The shift toward clean fuels reflects broader changes in energy production and use highlighted at the World Economic Forum Annual Meeting 2026.
At Davos, energy leaders argued that “clean fuels” will scale only where they are both necessary and politically durable. Elaine Buckberg urged prioritization: limited biodiesel and costly renewable diesel should go to sectors with few substitutes, especially aviation. Using real GPS truck data, she said “you could electrify 26% of US trucks today” and up to 56% by reallocating routes, rising toward 90% by 2035—shrinking the case for fuels in road freight.
Executives stressed affordability as the binding constraint. Patrick Pouyanné called oil the cheapest baseline and warned that “the green premium…does not exist” because customers won’t pay it; mandates work only when they increase gradually. He also highlighted regulatory risk: shifting targets can strand biorefinery investments, pushing firms toward cheaper options like refinery co-processing.
Arvinder Singh Sahney framed India’s clean fuel push as energy security: 20% ethanol blending, compressed biogas, and imminent co-processed sustainable aviation fuel reduce import dependence at manageable cost.
Richard Holtum was blunt: “In a free market, clean fuels, there would not be a market for them,” absent mandates or subsidies. Panelists converged on technology-neutral carbon intensity standards and more R&D, while warning that ideological, subsidy-heavy policies will “eventually fail.”
All right. Welcome, everyone. Good afternoon. From the World Economic Forum's annual meeting in Davos. Thanks to all of you for joining us in person and virtually. I'm Jason Bordoff, a professor at Columbia University, where I direct the Center on Global Energy Policy. Really delighted to have this group of people here today for this conversation. Our topic today is the Future of Clean Fuels. How do we accelerate the adoption of clean fuels? What the need for coherent policy frameworks look like that create an investable opportunity in that space, and the sustainability and the economic and security benefits that clean fuels may be able to provide. And we have a phenomenal group of experts to join us today to talk a little bit about that. I think people know that fuels remain the backbone of the global energy system. More than half of global energy demand essential for transportation industry electricity. As much progress as one might make toward electrification, which can go a long way, there are major parts of the economy in aviation and shipping and heavy road transport and certain industrial processes that are likely to. But we will talk about it here, continue to depend on fuel based solutions, at least for the foreseeable future. And if we're serious about reducing emissions and maybe increasingly thinking about energy security for countries, scaling clean fuels is certainly something that's rising higher and higher on the agenda. But we've got to make sure that that's economic, commercial, investable. There are some energy security, elements as countries perhaps increasingly look to, reduce their dependency on interconnected, volatile global oil and gas markets that are exposed to geopolitical risk and also a continued need to move in a lower carbon direction. And these clean fuels can also support economic development, particularly in rural communities, if deployed at scale. The World Economic Forum just released a really excellent white paper. I think up on the screen you'll see the QR code for it if people want to access it. I read it in preparation for this and really is a very good, piece of work to explain what the challenges and opportunities are and how business and finance and policy might come together to accelerate the market for clean fuels. And it's accompanied by a digital playbook outlining pathways to scale clean fuels globally. Again, you can find that on the QR screen here on the code. And this discussion today is part of the World Economic Forum's Future of Clean Fuels initiative that was announced at Davos last year. In some respects, the momentum for clean fuels has been growing. We saw at Cop 30 this year, Brazil in 26 more countries took the lead with a pledge to quadruple their clean fuel production by 2035. Significant ambition, but also, delays in maritime net zero frameworks. Not necessarily the sort of coherent policy frameworks that we need, and challenges with what the economics of this sector look like. And we know that enhanced cooperation internationally among stakeholders, among business are needed if we're going to accelerate the deployment of sustainable fuels moving forward. So, I'm really excited to have a conversation now with the group of folks that are here to talk about what the market looks like today, what the challenges are, what might be done to accelerate the deployment of clean fuels. Elaine Buchberg is a senior fellow at Harvard University. Patrick Pouyanne, I think is known to everyone here, the chairman and CEO of TotalEnergies. Our vendor, Singh Saini, is the chairman of Indian Oil. Marcos Bulgheroni is the CEO of Pan American Energy. And Richard Holtom is the CEO of Trafigura Group. And with introductions out of the way, just one additional piece of housekeeping. If you're sharing takeaways from this on social media, use the hashtag pound 26. So we're going to just make this as free flowing a conversation as possible. The less I talk, the better. And if this group is talking to one another, it'll be a really fascinating conversation. I have no doubt we were talking about it a little bit in the speaker room just as we got started. Elaine, maybe I'll start with you. There is at least some debate I sort of mentioned at the opening the sectors in which clean fuels will be needed. But some there's some disagreement about that, for example, some finding that up to more than half of us trucking routes might be electrified with current EV technology. Maybe that challenges the view that you need clean fuels in heavy road transport, and they should be reserved for some other sectors like aviation. I'm curious if you have views on that, because I know you've thought a lot about it.
