TotalEnergies' Renewable Pivot: A Risky Bet or the Future of Energy?

TotalEnergies' 2025 Annual General Meeting (AGM) marked a pivotal moment for the oil giant, as it doubled down on its dual-track strategy of balancing fossil fuel expansion with aggressive renewable investments. While critics argue the company's continued hydrocarbon ambitions risk “globocide” and undermine climate goals, shareholders must ask: Is TotalEnergies' pivot to renewables a calculated move to future-proof its value—or a reckless gamble in a shifting energy landscape?

The Strategic Tightrope: Fossil Fuels vs. Renewables

TotalEnergies' AGM decisions reveal a stark divide between its short-term economic priorities and long-term climate ambitions. The company confirmed plans to allocate $6 billion annually (33% of capital spending) to new oil and gas projects through 2030, aiming to boost production by 3% yearly. This includes projects like the Camacari bio-refinery in Brazil and the Greater Tortue Ahmeyim LNG project in West Africa.

Yet, alongside this fossil fuel expansion, TotalEnergies is pouring $17–18 billion annually into renewables and low-carbon energy, with 35% of total investments now directed at wind, solar, and green hydrogen. By 2030, the company aims to triple renewable energy capacity, double energy efficiency, and slash methane emissions—all while positioning gas as a “transitional fuel” in line with COP28's decarbonization roadmap.

The question for investors is: Can TotalEnergies thread the needle between these competing priorities?

The Climate Crossroads: Critics vs. Capital Allocation

Critics, including NGOs and climate scientists, argue that TotalEnergies' fossil fuel investments are incompatible with limiting global warming to 1.5°C. A criminal complaint filed in 2024 accused the company of “fabricating climate doubt,” though it was dismissed in February 2025. Activists now frame the firm's oil and gas projects as “locked-in carbon liabilities” that could render its assets stranded if global energy policies shift abruptly.

However, TotalEnergies' management defends its strategy as “COP28-aligned”, emphasizing that gas will remain critical for energy security in developing economies and that renewables alone cannot meet global demand. CEO Patrick Pouyanné has repeatedly stressed that the company's $6 billion annual fossil fuel investments are focused on “low-cost, low-carbon projects” to maximize returns while transitioning.

The Shareholder Value Equation

To assess whether TotalEnergies' strategy creates long-term value, investors must weigh two factors:
1. Renewables' growth potential: The company's low-carbon investments now account for one-third of capital spending, up from 20% in 2020. Its solar, wind, and battery ventures—including partnerships with Tesla and Siemens—are on track to generate $10 billion in annual revenue by 2030, according to internal forecasts.
2. Fossil fuels' risk exposure: TotalEnergies' oil and gas projects face rising regulatory and litigation risks. A shows that TTE has underperformed peers by 15–20% over the past five years, partly due to climate-related investor skepticism.

Yet, TotalEnergies' dividend yield of 6.5% and its $5 billion annual share buybacks since 2022 provide near-term stability. Meanwhile, its $16 billion in 2023 free cash flow (up 12% from 2022) suggests financial resilience to weather energy market volatility.

The Bottom Line: A Compelling Long-Term Play?

TotalEnergies' AGM decisions reveal a company straddling two eras: the fossil fuel past and the renewable future. While its continued hydrocarbon investments carry material climate and reputational risks, its renewable pivot offers a credible path to decarbonization leadership in an industry still grappling with transition.

For investors seeking exposure to the energy transition without abandoning fossil fuels entirely, TotalEnergies' stock presents a high-reward, high-risk opportunity. The company's low-carbon investments now represent a $100 billion addressable market, and its partnerships with tech giants like Microsoft and Total's battery joint venture with Saft hint at scalable growth.

However, the stock's valuation remains a wildcard. At 10x EV/EBITDA, TotalEnergies trades at a 30% discount to peer averages, partly due to its fossil fuel exposure. A buy signal emerges if the company can demonstrate that its renewables are scaling faster than its carbon liabilities are growing—a metric to watch closely in 2025.

Final Verdict: Position for the Transition, but Hedge the Risks

TotalEnergies' strategic shift is far from perfect. Its refusal to submit its climate strategy to a shareholder vote and its reliance on gas as a “transition fuel” will keep critics on edge. Yet, for investors willing to look past the noise, the company's $17 billion annual renewables spend and its $100 billion clean energy pipeline could position it as a leader in the $23 trillion energy transition market.

Action to Take:
- Buy TTE stock if oil prices stabilize above $70/barrel, unlocking capital to fuel renewables.
- Hedge with options to protect against fossil fuel divestment risks.
- Watch for Q3 2025 updates on methane reductions and renewable project milestones.

The energy transition is not a sprint—it's a marathon. TotalEnergies' bet on balancing both fuels and future could be a winning hand, but investors must stay vigilant.

This analysis is for informational purposes only. Always conduct your own research before making investment decisions.