The energy transition will take time, investment and, frankly, large companies with muscular balance sheets to succeed, the head of French supermajor Total SE said during a recent conference.

“It’s not in the blink of an eye that you can do the transition, so we need time,” Patrick Pouyanné, Total’s chairman and CEO, said at the IP Week virtual event. “We need time because it is a capital-intensive industry. Renewables, by the way, are even more capital intensive than oil and gas. For a company like Total, we don’t want to be only an oil and gas company but a world energy company.”

Total’s strategy is to build up its electricity generation division to account for 15% of the company’s business by 2030. In May, shareholders will be asked to vote on a proposal to change the company’s name to TotalEnergies to reflect its aspiration to carbon neutrality. However, there are no plans to reduce oil production in the next several years and the present business is necessary to fund the future one.

“We’re very proud to produce oil and gas. The economy today is 80% carbon-intensive,” Pouyanné said, noting that the global economy has achieved what it has because of oil and gas.

“We should not forget it,” he said. “Everybody wants reliable energy. We continue and maintain that activity and generating cash flows, and we will be in this part of it in the building of our future renewable and power businesses.”   

Total does expect oil demand to fall off beginning in 2030 and is preparing to steadily bolster its natural gas production, in part to support the energy transition to cleaner fuels.

“Natural gas is a complement to renewable energy,” Pouyanné said. “There’s no way to think of a reliable energy system without a flexible way to produce electricity, and gas is offering this flexibility.”

He noted that LNG production grew by 3% in 2020, despite a global economic crisis that cut overall energy demand by 5%. And while minimizing methane emissions along the value chain is an imperative for gas, he said Total is among those making the most headway.

The reliability advantage of gas over renewables like solar and wind is why demand for fossil fuels will not wither, even as the world pursues the Paris accords goal of limiting global warming to no more than a 1.5 C. The way to achieve the Paris goal while meeting the world’s energy demand is capture and underground storage of CO2, Pouyanné said.

“This transformation is possible because it will leverage a lot of competencies that are in an oil and gas company,” he said. “That’s why we are optimistic.”

But even with an ambitious strategic plan to curtail emissions and grow its electricity generation business, Total must contend with activists pressuring investors to divest holdings to protest the company’s fossil fuel operations. The company maintains its dividend even during downcycles to keep the trust of investors, but the logic behind the divestment campaign targeting fossil fuels eludes Pouyanné.

“Frankly, it makes little sense to me to divest from Total just because of climate change because, in fact, even if Total stopped producing oil and gas, other companies will produce it because the world requires energy today,” he said. “So, I’m sure national companies from many producing countries will be happy, but it will make no change in terms of climate change globally.”

Advancing the energy transition will require the resources of giant companies like Total, which boasts a market cap of about $128 billion, he said. When countries in Europe, Japan and elsewhere enact policies to push a massive demand for hydrogen, only a massive company has the ability to step up and produce it on the massive scale that is needed to keep costs low.

“Without large players, companies with a balance sheet like Total,” Pouyanné said, “I don’t think the energy transition will become a reality.”