That's exactly what our forthcoming research finds. So right now, you know, you have a limited supply of used biodiesel. And the other renewable diesel is incredibly expensive. So you really want to prioritize when you're using you're using it. Sustainable aviation fuel almost no substitutes trucking. Our research finds it's a lot easier to electrify than I think is the general takeaway. And so rather than being hard to abate, we actually find that using actual GPS data from trucks, real routes, real temperatures, you could electrify 26% of US trucks today without a single change to their schedules or routes. If you just reallocated routes within a fleet that stays the same depot every night, 56% using a current generation Mercedes E lactose 600 that's in-market in Europe. So let's put our focus on putting clean fuels where we really can't abate them. And again, I'm happy to talk about this more. But I think sustainable aviation fuel is number one.
Patrick. We we've had sessions like this year after year, not just here, but so many energy conferences with a lot of excitement about markets for green hydrogen and green ammonia. I remember we were on a panel together maybe two years ago. I can't remember exactly. And you sort of put the numbers out there. Europe had goals like 20 million tons total. Global production was one tenth of a ton, 2/10 of a ton. And how many electrolyzers it actually took to try to get to numbers like that, which I think you were suggesting this was going to be a lot harder than people think. And I'm wondering if, you know, the takeaway is sort of, I told you, but tell me where you see the market today and what the challenges have been scaling.
I think just what I observed in the first, in fact, the debate moved from sustainability to affordability and and security. But in fact, 20 or 27 years in this industry, it's the affordability of energy, which is just the fundamental parameter. And all of other societies, wherever you are in developed countries, Europe today, in the US, affordability of fuels look to the policy of the president. And so in fact, the second fundamental is that the cheapest way to have a fuel is oil, let's say 400, 300, $500 per ton. When you move to biofuel, you reach for something which is 2 to 3 times more expensive for renewable diesel and for 3 to 4 times. But the fundamental the reality is then the second thing is that what we have managed to do in Europe, through mandates, because nobody wants to pay more, there is a concept which does not exist. Forget it's a green premium. Nobody is ready to pay a premium to have to be clean. Maybe, our friend Bill gates, because he's a philanthropist, but I don't know what it is. It does not exist. So it's not that I have a mandate which obliges the people. You obliged. So, in fact, and contrary to what I heard, that the molecule world was not regulated, is fully regulated. Without regulation, there is no market. And this is one of the difficulties. And then what I observe is that it works in renewable diesel in Europe because we have made gradual mandates increase 1% 1.522.53 today we are moving from 8 to 8.5 gradually because why you inject your molecules which are three times more expensive with a minimum 0.5%. The customer does not see it. You absorb it, you know, it's in the middle of the volatility of your price. So it's become acceptable. So the affordability must be acceptable. What does not work, honestly, is when you have big jumps, you want to move from 1% to 10%. It is a panic, you know, and even in particular in the European regulation of staff, when it's 1 to 10, 1 to 6 in 2030 without having written one, two, three, four, five, that means that you have to overinvest during five years just to reach 6%. It does not work like that. So the gradual part of it is fundamental. Then the other lesson I discovered is that we have to be pragmatic, and to invest our capital in the most affordable biofuels, clean fuels. So today, to make biofuel from, from, I would say a soybean or from, from colza or from it's less expensive and from new oil, it's less expensive than alcohol to jet. It's less expensive to. So the way that we have used it and we invest in biorefineries, you know, and, it's in fact to, to to concentrate today on the technologies which allow us to produce some clean fuels, maybe not the perfect one, not an issue at 100% or 95% abatement, maybe only 50%, 60%. But it's better. But it's it's more affordable for the customers. But, you know, when I see the debate today in the South, in Europe, I will make a bet today. What happened to the car? To the car? Regulation will happen to the regulation in Europe. European European Commission has been obliged to be more flexible about the cars. The famous 2035 wall you will see today. All the airline companies are fighting the Famous Six, and even worse than the 6%, which is easy to reach, to be honest. The 15% plus 5%, 20% five years