To The Moon

1. otalEnergies, a Company Aiming at Revolutionizing the Energy Sector

The energy transition is underway, but the world still uses fossil fuels to meet 81% of its energy needs. Therefore, to keep global warming to well below 2°C, in line with the Paris Agreement, the world must drastically reduce its consumption of fossil fuels (coal, oil, gas) and make the world energy system evolve by building the new low-carbon energy system at a much faster pace. Investing in two energy systems simultaneously is necessary to meet the challenge of the energy transition and still ensure that reliable energy is available in the short term at the lowest possible cost. Firstly, we must ensure the current system continues to operate responsibly, and at the same time speed efforts to build a new system centered on low-carbon energies (renewable electricity, biofuels and biogas, clean hydrogen, and synthetic fuels, CCS solutions for offsetting residual fossil-fuel emissions). Leveraging two measures that will deliver immediate results is possible. That means replacing coal with energy

applications whenever possible and investing heavily to improve energy efficiency. That, in essence, is TotalEnergies’ strategy: to continue providing the energy the world needs now, notably natural gas to replace coal, while responsibly and sustainably accelerating the transition to low-carbon energy solutions. This is how, in practice, TotalEnergies supports the goals of the Paris Agreement, which calls for reducing greenhouse gas emissions in the context of sustainable development and the fight against poverty and which aims to keep the increase in average global temperatures well below 2°C compared to pre-industrial levels.

Indeed, the energy transition depends, first, on electrifying energy use, which will require a massive increase in green electricity. TotalEnergies is expanding across the entire electricity value chain, from the production of intermittent renewables for flexible power generation to natural gas, storage, trading, and sales, with an eye on profitability. Its goal is to build an Integrated Power segment with a return on average capital employed higher than 10% and to rank among the world’s top five providers of solar and wind energy by 2030, with a gross capacity of 100 GW and an interim target of 35 GW by 2025 (the company reached 17 GW as of year-end 2022).

Moreover, the energy transition depends on developing new, low-carbon energies (biofuels and biogas, clean hydrogen, and synthetic fuels combining hydrogen and carbon) that TotalEnergies has the core skills to produce. The company is expanding into these new markets by focusing on circular resource management and deploying less mature technologies to test its business viability at its sites. For natural gas, a transition energy, TotalEnergies is pursuing growth across the liquefied natural gas (LNG) value chain to consolidate its position as the world’s third-largest supplier. LNG plays a key role in the net-zero roadmap for many coal-consuming countries. It is also a perfect partner for intermittent renewable energies: flexible, controllable CCGT plants ensure a secure electricity supply in the face of unforeseen weather events and fluctuations in demand.

Hence, as they evolve, the energy markets are becoming increasingly interconnected and interdependent, particularly since electricity – the energy at the center of the transition – is secondary, meaning it depends on other energies and markets. Therefore, the integrated multi-energy strategy of TotalEnergies and its solid financial base are strengths that allow it to be a major player in sustainable energy the world needs and make the most of the current changes, including the potential price volatility they may cause. Similarly, because TotalEnergies is ambitious to be at the forefront of the energy transition, it will likely be at the forefront of potential regulations as well.

1. A Booming Interest in Renewable Energies Around the World

The global energy crisis is driving a sharp acceleration in installations of renewable power, with total capacity growth worldwide set to almost double in the next five years, overtaking coal as the largest source of electricity generation along the way and helping keep alive the possibility of limiting global warming to 1.5 °C. Moreover, energy security concerns caused by Russia’s invasion of Ukraine have motivated countries to increasingly turn to renewables such as solar and wind to reduce reliance on imported fossil fuels, whose prices have spiked dramatically. Global renewable power capacity is now expected to grow by 2 400 gigawatts (GW) over the 2022-2027 period, an amount equal to the entire power capacity of China today. This massive, expected increase is 30% higher than the growth forecast just a year ago, highlighting how quickly governments have thrown additional policy weight behind renewables. The report finds that renewables are set to account for over 90% of global electricity expansion over the next five years, overtaking coal to become the largest source of global electricity by early 2025.

The war in Ukraine is a decisive moment for renewables in Europe, where governments and businesses are looking to replace Russian gas with alternatives rapidly. The amount of renewable power capacity

added in Europe in the 2022-27 period is forecast to be twice as high as in the previous five-year period, driven by a combination of energy security concerns and climate ambitions. An even faster deployment of wind and solar PV could be achieved if EU member states rapidly implemented several policies, including streamlining and reducing permitting timelines, improving auction designs and providing better visibility on auction schedules, and improving incentive schemes to support rooftop solar.

Beyond Europe, the upward revision in renewable power growth for the next five years is also driven by China, the United States, and India, which are all implementing policies, and introducing regulatory, and market reforms more quickly than previously planned to combat the energy crisis. Because of its recent 14th Five-Year Plan, China is expected to account for almost half of new global renewable power capacity additions over the 2022-2027 period. Meanwhile, the US Inflation Reduction Act has provided new support and long-term visibility for expanding renewables in the United States.

Utility-scale solar PV and onshore wind are the cheapest options for new electricity generation in a significant majority of countries worldwide. Global solar PV capacity is set to almost triple over the 2022-2027 period, surpassing coal and becoming the world's largest source of power capacity. The report also forecasts an acceleration of installations of solar panels on residential and commercial rooftops, which help consumers reduce energy bills. Global wind capacity almost doubles in the forecast period, with offshore projects accounting for one-fifth of the growth. Together, wind and solar will account for over 90% of the renewable power capacity added over the next five years.

Therefore, as we can observe an overall increase in interest in renewables, we can believe that the world will be more and more prepared to face climate change and prevent environmental catastrophes.

1. ESG assessment

While the product portfolio of integrated oil and gas companies is not suited to contribute to sustainable development goals, TotalEnergies is engaged in environmentally and socially beneficial activities, including solar power, alternative fuels, and access to cleaner energy solutions in developing countries, which it plans to significantly, expand until 2035. The company has established management procedures in key sustainability areas such as occupational health and safety, human rights, climate strategy, and facility safety. However, it is involved in human rights, business ethics, and environmental controversies.

1. Environmental Assessment

1. Carbon Emissions

With regard to greenhouse gas emissions, TotalEnergies is committed to shrinking its carbon footprint from production, processing, and delivery to its customers. To begin with, the company is moving forward with an ambitious action plan to reduce the greenhouse gas emissions for which we are responsible (Scope 1+2 emissions at the company’s operated assets) to a strict minimum. The company also invests in carbon storage and sequestration projects to “neutralize” its residual emissions and to be able to offer those CCS solutions to its major industrial customers. Although the speed of transition will depend on the pace of change in government policies, consumer practices, and corresponding demand, TotalEnergies has embraced the need to offer its customers affordable, less carbon-intensive energy products and to lend support to our partners and suppliers with their low-carbon strategies. Drawing on the actions already taken to revise our energy offerings and reduce carbon emissions from our operations, in 2022, TotalEnergies published an outline of how our businesses might evolve as we become a carbon-neutral energy company by 2050, together with society.