Recently, I spoke with Philippe Marchand of TOTAL Refining & Chemicals on the company’s biotechnology portfolio and its plans for the future, as well as his views on electromobility and transitioning to multiple and cleaner forms of transport and how that intersects with what the company is doing on renewables.
TOTAL is an oil and gas company, is an energy company. And basically, we’ve been public this year about total refocus of our strategy which is one ambition. In this one ambition basically, beyond being an energy company for the future, we also intend to have in our portfolio within the next 20 years, up to 20% of renewables. And that is quite significant for a major in the oil business. Focusing on biofuels because renewables is a very broad includes power, electricity, solar, you name it.
In biofuels, it’s not something new for TOTAL. We’ve been active on an industrial basis in this activity since 1993 in France nearly 25 years ago. Basically, at the time we built each of these plants which were a way to combine refined butane with some ethanol and then produce a biocomponent. Obviously due to our position in Europe, one of the largest refiners and marketers, we are today the largest biofuel distributor in Europe. So that is where we are today. We believe that biofuels is one of the key answers for transport for the future.
We have decided to retrofit one of our former oil refineries in the South of France, in La Mer, and to transform it into a bio-refinery. This bio-refinery, in 2018, would be producing renewable diesel. So basically, we’ll be hydrogenating a range of oils, which can be vegetable oil, residual oil, cooking oils–all those things that are oil-related. And we transform that into renewable diesel. We have also the possibility to produce renewable jet fuel. And we think that one of the answers coming the next question about advanced biofuels that we would need for the future. I would say that what we’re aiming for is to be one of the leaders, if not the leader, in biodiesel and biojet, because we believe those products are necessary for the future of renewable transport.
I think that there are two points that are clear to me. One is that we do need a very stable regulatory environment. If you want to invest in any new technology as an investor, or to convince potential investors, you need the confidence that basically, whatever thing you’re going to put in the ground is still going to be profitable in the next 10 years, 15 years, 20 years. You need to recoup your investment. So I think what we’ve seen in renewables — it’s been the case in solar, it’s been the case in renewable electricity, it’s been the case with first-generation biofuels — is that if regulation is not stable, it creates a lot of uncertainty to the technology developers for one, and also to the investors. So that is certainly the first thing that we need. Over and above everything else, we need a stable regulatory environment for at least the next 10 years.
And then the second point that goes along with that. I mean, we’re talking innovation here. We’re talking developments that are completely novel. So we’ve got to be patient with the advanced biofuel development. We’re talking not only pure technology of pure process, we’re talking also the new way to transform raw materials. When we’re talking residual agricultural products, residual forestry products. You’re talking of raw materials that do not have the homogeneity that we’ve seen with oil, gas or coal. You’re talking of very diverse products that are not as pure as oil when it comes out of the oil well. On top of that, when you get the raw materials — which again are very diverse depending on the area of the world, depending on the way they are produced, cultivated, collected — and you get the technology, and those technologies, they are very novel. And that need time to be developed, as any new technology.
And finally, there’s also new constraints into the picture. Basically, you don’t just transform a raw material into a fuel, or into a special chemical with a novel process. You have also to demonstrate that this new product has got specific performances in areas that we’re not very familiar with, like sustainability. Now you’re talking of a product that eventually must demonstrate that is reducing greenhouse gas emissions, for instance. So when you take all that into account — novel raw materials, novel processes, and novel constraints — then I think at the end of the day, what you need is some patience. You need some time to develop properly to the level that basically, it becomes industrial after all the steps of bench scale, pilot, and demonstration, whatever. And that takes time. There’s a saying in the industry, that between the first of a kind, pre-industrial, pre-commercial level plant, you need more than 10 years to go to full-scale deployment. So for some of those advanced biofuels, we are not, yet, at the level of the first of a kind.