after it just makes zero sense. Maybe it's fine for the math on an Excel file to diminish the emissions, but it will not happen. So we'll be obliged, I'm sure, to revise because today I'm facing customers. My airline companies in Europe there are making a huge lobby accusing us not to invest in us, which is completely we have. I have no problem to invest. I will be able to provide 10% of staff to the airline companies in Europe by 2030. I have more than the six. But but it has a cost and everybody is dreaming to have this biofuel and fuel for the same price than oil. No, it's not true. So and again, and since I finished my, in terms of investment, why I say recently I will invest less in this thing because I'm afraid as it's a regulated market, if they move the targets from 10 or 6%, then I will have invested in Biorefineries for nothing. And there is another reason in terms of decarbonization, investing in renewables, solar, wind today in terms of cost of abatement by for CO2, it costs me $200 per ton of CO2, while my biofuels is more $350 $400 per ton. So if I have just logic, if I'm thinking to the planet allocating my capital to be efficient in terms of carbon abatement is not the primary solution. It's not the primary, it's not true. So in fact, and this is the type of things which having a holistic view and trying to see if we allocate our capital to be efficient for the climate, unfortunately, it's difficult because the policies are done by verticals. So you have a biofuel policy, you have a nuclear policy, a renewable policy, and nobody thinks that at the end all that is the same. It's energy. So the real objective is how do you provide the most affordable and as much as sustainable possible energy.
So what would cause.
Total energies to put more investment into clean fuels in the face of those challenges? With the green.
Premium, you I just I just discovered recently a new technology because of moving. It's a moving target because recently, the airline companies have been very smart to recognize when when you make co-processing in a refinery of used oil, it's a valid source. So it's a even if it's a mass balance, why did they accept it that they did not accept it, that two years ago it was new, but it changed completely the industrial patterns before I was obliged to invest in a biorefinery suddenly, by putting used oil in my. Because of my refineries, I have a safe. It's not a perfect sapphire. It's a mass balance. Why did they do it? Because they realized it was much less expensive. Because it's almost marginal there. And because again, they led. So in fact, today I stopped. We had two we have two biorefineries in Europe. We were planning to announce a sanction. A third one, we stopped because I say no this let's co-process all what we can and when we have co-processing story, we will move to a new industrial tool. And again, all that is known. So it's not a it's very regulated, it's complex market where traders are happy. My traders are happy because you have, by the way, in Europe, you know, each regulation is different for each country, even if you have a European framework. And so you have discrepancies and you can move the clean fuel. So you make quite a lot of money by moving clean fuels from France to Germany and then from, which is not sure if it's good for the planet and for the climate, but that's the result of that of what we do today.
So I'm curious, your perspective from what you see in India, where, of course, energy affordability issues are very important and have been for a long time. You can tell us about the willingness to pay a green premium, but there's another potential willingness, which is an energy security premium. And we do see countries, Japan, China, to some extent, some other countries that are willing to pay some premium for energy security. And does that factor into the conversation about clean fuels at all in the Indian context?
It is certainly a factor, although, because we are importing around 85, 90% of my crude oil, we are importing similarly with gas, 50% of the gas we are importing, 50% is indigenous. So for us, the premium or no premium, it is a meaning of energy security basically. So if I can develop an ecosystem which will give me continuous supply of non-fossil fuel, that will be a great thing for the country, for the economy in that context. But still, I will say, and to to that extent, I will agree with what Patrick was saying, that still the industry has to be ready to pay for it. I can work, we are working on two pathways. One is the solar one, which is very obvious, and we have like India, has developed around 150GW worth of solar power, solar power, energy capacity in the last few years, and at least 85GW of it is already on the floors. They are getting converted into solar energy. They will be converted into solar energy in next one and a half years or so. So this is the kind of growth.
For the for the grid. not for.
