Among oil and gas majors, TotalEnergies stands alone in its plans to shift a fifth of its business to renewable-led integrated power by 2030. It’s a tightrope walk for the company’s long-time CEO Patrick Pouyanné—essentially a strategy that’s not “enough oil and gas” for traditional investors nor “enough renewables” for green ones. But after a decade in charge, the Frenchman is thinking about his legacy and remains confident his is a no-regret strategy that fosters innovation, has raised employee morale, and targets returns on an integrated-clean-power equivalent to what oil delivers through the price cycle.
Appointed after the tragic death of his predecessor in a plane crash, Pouyanné has led the business through turbulent times for the sector, including the decarbonization commitments in the Paris Agreement, the COVID-19 pandemic, and the war in Ukraine. While he counsels leaders to expect the unexpected, he has no doubt that the energy of the 21st century is electrons. He argues for both carbon prices and net-zero ambitions but also says the transition needs to be gradual, pragmatic, and affordable to bring society along.
Pouyanné recently spoke with Sandra Sancier-Sultan, a McKinsey senior partner, at TotalEnergies’ Paris headquarters. The discussion provides an important and timely perspective on the broader energy transition and its implications. This interview has been edited for length and clarity.
Sandra Sancier-Sultan: Today we’re seeing a slowdown in the energy transition—not in the commitments, but in the actual projects. What’s your view of this change?
Patrick Pouyanné: What I see—and I’m a little surprised by it—is that for some people, having more pragmatism means backtracking on their commitments. But to me, pragmatism doesn’t mean renouncing the ambition. I don’t want to renounce the aspiration that TotalEnergies could achieve net zero by 2050, together with society, because it’s a big motivator for our employees and our strategy.
But there are challenges to reaching that goal, like we see today with the slowdown in electric-vehicle [EV] adoption in the US. What the US decides will be fundamental to the pace of the transition everywhere. Europe may go faster, but in other big markets of the world—China, India, South America—the transition won’t go faster than in the US.
We’re also seeing a backlash to going too far in the net-zero-above-everything approach, so we need to rebalance. That’s why I’m insisting that the targets we set for 2030 are pragmatic ones: reducing Scope 1 and Scope 2 emissions and continuing to grow via renewables. I don’t know if collectively we will be able to reach the COP28 [28th UN Climate Change Conference] target of tripling renewables, but it’s a bold objective. If we can make 2.5 times, we’re not yet on the trajectory to reach the 1.5° target, but at least we will have made strong progress.
Sandra Sancier-Sultan: In your view, what are the major misconceptions people have about the energy transition?
Patrick Pouyanné: In 2015, when the Paris Agreement was signed, the target was well below 2°—if possible, 1.5°, which meant carbon neutrality around 2070. Then in 2017 or 2018, scientists said if you want to reach 1.5°, you need carbon neutrality in 2050. This was a huge acceleration. Immediately, a sense of urgency arose, and it ignored that a transition means gradual changes. Instead, it led to the belief that we could transform the energy system overnight.
The change in target also led to the idea that we need to urgently go to the ultimate solutions—that we need EVs and e-fuels tomorrow morning instead of having some time for gradual solutions, like more fuel-efficient internal combustion engine cars. Suddenly we want the perfect solution, as if tomorrow morning we will be in 2050. But perfect solutions are expensive. We need to bring them to customers and society gradually. For example, we’re working with the marine industry to use liquefied natural gas [LNG] as marine fuel. It’s not the ultimate solution, but it decreases emissions by 20 percent. During the past five years, we lost time talking about e-methanol and ammonia, which are a perfect, final solution but aren’t available now, because they’re expensive. Now the marine industry is coming back to LNG, which is good for 15 years, giving us time to develop better solutions.
Suddenly we want the perfect solution, as if tomorrow morning we will be in 2050. But perfect solutions are expensive.
Sandra Sancier-Sultan: So you want to keep the ambition but be pragmatic about the way to reach it?
