KUALA LUMPUR (June 26): Governments' reactions to the 2022 gas price spike demonstrate that energy affordability is an essential factor in the move towards renewable energy (RE), said TotalEnergies chairman and CEO Patrick Pouyanné. 

Speaking at the leadership dialogue at the Energy Asia 2023 Conference here on Monday (June 26), Pouyanné also pointed to energy security and how the energy industry is intertwined globally, where the rise in consumption of coal in Asia is partly a result of Europe’s pivot for Asian gas. 
 
“We eliminated Russian gas [demand]; last year we took around 50 million tonnes of LNG from Asia to Europe... in order to bring all this energy, the only way was to pay more. 
 
“This is a world market; so we pushed prices up, and then, doing that we took some LNG from Bangladesh, Vietnam, Thailand, and we pushed countries to use coal and we then said ‘look, you are using more coal.’  

“Of course, it is because of Europe,” Pouyanné said. 
 
“And the governments in my continent decided that customers should not suffer. So last year Europe subsidised more than €500 billion (RM2.55 trillion) for the European consumers. At the same time, we say to our colleagues in the emerging markets ‘you should stop subsidising fossil fuels.” 
 
“Why did we do that? Because honestly, the affordability of energy is just fundamental,” he added. “Any political leader knows that he could face a huge problem from the population [because of this].” 
 
Gas prices shot to records in 2022, on the back of sanctions by Europe against gas produced from key supplier Russia as retaliation against its invasion of Ukraine. At the time, even parts of Europe restarted coal plants due to the resulting price and demand shock, to meet demand for electricity. 

Gas futures on the New York Mercantile Exchange’s Henry Hub rose as high as US$6.029 per MMBtu (million British thermal units) in June last year, from US$3.125 per MMBtu at end-2021. Prices have been trending downwards since the beginning of the year, from US$4.157 per MMBtu at the end-2022 to US$2.729 per MMBtu last Friday (June 23). 
 
While still historically high, prices have eased on the back of storage buildups and a mild winter compared with the year before.  

 Meanwhile, Pouyanné said that energy efficiency “is a huge part of the journey” in the energy transition. 
 
“We can be more efficient in the way we run our operations. Fifty percent of our own reduction of emissions will come from energy efficiency,” he said, on top of the adoption of hydrogen as well as carbon capture technologies. 
 
These developments, which fall under what Pouyanné described as “System A”, will continue to be developed amid a low-carbon energy system when “System B”, where capacity such as renewables, is unable to meet demand, he said. 
 
“Today we have only built 10% of it [System B]. Populations want reliable and affordable energy. There’s no way to stop investing in System A as long as we have not built System B. So the priority should be two ways, reducing emissions and investing heavily in system B,” he added. 

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