividend payments while some competitors have cut theirs, said it would increase investments in renewables and electricity to $ 3 billion per year by 2030, against $ 2 billion now.

Its overall spending budget will remain below $ 12 billion in 2021 – a very uncertain year, according to Pouyanne – before increasing between $ 13 and $ 16 billion per year between 2022 and 2025 when oil prices are expected to rise until at $ 60 a barrel, he told me.

The group aims to have 35 gigawatts (GW) of gross renewable energy generation capacity by 2025, up from a previous target of 25 GW, and said 70% of that capacity was already accounted for, including in the framework of projects still under construction.

It aims for returns above 10% on renewable investments, a target considered ambitious by many analysts compared to the returns of 6 to 8% of established producers in the segment.

Pouyanne said the goal could be achieved through the sale of stakes in projects to outside partners, known as farms.

Total shares rose 4.18% at 2:14 p.m. GMT.

COST COSTS

Major oil companies have come under heavy pressure from investors and activists in recent years to align with the 2015 Paris climate agreement to limit global warming.

While major European players have presented plans to cut emissions, reduce their dependence on oil and gas and boost renewables, US rivals Exxon Mobil and Chevron have largely stuck to their traditional businesses.

Shell on Wednesday announced plans to cut up to 9,000 jobs as part of a major overhaul, while BP also plans to cut around 10,000 jobs.

Pouyanne said Total, on track to save $ 1 billion this year, would focus cost cuts on its operations rather than layoffs, although he added the company could downsize its head office .



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