Patrick Pouyanné: Yes. We won’t make this transition if we forget that the fundamental characteristic of energy is affordability, because it’s central to everybody’s lives and to economic development. If we don’t find a path for affordable energy, emerging countries won’t accept it. And it’s one of the difficulties for Europe, as well, which is the only continent where we have a significant price on carbon. And the desynchronization on carbon price with the other regions of the world has become a real problem for European competitiveness.
I signed the 2015 call for a carbon price. It’s good for the climate because it’s the right signal to influence economic choices; I’m absolutely convinced. But ten years on, Europeans haven’t convinced other big countries about carbon pricing. And in the new geopolitical context, this is a major question for Europe: Are we going too far? Should we be more pragmatic?
Sandra Sancier-Sultan: What about China’s carbon price?
Patrick Pouyanné: It’s still low, and China will not change it quickly but gradually—it’s pragmatic. It’s ahead today in many low-carbon technologies because in 2010, when the price of oil reached $100, its bill was exploding. As the largest oil importer, China was fundamentally thinking of affordability but also of its own security of supply.
China was a strong believer in solar, wind, and batteries. It developed them very quickly, much earlier than the others. China has been super at driving costs down—which the rest of the world benefits from today. But it didn’t do it with a real carbon price but by driving its own technologies to be affordable. Today its EVs are the best, but it also has too much renewable energy and can’t cope with the intermittency. So it’s reintroducing a carbon price, but I’m sure it will keep the price at a level where it remains competitive with the US and the rest of the world.
Sandra Sancier-Sultan: Early in your tenure as CEO, you made a choice to expand the company from oil and gas to a multi-energy strategy that includes electricity. You talked about this as “walking a tightrope.” What do you mean when you say this?
Patrick Pouyanné: We’re a successful oil and gas company. We restructured our portfolio to reach a $25 per barrel breakeven and have the highest profitability of the oil majors. At the same time, we observed the energy transition all around us, with society pressuring us to contribute to the new energy world. It wasn’t an easy decision, but we’ve done it for several reasons.
The first is that, historically, we were an energy supply company. Our strategy was to supply more oil and gas, knowing the market would buy it. Suddenly in 2015, a new realization came to us: Maybe we were wrong. Maybe oil demand won’t continue to grow proportionately to the population. So we needed to look at demand. And when we did so, there were many different scenarios. But in all of them, electricity was growing. There’s no doubt that the energy of the 21st century is electrons. Our strategy is led by demand planning, not just by supply capacities. We then considered if we could find a way to use our fossil fuel skills to develop an integrated electricity business. We decided yes, it made sense.
There were many different scenarios [for oil and gas demand]. But in all of them, electricity was growing. There’s no doubt that the energy of the 21st century is electrons.
The other motivation was our people. In 2018, when the net-zero debate arose, I was having lunch one day with some young drillers. They asked me, “What will I become in ten years?” For me, it was obvious: They would drill. But for them, it wasn’t obvious. I realized we will have an issue if our own people, who are proud of the company and whose motivation is our best asset, begin to ask this question. So one key factor in our decision to move to the multi-energy strategy was to give our people a positive answer. And it’s working. In our surveys this year, 92 percent of our employees are proud of the company and are convinced that the strategy is right and that it will succeed. That’s much higher than ever before.
We’re walking a tightrope at TotalEnergies. The people who tell us we should only do oil and gas aren’t happy with us, because we invest 30 percent in renewables and electricity. And other people say to us, “You continue to put two-thirds into oil and gas; you aren’t good citizens for the planet. Why not put more in renewables?” So today, we think we’re doing well because we’re building a strong renewable-integrated-power business that delivers good profits. But it’s not enough for one, and it’s too much for the other.
However, I’m sticking to the strategy, even as some of my peers backtrack. Consistency of strategy in such a fast-changing environment is the best answer because the energy business is a long-term business. I’m convinced that by 2030, these electrons will represent nearly 20 percent of our mix. It’s a sizable transformation for us.
