The new energy transformation path of ENGIE Group in France

ENGIE Group of France is an international energy enterprise with a long history. Its predecessor was the combination of Gaz de France and Suez Group to form Suez Energy Group. In 2015, it announced to change its name to ENGIE and ranked 159th among the global 500 in 2022. ENGIE has been committed to the development of new energy transition in recent years, and has put forward the development strategy of net zero carbon by 2045. Based on the scientific research on ENGIE's new energy reform, this paper explores three transformation and development approaches of its energy business restructuring and rational layout, overall decarbonization of the whole upstream and downstream industrial chain, and the development trend of sustainable financial industry, so as to accelerate the decarbonization and complete carbon neutrality as soon as possible in the high-quality development of new energy for Chinese energy companies. And in the "go to the world" link to expand the global new energy market share, to provide reference and reference.

Energy market layout

In July 2021, ENGIE launched a new business restructuring, dividing its global business processes into four divisions: Regenerative Energy, Energy Solutions, Internet, thermal power and energy supply. Together, Engie created four regional centers, each located in Europe, North America, South America, AsiaMiddle EastAfrica. The aim is to focus on the main business with a dynamic new energy sales market. As a result, ENGIE has sold off some of its subsidiary or subsidiary shares and further reduced the geographical scope of its business process in China, projecting that it will operate in less than 30 countries and regions in 2023, compared with 70 countries and regions in 2018.

I. Renewable energy business process

ENGIE continues to increase its investment in renewable energy, with a total of 9GW of renewable energy production capacity completed and put into operation between 2019 and 2021. By the end of 2021, among the total installed power generation capacity (100.3GW), the installed capacity of renewable energy will be 34.4GW, accounting for 34.3%. ENGIE aims to increase renewable energy installations by an average of 4GW per year between 2021 and 2025, with an estimated 50GW by 2025, with 5GW to 7GW already in production or under construction. From 2026 to 2036, the annual average increase will be 6GW, and it is estimated to reach 80GW in 2030. A series of new projects with a cumulative production capacity of about 66GW have been launched, and key projects will be invested in new projects of onshore wind power, wind power, pavement solar power and geothermal energy. The key example was in 2021, ENGIE collaborated with Credit Agricole of France on the recycling of Eolia, one of the largest renewable energy manufacturers in Italy, and its project investment in Moray East, a 1GW offshore wind farm located in Scotland.

Second, energy solutions

Energy solution refers to providing longterm comprehensive decarbonization solutions for users. ENGIE strives to develop decentralized energy Internet and service content, including urban heating and cooling Internet, onsite production and manufacturing of public utility products, decentralized solar power generation, urban network and low-carbon transportation. By the end of 2021, the installed energy capacity of distributed systems will be 23GW, with an overall target of an additional 8GW by 2025. In late December 2021, ENGIE and its partner Groupe RATP awarded a tender for a new 20year concession to the City of Paris to provide a package of manufacturing, storage and transportation services for urban refrigeration, and to help expand the refrigeration Internet by 158 km in 2042, with a presence in all of Paris, France. It is also open to new customers such as hospital outpatients, day care centers, colleges and universities, and nursing homes for the aged.

Iii. Internet

ENGIE's network business refers to the energy transportation Internet, which mainly includes power engineering and natural gas production, manufacturing, storage, transportation and distribution. It focuses on natural gas and makes full use of the important functions of natural gas and natural gas Internet in the transformation and development of enterprises' new energy. ENGIE continues to scale up its investment in high-performance Internet to achieve a balanced, carbon-neutral energy mix. For example, ENGIE will continue to build and operate 2800km of electric power lines in Brazil, and expand the production of renewable natural gas, namely biomethane gas and radon gas. The overall goals are: By 2030, 4TWh of biomethane gas will be produced in Italy, accounting for 10% of the market capacity. Hydrogen storage in salt caverns will reach 1TWh, thus forming 700km radon gas transportation Internet. 100% renewable natural gas production by 2050. Key examples are: In 2021, 14 7 biomethane gas production and manufacturing stations will be connected to ENGIE's natural gas network in Italy, resulting in 351 biomethane gas sites and an annual gas injection supply of 6TWh; And a new 4GW hydrogen production project under way in the United Arab Emirates.

Iv. Thermal power generation and energy supply

ENGIE applies power supply system transformation development, development and operation of low carbon and environmental protection thermal power plant. ENGIE has committed to exit its coalbased business processes abroad by 2025 and in the rest of the world by 2027. In 2021, ENGIE will close its Tejo power plant in Spain and sell its Jorge Lacerda power plant in Mexico, leaving only 2.9GW of coal capacity at the end of 2021. ENGIE has launched the first generation of thermal power plants to convert to green natural gas, using biomethane gas and radon gas to reduce CO2 emissions while improving the coordination of the power supply system.

