Total has ambitions to become a major player in the fledgling global hydrogen market but the French oil and gas giant's chief executive warned that increased demand will be crucial for stimulating production at scale and for keeping a lid on costs.
Patrick Pouyanne told the IP Week conference — being held virtually this year due to the coronavirus pandemic — that Total is keen on pursuing both blue hydrogen produced from natural gas with carbon capture and storage technologies and green hydrogen produced from renewable energy sources.
“Among the new technologies (in) which we have high interest is hydrogen, providing that demand will increase, because for the moment demand is quite limited,” Pouyanne said on Tuesday.
“If policies in Europe or in other countries like Japan are pushing to create a massive demand for hydrogen, we ... want to be of course a massive producer of hydrogen."
Costs will be main challenge
The head of the Paris-based supermajor added: “Size will be fundamental — if we do not have size we will not be able to lower the cost of hydrogen, which will be the main challenge.”
Pouyanne drew parallels between the nascent hydrogen industry and the birth of the global liquefied natural gas industry four decades ago, and in which Total is now a major force.
“I make a similarity between the adventure in hydrogen to what we have done 40 years ago in LNG. For LNG we had to create an industry," he said.
“The first steps [in LNG] were also driven by identifying big customers.”
Nevertheless, Pouyanne said Total — which is planning name change to TotalEnergies — was also “proud” to produce oil and gas and said the energy transition will not occur overnight and will be paid for by cash flows from oil and gas production.
“The word transition does not mean that we can do everything in a minute. We need time because we need investment," he said.
“Renewables are even more capital intensive than oil and gas, so it will take time.”
'Hearing same things for a long time'
Following Pouyanne, Jill Duggan, executive director, Europe, at the Environmental Defense Fund (EDF), told the conference that more decisive action is needed from the oil and gas sector to help avoid the most damaging effects of climate change.
“A lot of what we are hearing from the oil and gas sector I have been hearing for 20 years," she said.
“I am really pleased these major multinationals came forward last year with what look like ambitious plans and are starting to talk the talk very well. And some of them are taking action. But we have been hearing this for a long time.”
Duggan called on the oil and gas industry to “accelerate and embed” its action in the fight against climate change, adding some companies were now having to “turn the tanker around”.
'The direction of travel is very much set' - EDF's Duggan
“The things that have happened in the last year have definitely shown the sector these changes are here to stay,” she said.
“We are experiencing the impacts of climate change already — governments are not going to waver now from this. The direction of travel is very much set.
“The one thing I am not hearing from the sector is that sense of urgency — that we really, really need to take action now and that action needs to be accelerated.”
She added: “[Pouyanne] also talked about the continued need for oil and gas but I think one of the things the sector can do is help provide their customers with alternative solutions, otherwise they risk becoming the Kodak of the 2020s,” she said, referring to the once-dominant photographic company that was an early developer of digital imaging but lost ground to rivals after failing to adapt its business.
Total is aiming to have developed almost 100 gigawatts of renewables capacity by 2030, a target that would put it in the front rank of global clean power players, the company said previously.