Sandra Sancier-Sultan: What fuels that conviction when you have stakeholders who question it?
Patrick Pouyanné: It’s a no-regret strategy, and the board is unanimously supportive. Having said that, we face reality, too; we check our progress quarter after quarter. For me, it’s a no-regret decision, and the motivation it creates for our people confirms it. It would have been more comfortable to remain an oil-and-gas-only company even if we had to face criticism. But I thought that if we didn’t make that decision, our successors would regret it.
For me, it’s a no-regret decision. . . . It would have been more comfortable to remain an oil-and-gas-only company even if we had to face criticism. But I thought that if we didn’t make that decision, our successors would regret it.
As a CEO, you also think about your legacy. I’m number ten in the series of CEOs of TotalEnergies over 100 years. I said to myself, “If you don’t move in this electricity segment, it will be difficult to catch up. With all that we’re doing this decade, we will learn, we will spend some money, and we will build teams and competencies. And yes, it will produce a legacy that will be different, and to be a little different from the others is also to differentiate in terms of business model. So why not?”
Sandra Sancier-Sultan: The topic of the energy transition is very politically charged. You have been challenged a number of times, especially in your own country. How do you navigate this? What’s your “true north”?
Patrick Pouyanné: My true north is clear: It’s the interest of the company. When you become CEO, your life is driven fundamentally by the interests of the company, not personal interests. There’s a lot of politics and criticism. Yes, I’m frustrated by it. And strangely, it’s in my home country that we’re most criticized. It can have an impact on my children, sometimes, but not on me. It doesn’t mean I don’t question myself regularly. But if it’s what I believe is good for the company, I have to stick with it. That’s just part of the job.
Sandra Sancier-Sultan: You’ve told the media that your main competitors don’t like to take risk, so you do. What do you need to do as a leader to take that risk?
Patrick Pouyanné: It’s boldness. I’m not a poker player, to be clear. I’m quite rational. But being too cautious is also not best for the future of the company. Again, my driver is: Will taking that risk be good for the company or not? It’s not an emotional decision, it’s intuition. But the intuition is also based on my experience, not on emotion.
We faced a lot of criticism when the war in Ukraine started because we didn’t immediately declare that we would leave Russia. But the company had $15 billion of assets in Russia. Emotionally, I could have said, “Let’s leave,” but it was in the interest of the company to take a little more time. I was quite heavily criticized in the newspapers at the time.
My team spent the summer of 2022 in a big exercise evaluating what we would do if we didn’t have assets in Russia. Part of the answer was in the diversification to electricity; another part was to invest more in the US. I said to my team, “The US has oil, gas, LNG, and renewables. So let’s redeploy the capital we were planning to spend in Russia and put it in the US instead.” We found a new road map for the company, and then the momentum came back. In the US today, we’re the largest LNG exporter and one of the top five renewable companies.
Sandra Sancier-Sultan: You’ve communicated a very strong ambition for electricity: over 100 terawatt hours with a return on average capital employed [ROACE] of 12 percent—much higher than established utilities. What gives you the conviction that you will be able to get to that level of profitability?
Patrick Pouyanné: First, the idea that oil is more profitable than electrons is true at $80 per barrel, but it’s not true at $50 or $60. At $50 or $60, we’re doing 10 percent—maybe 12 percent—ROACE. So this is where our target for electricity is coming from. I want this integrated-power business to be as profitable as oil and gas at $50 to $60. Why $50 or $60? When you take the average of the cycles, you will find that the average price of oil is around $50 to $60 per barrel. Of course, at $80, it’s a bonanza. There’s more upside in profits of oil and gas today, but I’m not sure that will be the case in 2040.