For the grid, for the grid, for the grid. And then it goes into EVs and it goes into electricity and electron. That is the electron pathway. And the molecule pathway is very obvious that we have strength in bio energy because it's a large agriculture based economy. And then we have lot of bioenergy potential that is available in terms of biogas, that is compressed biogas, and that it goes and mixes into the natural gas for for kitchens and for the vehicles also. And ethanol, ethanol is a very big story with us because we are last one year or so, one and a half year or so, we have been blending. 20% of my gasoline is ethanol. So that is starting from 1%, 2%, 3%. Now we have reached 20%, and we are consistently blending 20% ethanol in all my gasoline. And that is a good, take away from my CO2 emissions by any standards. Similarly for sustainable aviation fuels, as he said Co-processing yes, we are starting the Co-processing and within few 2 or 3 months I will myself will be doing the co-processed sustainable aviation fuel that will be available for the dispensation. And ethanol two jet that also works in work is in progress, although there are certain uncertainties involved with ethanol to jet. Because, there is a debate going around the source of ethanol and all those things. But if that is sorted out, we can contribute as India in a very large way from ethanol to jet. And that will be a great contributor to the world usage of sustainable aviation fuel. So these are the three four pathways which we are working on. The other ones are more expensive. As we were talking earlier in the session, that the other ones, like converting that gigawatts of solar power into hydrogen and then going into green ammonia and then going into clean bunkering, those are the pathways which are there on the horizon, but they are certainly more expensive than what I earlier told. Like putting it into gasoline is very easy, very cost competitive also. And it reduces my dependency on fossil fuel. It helps the environment. Also. Sustainable aviation fuel is going to be there, compressed biogas is going to be there and solar and wind are going to be there. So these are the 4 or 5 pathways which we are working on. And these are reasonably priced and reasonably, factored in options, which we are going into as of now.
Marcus, I'm curious your reaction to some of what you've heard about what the challenges are, and also any thoughts you have on how policy in particular might change that outlook and be able to accelerate the clean fuels market.
Let me first make a small, you know, interjection. I'd rather call it low carbon fuels because we all produce clean fuels. None of us produce, you know, polluting or filthy fuels, for that matter. But I mean, clearly, we have a lot of the problems that have been discussed. We we we probably don't have the issue of energy security per se, because we are a net producer of energy. But we do have an issue that has to do with, I would say, price in terms of cost to the consumer on the one hand. And then another issue that is very important, that particularly.
For remind people about the portfolio of your, of your company.
So I'm going to, I'm going to speak a broadly about Latin America. But as Pan American we do produce oil, we do produce gas, we produce biofuels, we generate electricity, we generate renewable electricity. So pretty much, you know, the whole portfolio of, of, of clean products, low carbon, low carbon products. Sorry. No, just I was just a joke, of of low carbon products. So, the other issue that I think so in the same way, energy security is important for countries like India that is a net importer for Latin America in general. What you see, the big issue that has to be balanced out in this equation has to do with economic development. You know, there is no policy that actually will work or that has worked unless this equation is balanced, in which on the one hand, you do, come up with, fuels that are lower carbon emitting. But also you need to, make sure that whatever project brings economic development to the country that is producing and I'll take natural gas as a transition fuel as an example, which clearly in Latin America is, is is is, very well developed. And if you think about it, it does hold this equation. And that's one of the reasons why it's been so successful in developing. So on the one hand, natural gas through LNG or or pipe system, natural gas brings development in the forms of jobs, in the forms of investment in the forms of critical infrastructure that is being built across the different countries and in the forms. I think, most importantly to some of our countries of exports and therefore bolstering the balance of payments. Right. And on the other hand, natural gas is a low carbon emitting fuel, low carbon intensity fuel. It does provide diversity of supply to the different buyers. And of course, it does help in terms of energy security, particularly to places like Asia and Europe. So, this is really, in my opinion, what, us in the emerging markets have to focus on, I mean, as companies as well as governments, because at the end of the day, it's not about resources. It's not I mean, the resources are there. It's not about choosing the right technology because the market will choose or should choose the right technology. And we have a whole spectrum of different technologies. The the issue is putting the right policies in place. And these policies, you know, in the last years or decades, unfortunately, a lot of the policies were driven more by ideology. And I heard today in one of the sessions, religion, which I thought was funny but not so funny. But, you know, those kind of policies are, are, are based on subsidies, are based on overregulation, are based on essentially what, what, what I like to think is going against human nature. And human nature will try to do the best of what's putting in front of them. And they don't work. They may work for wealthy countries in which maybe, you know, maybe, you know, politicians will not explain the true cost of to societies of these policies. But for emerging markets, we need we need market driven, regulations. And those are the ones who, who, who are will support, will foster and who will basically grow. The, the, the extent of low carbon fuels we have today, LNG and natural gas, biofuels as, as, as, as we talked before and also a whole range of, I would call it, you know, hydrogen based fuels, e fuels that slowly are trying to gain ground.
But on the spectrum of, low carbon clean fuel options, you're talking about gas and biofuels sort of being the low. hanging much easier than the others.
