Illustration; Source: TotalEnergies

TotalEnergies draws attention to slow energy transition progress, urging developed economies to support Global South’s transformation

France’s energy giant TotalEnergies has published its new annual energy outlook, presenting scenarios for the evolution of demand and the global energy system to contribute to the energy transition’s debate in the run-up to COP28. While the decarbonization engine is not running smoothly and needs to be tweaked to reach full speed, the oil major also puts the accent on the need to support the energy transition in the Global South through North-South financing, technology transfer, and training.

Illustration; Source: TotalEnergies

The TotalEnergies Energy Outlook 2023, which is published for the fifth year in a row, updates the Momentum and Rupture scenarios for the global energy system up to 2050, comparing them with a Current Course & Speed scenario to better assess the impact of the various decarbonization levers that will enable the energy transition to be completed by mid-century.

Source: TotalEnergies

The oil major’s analysis of the 2000-2021 period shows that the energy transition has started but is not progressing “fast enough.” While better use of energy over this period has led to decoupling energy demand growth from GDP growth, the share of fossil fuels in the energy mix is still around 80%. As growth in energy demand is linked to the rise in the world’s population, the current investment in low-carbon energies is “insufficient” to meet this demand growth, according to the French player’s new outlook.

Furthermore, this outlook distinguishes three geographical zones: NZ50 countries, the forty countries – mainly from the OECD – that have committed to achieving net carbon neutrality by 2050; China; and Global South, the rest of the world. Based on demographic forecasts, the world’s population will increase by 1.7 billion between now and 2050 in Global South while living standards are set to more than double and energy demand to rise by more than 70%.

Three possible scenarios in 2050; Source: TotalEnergies

On the other hand, things will remain stable in China and fall by 20% in NZ50 countries. Therefore, TotalEnergies concludes that the challenge will be to reconcile the energy transition with this growth in Global South in that period. The main findings of the French giant’s outlook point out that the energy transition has started, but 2022 saw a further increase in energy-related CO2 emissions.

Despite their commitments, many NZ50 countries continue to burn coal to generate electricity, producing about 2 Gt of CO2 emissions – some even increased their coal-fired electricity generation in 2022. The pace and scale of deployment of the new low-carbon energy system need to be significantly accelerated to promote better use of energy and massive progress in energy efficiency while speeding up the increase in investment in clean energy worldwide, not just in OECD countries, based on the French company’s outlook.

Expectations over the next 30 years; Source: TotalEnergies

In addition, the developed economies need to commit to fully supporting the Global South’s transition through financial, technological, and skills transfers. Another challenge, which TotalEnergies underlines, is the importance of reducing fossil fuel consumption at the right pace. The firm’s outlook brings home the point that fossil fuels remain an affordable solution in Global South for providing growing populations with access to energy and prosperity.

Moreover, an accelerated transition in NZ50 countries means retiring existing assets at country, industry, and household levels, and investing in new low-carbon assets. However, the French player is adamant that the transition will not take place without social acceptability – both between North and South and within NZ50 countries – and without genuine efforts in terms of climate justice.

Therefore, actions to be taken in the short term entail the phase-out of coal from the electricity mix in NZ50 countries; massive investments in electricity networks, and adapting them to the complexity of the low-carbon electricity system; leaning towards the elimination of methane emissions from fossil fuel production processes; and decarbonization of road transport.

Specific challenges for each bloc to comply with Paris Agreement; Source: TotalEnergies

Helle Kristoffersen, TotalEnergies’ President Strategy & Sustainability, commented: “Our collective challenge is to move away from the ‘Current Course & Speed’ scenario, without compromising growth in emerging countries and in a way that is acceptable to people in more advanced countries. With this document, TotalEnergies intends to share its knowledge of the global energy system, in order to contribute to the decisions that will foster the energy transition and help combat climate change.”

What does each scenario entail?

TotalEnergies’ Current Course & Speed scenario, which continues current trends in the transformation of the energy system, leads to a temperature increase of more than 3°C degrees by 2100, thus, it is deemed to be unsustainable. This scenario extends the energy efficiency gains observed over the average of the last five years – 2.0%/y compared with 1.4%/y over the last 20 years. Despite this, the end result is not enough to enable NZ50 countries and China to achieve their 2050/2060 targets while global investments in low-carbon energies are not sufficient to be deployed in Global South.

Source: TotalEnergies

The French giant’s Momentum scenario offers a forward-looking approach, integrating the decarbonization strategies of NZ50 countries, as well as the nationally determined contributions (NDCs) of the other countries. This scenario implies significant energy efficiency gains in all countries, which is 2.4%/y over the period 2021-2050 versus 2.0%/y in Current Course & Speed scenario; green electrification of road transport in NZ50 countries and in China; and phasing-out coal in NZ50 countries, a sharp reduction in China and slight growth in the Global South countries.

Additionally, the scenario encompasses the use of natural gas as a transition energy for electricity and industry in all countries; increasing use of hydrogen after 2030 in the NZ50 countries and China, particularly in industry; and the levelling off of global demand for plastics and the deployment of recycling in NZ50 countries. Even though fossil fuels still cover half of the growth in energy demand in Global South due to insufficient low-carbon investment, the scenario results in a temperature increase of 2.1 to 2.2°C by 2100.

Key modeling drivers of Momentum & Rupture scenarios; Source: TotalEnergies

Last but not least, the company’s Rupture scenario is designed to achieve a temperature increase of less than 2°C by 2100 and envisions a wide diffusion to the whole world of the decarbonization levers developed by NZ50 countries and China, while meeting the legitimate growth expectations of Global South; an increased penetration of electricity and renewable energies in Global South; an even more significant reduction of coal in China and Global South; and the extension of the transport revolution: increased penetration of electric vehicles worldwide and sustainable liquid fuels in aviation and marine.

The scenario, which yields a temperature increase of 1.7 to 1.8°C by 2100, also implies increased penetration of new energies such as green hydrogen in industry and transport, e-fuels, biofuels, and biogas; and increased plastics recycling in China and Global South. TotalEnergies emphasizes that the global transition will not happen without rich countries supporting Global South by promoting a just energy transition through investment, technology transfer, training, etc.

Rapture scenario; Source: TotalEnergies

“Faced with increasing energy demand, it is impossible to ‘unplug’ the current energy system, as long as the carbon-free energy system is not developed enough to meet global demand. So, investment in the new energy system has to accelerate sharply,” underscored TotalEnergies.