Second, it’s not renewables; it’s integrated power. An energy product needs to be reliable. Renewables aren’t reliable; they’re intermittent. So we’re developing flexible assets, as well, with gas-fired power plants and batteries. And why are we doing that? Because our customers want firm power, but they want it with more green electrons. And when we add in some trading—because the more intermittent sources in the electricity system, the more there are imbalances—we can create additional value. And our strong balance sheet allows us to take merchant risk and sanction renewable projects with a different model from the competition. Our integrated-power business is really delivering: Today we make a 10 percent ROACE. That 10 percent could become 12 percent when we have some scale, better understand the business, and develop more integration.
Sandra Sancier-Sultan: How are you going to do all that? How do you think about the balance between using your historical skills from oil and gas and getting in some new skills?
Patrick Pouyanné: That’s a major question. In the beginning, we were betting on people from outside by buying smaller renewable developers. We had some success, but they weren’t really thinking the way we wanted them to think. They came with their experience of renewable infrastructure, and we wanted to build an integrated-power play. So I also took some of our best talent from our oil and gas business and transferred them into this new integrated-power business because they knew the company. And it worked.
The clear management lesson I drew is that, in this time of diversification, you can bring in external talent, but you also have the question of culture. If you want the new business to be a success, you must also transfer some of your strong people from your core business into the new activities to be able to overcome difficulties and move faster. Maybe they didn’t know electricity, but they learned, and we learned with them. It was quicker to make some decisions because of the trust we had built up with them.
Sandra Sancier-Sultan: In parallel to that big transition, you also have high ambitions for innovation in your core business. How do you foster that innovative spirit?
Patrick Pouyanné: The climate challenge gave me a path to innovate—to say to my colleagues in oil and gas, “Your mission will be to produce oil and gas but differently, with much lower emissions.” We told them, “There’s another KPI that’s as important as production; it’s emission reduction.” This has created a lot of innovation in the company. I went to a production unit in Angola, and the engineers told me it was difficult balancing production and emission reduction because higher production meant flaring more gas. But they said they eventually found ways to produce with technologies that reduced flaring.
I’m convinced AI and digital tools will be at the core of the next wave of efficiency in the energy world. We set up a 300-person digital factory in the company to keep this innovative mindset.
Sandra Sancier-Sultan: CEOs with a decade in charge are quite rare. What have you learned over the years?
Patrick Pouyanné: I came young into the job. At the beginning, it was suddenly very different to be number one compared with number two or three. What’s fundamentally different is that everybody is looking to you permanently. I made some mistakes during the first few months because I didn’t realize I was no longer “normal” in the eyes of my colleagues.
In 2015, we faced some hard times because the price of oil dropped dramatically. Our breakeven was above $80 per barrel, and we had to reduce it to $25. It was a huge effort to convince my colleagues of that. You discover that you have to convince people; it’s not a given. It’s not because you are the CEO that they will follow you. You have to show them step by step. Of course, it’s also very important to have strong unity at the top of the company, but that doesn’t mean everybody has to be like you. Diversity is also good.
Year after year, I see what works and what doesn’t work. I can’t correct everything, but I think I’m a better CEO today than I was at the beginning.
Sandra Sancier-Sultan: Can you tell us a bit more about how you bring your people along with you?
Patrick Pouyanné: People look to you as the CEO because, in the end, the CEO will decide. But at the same time, your decision is the result of exchanges with others. You need to be a sponge: to listen and to create debate. Then you can make better decisions, people will follow you, and the execution will be in the right direction.
Sandra Sancier-Sultan: What’s the biggest challenge you see for TotalEnergies in the years to come?
Patrick Pouyanné: We have to be ready to face the unexpected. At the end of 2021, I thought, “We’ve overcome the COVID-19 pandemic. Life will be easier.” Oil prices were coming back. And then the war in Ukraine happened. 2022 was probably one of the most complex years for our company—even more than 2020. We’re in a world where, unfortunately, we see more and more volatility. We have to be ready for the unexpected.
Maybe I’m optimistic because I’m very lucky to be at the helm of a company that has huge capacities and can absorb shocks. I feel we’re ready to face the unexpected.
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