I think, you know, it's a transition. It takes time and different regions have different needs. Clearly my personal view is natural gas is the transition fuel that will get us there. I mean, it's not by coincidence that the US.
Look to the maritime industry in 25, the big shifts have been moving to LNG bunkering rather than ethanol. And, I don't know, ammonia, a green ammonia, which is dangerous. We've seen this industry moving to LNG bunkering because you can abate 20% very smoothly at an affordable price, and I think it will take ground on it. So it's not perfect, but at least you eliminate 20% of the emissions.
The IMO rules have a significant impact.
And this is a law until 2035. And I think with thanks to some people it will be valid longer.
Just just just to finish.
Off better than IMO.
Also yeah it's better.
I come to Richard in a second.
Yeah. Just if you look at the US, the US grew in energy intensity in the last 3040 years tremendously. And emissions actually went down. And what was the thing that really sort of made that happen was the displacement of coal by by gas. So I mean, it can be done. No reason why we shouldn't do it within, within the market framework.
Yeah, yeah, it depends what you're displacing. But in the US we had a lot of coal to displace with cheap gas and get it from 60% of the power mix.
The emissions are going up in the US because they come back to coal, which is not good for the gas demand, by the way.
That's how markets work, I guess. Richard Trafigura is focused on some major green hydrogen projects. I'm curious your reaction to what you've heard so far and sort of what kind of market structures or demand signals or policy interventions you think might change this not terribly optimistic outlook that we're hearing right now?
I mean, it's not an optimistic outlook. Let's be let's be extremely clear. In a free market, clean fuels, there would not be a market for them. Clean fuels as as Patrick has said, are 2 to 3 times more expensive than conventional fuels. And I really dislike same as Marcos. This this concept of the word clean fuels that implies that other fuels are dirty or therefore bad. That isn't the case. Fuel is the thing that drives human progress. I don't think any of us here walked to Davos. So fuels are absolutely essential. Clean fuels. Call them what you will. They will only exist if people are willing to pay 2 to 3 times what they're willing to pay for fuel today. So the only place, the only way that works in the marketplace is either in the place of things like SAF, where there is mandates, or in something like hydrogen where there is subsidies. So we have a very nice SAF facility with, with Marcos, electric biogas in Uruguay. And that exists because there are mandates. We have a very small green hydrogen facility in Milford Haven, and that exists because we are able to sell that at the equivalent price of natural gas, because there are subsidies. But without either of those two things, there isn't a market for clean fuels today, maybe, maybe one day in the future. But what we have to remember is that there is a time value of carbon. So anything we can do today to reduce carbon is so much better than hydrogen in in 2035. And the way we can do that today is coal to gas switching, because that carbon removed today is much more valuable than the carbon you're going to remove.
That's about.
Electrons in ten.
Years fuels. Right?
Correct. So if you have excess renewable power, which we don't use it to, electrify the grid rather than using it to turn it into, into fuels. And then anything you can do to move away from coal. And let's again, let's be very honest with ourselves. Coal is the cheapest form of power today for the 6 billion people out there that don't have ready access to power like we are lucky to have they. Coal is the most attractive thing for them to to burn. So for those people that have the ability like the US does, where gas is cheaper than coal, switch to switch to gas where it's where it's possible because that will save many more tons of carbon than, you know, a little bit of SAF here, a little bit.
Of I totally get that. I'm trying to stay focused on sort of again, the focus of the discussion, which is on fuels, there's a whole important conversation to have about the power sector and how to reduce emissions.
But electricity is a reality for light vehicles or for trucks, in fact. And one of the big news for me from the last two years is that the progress in the battery is so quick that the trucks will be electrified.
So you agree?
You know, five years ago I was thinking that they might have a market for hydrogen for trucks because distance, in fact, this market is disappearing and we will see electrification of trucks because again, it's more it's more affordable. And this is why the question of gas, coal to gas is also valid for that even in Europe, because in Europe we will have 2035 or a little later electric vehicles. But if we continue to produce electricity with coal in Poland, all that is a little strange.
Then you have a coal.
