French energy group Total SA on Wednesday said it would ramp up annual investments in the renewable energy and power sectors by 50% as part of efforts to cut dependence on oil. On the back of gloomy outlook of long-term crude demand, Total has been aggressively pushing into alternative sources of revenue, particularly electricity and renewable energy.
The company slashed this year’s spending from $15 billion to $12 billion as it struggles with the fallout from the COVID-19 pandemic. Previously, Total also said that it aimed at becoming one of the world’s top five renewable power producers. The company’s annual investments in electricity and renewables are expected to grow from $2 billion now to $3 billion in 2030.
CEO Patrick Pouyanne said the company’s annual budget would remain below $12 billion in 2021, before increasing to $13 billion - $16 billion between 2022 and 2025 when oil prices are expected to recover to around $60/barrel. The group aims at expanding its gross renewable energy production capacity to 35 GW by 2025, increasing its previous target of 25 GW.
The coronavirus pandemic has forced global oil majors to cut spending and rationalize operations. They are also under pressure from investors and environmentalists to step up measures to address climate issues. Europe’s Shell and BP have announced plans to reduce exposure to fossil fuel while accelerating the transition toward low-carbon energy. Meanwhile, US-based ExxonMobil and Chevron have mostly stuck to their conventional businesses.
