French Energy Titan Shuns EU with $2bn Investment in US Gas Sector

Total, the French energy behemoth, has declared its intent to establish a $2 billion (£1.6 billion) synthetic gas facility in the United States, thereby challenging Europe’s renewable energy ambitions.

In a collaborative venture with Belgian startup, Tree Energy Solutions, the plan is to produce e-natural gas derived from hydrogen and carbon dioxide.

The Inflation Reduction Act (IRA), a hallmark legislation enacted under the Biden administration, is predicted to provide subsidies for the venture. Both companies attributed their choice to this act.

Stéphane Michel, the head of gas, renewables, and power at TotalEnergies, stated, “Our inaugural e-NG project will greatly benefit from the numerous advantages offered by the United States, such as robust gas infrastructure, burgeoning capacity for renewable power generation, and substantial public subsidies.”

He further stated that e-gas would “facilitate the energy transition by aiding our customers in reducing carbon emissions in their operations, particularly in areas challenging to electrify.”

CEO of Tree Energy Solutions, Marco Alverà, praised the project as a testament to the efficacy of the Inflation Reduction Act.

The IRA has left the UK and Europe struggling to adapt, with warnings from EU politicians that this could lead to a shift of investment from European energy, automotive, and technology firms to the US.

Anticipated this month is the unveiling of the UK’s policy response by Chancellor Jeremy Hunt, while the EU has disclosed a “Green Deal Industrial Plan”. This strategy seeks to offer firms greater regulatory predictability and soften state aid regulations.

Nevertheless, the IRA presents substantial tax incentives for carbon-free power generation, a component that could revolutionize the commercial argument for developing industries.

For instance, from 2023 onward, enterprises will be eligible to receive $3 for each kilogram of green hydrogen produced during the initial ten years of a plant’s operation. These payments are scheduled to increase by 2% annually.

Some businesses have even hinted at the possibility of relocating their operations entirely to the other side of the Atlantic to fully capitalize on the subsidies.

Total has stated its goal to generate 100,000 to 200,000 metric tons (up to 200 million kg) of e-natural gas annually.

The hydrogen will then be merged with “biogenic” carbon dioxide – CO2 produced from the combustion of fuels like biomass such as wood pellets or biogas – to manufacture the e-gas.

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