Fired truck. The right policy. I'm convinced the right policy in Europe would have to decide that, a gasoline engine should go down to two liters per 100km from 6 to 2. Without that 75%, rather than deciding that all all should be electric and continuing to produce electricity with coal and other other emissions. So nobody has looked at it like that, because, you know, the regulations on the cars in Europe is very strange. It's limited to the cars. It's not a value chain which is considered on the carbon, it's only the car, which I think is completely nonsense from a climate point of view. If you make the rule story from the world to the will, you will find different conclusion. Maybe the ideology will not be there. But coming back to your session, just a word. The question was how to accelerate. My message is not to accelerate. The message is let's do it in order in a proper way, because otherwise we will give up, which is a mistake because we need to continue to implement the solution. But it will take time. It will take time.
That's what.
I want to pick up on some points that my fellow panelists have made. So first of all, completely agree. Do the stuff that's easier first, but also think long term. So yes, we can electrify trucking. And when we look at sort of assume versus the Tesla Tesla style truck comes in market and that there's a continued improvement in battery, we see that you're at about 70% that you can electrify in the US by 2030, that by 2035 you're you're approaching 90%. And that actually the cost as you start using longer routes and electrifying more of VMT, you actually get to net negative cost of carbon emission avoidance. So that's great. But you still need to think long term, right? So that's why predictable government policies can step in and help take action where the collective interest is better. But predictable is really important, predictable and stable. I was chief economist of General Motors, and I've seen how predictable or what you think are predictable paths of expected future emissions requirements and fuel economy requirements drive what investments are made. Drive technology development. Maybe in five years we'll have solutions that are much more cost effective than we don't have now. So that's still really important for the really hard to abate stuff like aviation. And because, you know, it's great that you're decarbonizing and using ethanol. But if we tried to switch many things, you're competing with food supply and food prices. And that's not a that's not an infinite path that we can take and actually improve welfare.
That is our notion that we have to debate offline also because because that is a notion that it is a food versus fuel debate. This is not there. It is additional from that, and it is not interfering in my food economy. That is a separate issue. We can discuss separately for that. And that is a very big impediment, moving forward, for countries of Latin America like Brazil, which have taken leads in, in biofuels and from where we have taken a lesson or two and us also has taken a lead, because these are the three main geographies who are working with biofuels and who have the potential of increasing this. But we'll have to do this debate otherwise that but.
I think it's a debate by Westerners, by developed countries.
I don't.
Want I'm sorry on. this topic. I fully agree with you.
I don't.
But Brazil has been a perfect example where because of security, of supply, because the oil price was too expensive very early in the 90s, in fact, when our students I remember I made a mission there 30 years ago, we have developed that policy on ethanol and on sugarcane. I don't think they have, people are hungry everywhere in on it in a smart way.
And hydro.
Hydro as well.
If you look at Latin America, the equation in energy is basically either zero, net zero or net negative. And also in relation to their GDP, because that's also important.
Because of bio.
Only the, the lessons, let's say the, the, the regulations that want to be imposed, you know, from one place to the other don't really work. Really, you know, I'm sorry, but, regulation which, whether it's predictable or not with that is based on subsidies will eventually fail because subsidies will wither away, will be cut. We've seen it in Europe. We've seen we're probably going to see it. Well, you saw it in the US, so you have to have the market determine what are the solutions that actually work and, and see how it goes.
The perfect market would be to have a price for CO2, then to put an objective on lowering emissions and then let the market work. Let's let the technology, even in Europe, you know, when you see that the famous rate free, I invite you to read it. You have different categories advanced biofuels, H2, and I don't know how they made the math to put 1% of that, 2% of that. They have regulated so much. But we lose a constraint in strange because in Europe we have a carbon price. So with a carbon price and just an objective to reduce carbon intensity of a gram of CO2 per kilometre. I don't know. Then let's, let's that's the people, that's the companies, that's the industry, that's the market find what is the most the best solution.
We should just be looking at fuels on carbon intensity, calorific value and price. They should be take the ideology, take the politics out of it. Take the, you know, clean fuel dirty fuel moniker. Just look at those three things. And that's and and that's how the market will develop for these fuels.
So but coming back to Elaine's point about a stable and predictable policy framework, again, there's an initiative at the clean fuels for clean to to to to build this market faster. If that was the policy goal, the question is what would do that? The only thing that I'm reasonably confident about, at least in the United States, is we're not going to have a predictable and stable policy regime. The pendulum is going to swing pretty wildly in different directions. But what I'm hearing everyone say is this is not going to happen unless somebody pays for it. Government has to subsidize it or have a carbon tax and maybe a subsidy in the technology neutral way you describe without.
Ideology subsidies.
Well.
But what would short.
Of a carbon tax and.