I think there are tremendous opportunities today to develop electro mobility, for instance. And that’s good news. We still need to see some breakthrough in the battery, the electricity storage. It would eventually come. We can be convinced of that. The point is that it takes time. The point is that then afterward, you’ve got billions of cars that have to be replaced. And that doesn’t come right away. Whereas we already have, in place, the technological skills, as you say, to improve the efficiency of the plants, to make sure that the biofuels are produced sustainably.
And I think if you’re looking at Brazil today, no one would argue that the ethanol is not produced sustainably in Brazil when you see the small part of the agricultural land that is used for sugarcane production compared to all the land that is used of cattle ranching for instance. So, I think that we can be convinced that biofuels — even first-generation biofuels — can be produced sustainably. And therefore, let the developers of electric vehicles work with all the support they need to get those breakthroughs, and bring these technologies as soon as we can. But knowing that it would take quite some time. And then on the other hand, let the people that have the technological skill to develop energy efficiency, to develop the sustainability performance, to develop the efficiency of the plants that are transforming the biomass into biofuels, or bio specialties by the way…let them work, let them be supported, so that eventually, as I said before, they can play their role in the decarbonisation of transport. So we don’t end up with transport being left behind compared with the other sectors like electricity production nowadays, which is certainly relying much more on renewables, than on fossil fuels.
I think last year was the first year when we saw the investment in renewable electricity be more significant than the investment in fossil-based electricity generation, and that’s good news. But that can be done because the technologies are more mature. Now, the maturity in mobility, in transport, is not at the level of the maturity that we enjoy in electricity generation. Therefore, we should do our utmost, to refine to the maximum what we have today in stock, which is the internal combustion engine running on liquid fuels, fossil, and bio. And then, in parallel to that, develop all the breakthroughs in technology that will be needed to go to a further level of decarbonization.
I think one should always accept the fact that the world is changing. It’s a constant. In the 19th Century, we moved from wood to coal. We moved from horses to vehicles or automotive. And it was certainly challenging at the time. Now, I think there’s the view that electricity may be the energy of the 21st century because it can be produced sustainably from truly renewable resource like solar, like wind, like waves. And that means that there’s obviously an enormous hope that our world will become electrified for most of the activities that we have, that we use, that we need. And that includes transport. So that means that when TOTAL says that within the next 20 years, we want to have 20% renewable in our portfolio activity, we’re not necessarily talking about 20% of fuels. What we’re saying is that we believe that within this 20% of renewables, there would be a fair amount of electricity, electricity as an enabler for transport, for industry, for human activity generally speaking.
So, that means that as a large, integrated energy company, we needed that to change the way we live as humans. It’s natural and it’s what we have to do. Now, if you ask me at what pace it would happen? That, I don’t know. We never know when the breakthroughs would come into play. Maybe tomorrow, maybe ten years from now. We know that today, one of the biggest hurdles for electromobility is the storage of electricity. As much as for electricity generation, it’s the fact that the production is intermittent. You don’t have wind all the time, you don’t have sunshine all the time. And the challenge is the same. It’s basically, how do you store electricity, either to make sure that you get your autonomy, and that’s for transport. The autonomy that you enjoy with high-density liquid fuels. And for electricity generation, how you deal with nighttime, how you deal with days without wind?
I think we don’t know when we will have a competitive answer to that. And until that time, we would have to rely on the energy that we’ve been using now for more than a hundred years. That means that we still have quite a way to go, before we can say, “We are done with the liquid fuels. And now we’re in the world of electricity.” As I said, we are dealing with a transition. And we need to accept the fact that this transition would take time. And this time, we won’t just sit our hands and wait for things to come. We will carry on improving, and basically refining what we’ve been doing for so many years. So I think it’s not a contradiction, it’s an evolution we’re going to have. And we have to live with it, which is natural in human history. And it’s been through every period of humanity, of mankind. And I think we would adapt to that. That’s basically the essence of the industry is to adapt to change. And from time to time, to also promote change, as when we’ve got the possibility to innovate. And innovation is also part of our DNA.