Big Oil CEO says going green 'will have a cost for everybody' — and governments need to explain that

Big Oil CEO says going green 'will have a cost for everybody' — and governments need to explain that

February 3, 2021
  • His comments come at a time when the global oil and gas industry is under immense pressure to pivot away from the burning of fossil fuels, amid deep concern about the effects of the climate emergency.
  • The United Nations has recognized the climate crisis as the "defining issue of our time."
  • Big Oil, meanwhile, has been slow to respond.

LONDON — The chief executive of French oil major Total called on governments to explain the cost of carbon neutrality pledges, urging policymakers to make the "affordability" of an energy transition clear to everybody.

His comments come at a time when the global oil and gas industry is under immense pressure to pivot away from the burning of fossil fuels, amid deep concern about the effects of the climate emergency.

The United Nations has recognized the climate crisis as the "defining issue of our time," warning the impacts of everything from shifting weather patterns to rising sea levels are global in scope and unprecedented in scale.

Big Oil, meanwhile, has been slow to respond, and many underline the importance of oil and gas when it comes to economic growth and security.

Speaking to CNBC's Steve Sedgwick at the Baker Hughes 2021 annual meeting on Tuesday, Total CEO Patrick Pouyanne said: "Obviously, if we want to go to carbon neutrality together with society … governments and authorities are very important because they will set some policies."

"And we all know that if we don't have some policies in place it will be very difficult to go to carbon neutrality," he added.

"Transition, for me, it means a journey. It means a journey in which we will have to adapt. Yes, for sure, with a clear target to go to carbon neutrality by 2050, but also not thinking that it could be done in black and white and forgetting, for example, the affordability of this transition," Pouyanne said.

Carbon neutrality

Total has pledged to get to net-zero emissions across its production and energy products used by consumers in Europe by 2050, or sooner. Pouyanne said this represented 60% of the company's activities.

The European Union agreed last month to cut greenhouse gas emissions by at least 55% by the year 2030 compared with 1990 levels. At the time, Ursula von der Leyen, president of the European Commission, said the target "puts us on a clear path towards climate neutrality in 2050."

Total's Pouyanne described the commitment from EU leaders as a "very ambitious" target, adding he believed it "obviously will have an impact on the cost of energy in Europe."

"What I am expecting from the government is not only to set the policies but also for them to take the responsibility and to explain to the citizens and the consumers that this journey will have a cost for everybody," he said.

"And then, of course, Total is there to answer and to bring more energies and green energies to the customers."

The oil and gas industry endured a dreadful 12 months by virtually every measure in 2020 and currently faces significant challenges and uncertainties as it seeks to recover.

In 2020, the coronavirus pandemic coincided with a historic demand shock, falling commodity prices, evaporating profits, unprecedented write-downs and tens of thousands of job cuts.

The torrent of bad news was reaffirmed as some of Total's peers published their latest financial results in recent days. U.S. major Exxon Mobil reported on Tuesday that it had lost $20.1 billion during the most recent quarter, while U.K.-based oil and gas company BP posted its first full-year net loss in a decade.

Total is scheduled to report its 2020 results and outlook on Feb. 9.

Shares of Total are down around 1.4% year-to-date, having tumbled 28% last year.

Earlier this month, Total became the first major global energy company to quit the American Petroleum Institute following a review of the influential U.S. oil and gas lobby.

Total said it decided not to renew its membership with API this year, citing disagreements over climate policies and the group's support for easing drilling regulations.

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