Subsidy, I say the carbon price carbon carbon tax is exactly the same. That carbon price.
That's not a subsidy. It's a pricing issue. It's about how you price your product, what is your cost and whether the consumer is willing to pay. That's that's the right way. It's not about subsidies.
But it needs.
To be a global global carbon price, by the way. Yes, but I agree with you. The example of the US, but even the example of Europe, which is shifting, is of course targets. When you are a company like TotalEnergies, I have to decide to take decision on investments and allocating capital. I become cautious. I said to my team, I don't know if all this framework will move, not move, and we will. I'm even convinced that the framework will be postponed because of the customers, because of affordability. But I think the message of Richard is very good. There are three ingredients in the policy which avoid. It's a pricing, it's carbon intensity. And then you let the technology work. so short and you give a you give and you, you, you say intensity we want in 2035 don't know which decrease we want in 2045. And and not a crazy 1 in 2050. Just because there is an ideology. You know.
Carbon pricing is definitely powerful. That's a great solution. If we can get widespread carbon pricing, that carbon pricing in the US has been difficult from a policy perspective. Right. So there are ways to get stuff done. You know, we've long had national labs and other things to try to drive innovation in critical technologies with broad benefits. So I think there's still a research side, but I just want to agree that carbon pricing is a powerful thing that will will operate across sectors somewhere.
The IRA, I create a carbon pricing for the fiscal incentives. You take.
Totally uneven carbon.
Pricing, fiscal incentive. You know, the fact that you have an abatement of 20% of tax, etc. is a way when you make the math. I translate that in carbon pricing.
My point about.
But you've got different prices for everything.
Carbon pricing is maybe aggressive for the consumer politically, but in fact, this this not subsidies. It was fiscal. It was more clever than the subsidies. It's a way to drive investments and let and it was good because the Clean Fuel Regulation and the IRA was not technological driven. You do what you want, you will have this credit.
Just set a carbon.
Standard if you reach this target of abatement, and if you are reaching a higher or lower target of abatement, you will have more tax credit. That was a way to put a price on carbon.
You put a lot of different prices on carbon, so one price would be better.
I wanted to make that, this is what we are discussing has been discussed a number of times, and we know that there is not a a solution, that this is the solution. We don't have the solution. It is a transformation. It's a transition that is happening. And this transition is not going to happen within two years or five years or six years. It will take certain time to move away from where we are to where we want to go. That is one. But the point that we are missing today is how much we are spending on finding the solutions, because the solutions that we are discussing, they have some positives, they have some negatives. None of them is a perfect solution. If had it been a perfect solution, it would have been implemented by now. So we are all trying to find solutions, but what we are missing is how much money I am spending on the research. How much money am I spending in R&D to find a perfect solution? That is the point that we are missing all of us. I am including myself. Everybody else is missing that. How much I am spending and what percentage of my earnings I am putting into my R&D for finding a solution going forward. We can't expect everything to be done by the governments because we expect that governments will do the R&D and we will start doing the business after that. So we have certain we will have to take certain responsibility on that. I am not saying that I am doing the perfect thing, but I am including everyone else here. So that is a point that we should keep in mind that we are yet to find a solution which is perfect, which is giving me this transition or this transformation from clean like clean fluids to low carbon fuels or fuels to low carbon fuels.
By the way, in terms of innovation on biofuels, I think we should look to the upstream of the feedstock, developing alternative agriculture feedstock. Yes, I think it's a topic which is not yet fully explored.
Same.
Same, I think I think it's something on which we should work more because it's a way, by the way, maybe finding cheaper feedstock to make this biofuel cheaper. So going upstream in the value chain is also an area for us, our investment in our.
Agricultural innovation.
Yeah. Agricultural innovation. What is something to be done.
What kind of crops can be developed? What kind of crops are consuming less water? What type of crops are going better? Yields when they are converted into biofuels? I think that is the kind of research that is required to be done. And then it becomes a some kind of collaboration between agriculturists and the energy people. I think some solution might come there.
I also want to throw in my hat on another issue, which we haven't talked about, which is the unfortunate, state of what, you know, the MLA's, in terms of financing projects because, you know, a lot of these projects, particularly in places like Latin America, where the resources is fantastic, but there are capital constraints all across the board, mainly because the capital markets are not big enough to sustain the kind of investments that companies such as ourselves, we find that this, this ban on, on, on, on financing anything that has a hydrocarbon in front of it is it just doesn't work. We I think we need to rethink that, because if you want to, you know, obviously, further, you know, the development of, of low carbon fuels, you're going to need some gas in there and you're going to need other types of low carbon hydrocarbons. So I think there's a, there's a there's a responsibility of the multilateral financing institutions to start financing projects all across the board.
So I'm hearing at least a little bit of, I think consensus emerging, some policy interventions, carbon price, maybe a carbon price through technology neutral CO2 standards that could take the form of government support, innovation, R&D, support, early stage to advance the technology. I am curious whether a lot of this conversation has been framed about what moves you in a lower carbon direction, but a lot of the conversation at Davos this week is about, a collapse of a rules based order, geopolitical fragmentation, competition, interconnected global energy markets that maybe countries are starting to be a little more concerned about, and trying to think more about self-sufficiency and domestic resources. And we talked for a moment before about whether energy security plays any role in how countries think about developing, reducing need for oil imports, maybe gas imports through fuels. I'm just curious if people have a reaction to whether you see that changing the conversation.
Yeah. But at the end, affordability dominates people is a limit to that.
People will always underestimate the cost of national security until it's too late. So as a result, Patrick is entirely correct. The affordability will be the dominant will be the dominant issue. Look at Europe in 2022. Everyone knew Europe was dependent on natural gas. No one did anything about it because it was cheap. The same will be true here.
Well, I have a slightly different opinion in the sense that particularly because Europe made the mistake of not paying attention to having one or let's say, a main source of supplier. Hopefully it won't make the same mistake twice. I'm saying it also because I have a vested interest, you know, I hope they start selling, you know, buying gas from Latin America. Right. So but clearly there is there's.
A lot of gas in Venezuela.
Yes. Yes. And in Argentina.
It's a gas from Latin America. The LNG coming from Argentina to Europe is is cheaper than the one. It's very competitive. Yes, I'm sure the European buyers will buy it. And in fact the market is efficient. You know what happens today. It's not a question. The US are not willing. It's just what happens in the LNG market. It's the route between the US and Europe. Is is shorter than from Latin America or from Qatar. So you see the LNG from the US going to Europe and the LNG from Qatar going to China and all that, because the market optimized the global costs and margins. I would.
Say I.
Agree, but it's quite efficient. In fact.
There's also a an economic point of view in diversification, right? Yeah. I mean, it's not only energy security per se in the military sense, it's also energy security in the sense that you're not buying from one buyer. And by the way, it's true that the route from the US is closer to Europe. Nevertheless, we're selling LNG from Argentina to, to to Europe as we speak. I mean, not as we speak in 2027. So there is a there is a point in making sure that your energy secure in the broader sense, not only in the in the economic, in the geopolitical sense.
The energy security debate. To be clear, it's not the states in Europe do not buy energy, right? We are the buyers, we are the sellers, the company. So there is a limit because at the end, the state, the state's interests are in the end of the different players we are today. Total energy is the largest exporter of LNG from the US and the largest importer in Europe. And you know, I'm optimizing the cost of supply of Europe.
We only have a minute left. But I'm wondering whether people see that changing. Because what you do see in the name of national security and economic security, is governments taking a more active role in private enterprise in the way we talked before about Japan being willing to pay a security premium and setting up entities like JMC. There's more government intervention to drive the cost of national security.
If the European Union couldn't set up a way of buying gas in the crisis in 2022, they're definitely not going to do it. They're not going to be able to do it now.
Okay.
No, the point that you are making is whether energy security of a company which is dependent from outside, does it, is it ready to pay more for clean energy or a non-fuel, non-polluting energy? I'll say not the money, but the encouragement will be there. The drive will be there, the ecosystem will be there. The policy interventions, whatever are required, they will be there. And as I can speak for the Indian company, Indian companies and Indian government, the drive, the motivation, the entrepreneurial encouragement that is there, not in terms of money, not in terms of tax, not in terms of carbon credit, but the direction is clear that this is an opportunity which can partially de-risk our energy sources. So that is that encouragement is always there and that will remain there. And it's a very legitimate, encouragement that the government has to do to the entrepreneurs.
Thanks all of you. This was a great conversation. As someone who spends every day running a think tank that tries to bring together analysis about the energy transition and energy security and policy and geopolitics, the sort of brought all those together in one conversation in the context of the Future of Clean Fuels initiative here at the World Economic Forum. So, really enjoyed this and I learned a lot. I hope you all did as well. Please join me in thanking our panelists.
Thank you.