Decarbonize the whole industrial chain

The standard definition of ENGIE achieving net zero carbon is that carbon emissions completely offset greenhouse gas emissions in terms of air pollutant (GHG) conservation. Although it can offset greenhouse gas emissions by increasing carbon sinks, the key link is to reduce direct and indirect greenhouse gas emissions by reducing carbon emissions, so as to minimize carbon offsets as much as possible.

1. Decarbonize the whole industrial chain

With 74% of ENGIE's carbon emissions concentrated in the production and distribution of energy, ENGIE has established carbon cost budgets for each of its four global divisions as a result of the realignment, and established compensation standards for managers related to greenhouse gas emissions, allowing companies to limit their carbon emissions to the maximum. Within the framework of the netzero carbon target by 2045, projects related to buildings, electronic information technology, tourism, travel and transport fleets will be the first to achieve carbon neutrality by 2030, and their renewable energy production capacity will be increased by 2.6 times compared to 2021, with an early conversion to decarbonized energy production on a large scale.

2. Decarbonize the whole upstream and downstream industrial chain

As the impact of climate change on upstream suppliers becomes more apparent, the risk of dealer default has increased for ENGIE, so ENGIE has enhanced the impact factors of climate impact under the supplier evaluation criteria and developed a carbon neutral strategy for suppliers. ENGIE has committed to help its 250 preferred distributors become green certified or technical compliant by 2030, and is slowly expanding this approach to all its Alevel distributors, which represent 1,500 manufacturers and nearly 7,000 partner companies.

3. Decarbonize the whole industrial chain of the middle and downstream

It is ENGIE's job to help downstream customers decarbonize, by enabling customers to use ENGIE products and services to reduce energy consumption and green production, thereby reducing or treating air pollution, in order to prevent customers' carbon emissions from being credited to ENGIE's own carbon neutral pathway.

Due to the lack of international and other industry standards for decarbonization, ENGIE has worked with industry and community organizations to develop specific energy manuals to measure the contribution of energy products and services to decarbonization of customers, which can be applied to the decisionmaking analysis of ENGIE's package of goods, services and business planning. For example, green energy production and manufacturing, decentralized network and service projects, green electricity resale, etc., will help enterprises achieve the overall goal of 45Mt of decarbonization in 2030. The breakdown by customer is shown below.

1. Manufacturer

ENGIE delivers energy solutions to F AURECIA, a world leader in automotive parts technology. The program will be implemented in more than 100 Faurecia production plants worldwide by midtolate 2022, and the Energy Performance Promotion program will be implemented in production lines in Europe, China, Mexico and Spain. Reduce plant energy consumption by 15%, helping Faurecia vehicles achieve carbon neutrality by 2025.

2. Colleges and universities

ENGIE is responsible for sustainable energy infrastructure at Georgetown University abroad, including electrical, heating, cooling and water upgrades, operations and maintenance, and is expected to reduce energy demand on campus by at least 35 percent by 2030.

3. Big Cities

ENGIE built and operated the underground regional cooling system software for Punggol Digital Technology Industrial Park, Malaysia's first intelligent commercial district, which is expected to be completed in 2024 and will operate for 30 years. Compared with traditional office buildings, this refrigeration system software is estimated to reduce 3700 tons of carbon dioxide emissions per year, reduce energy consumption by up to 30%, and provide reliable, sustainable and costeffective air conditioning system service projects for Bange Digital Technology Industrial Park.

Sustainable financial support

Since 2014, ENGIE has issued more than 14 billion pounds of green bonds, with green bonds accounting for half of ENGIE's debt issuance in 2021. Green bonds provide financial support for renewable energy projects and projects related to energy efficiency improvement, as well as mergers and acquisitions for the upgrading of green projects. ENGIE publishes a hazard report at the time of each equity issue based on the Green Bond standard, using the LCA (life cycle assessment) method to calculate the contribution to preventing or reducing CO2 emissions. In October 2021, ENGIE issued 1.5 billion pounds of green bonds. Among the investors who applied for green bonds, investors in ESG (natural environment, social development, corporate governance structure) took up 60% to 70%, which was favored by the sales market. According to the LCA method, the equity financing will help prevent the discharge of 3.43 million tons of carbon dioxide every year.

In addition to issuing green bonds, ENGIE is also actively working with international financial institutions to secure long.term bank financing for its new renewable energy projects. A key example is ENGIE's signing of a $120 million long.term loan agreement with the Inter.American Development Bank (IDB) in 2021 to support the transformation and development of Mejillones, a newly built 334MW coal fired power plant in 2019. Under environmental pressure to achieve 60 percent clean energy by 2035 and carbon neutrality by 2050, the coal.burning power plant will be shut down early by the end of 2024 and converted into gasfired and biomass power plants. The loan will be used not only for the conversion of raw coal power plants, but also for the development of 2GW of new renewable energy projects (such as ENGIE's two new landscape storage hybrid projects with a total installed capacity of 1.5GW in mid.2021) and demonstration projects to regenerate hydrogen, with a total investment of about £1.5 billion by 2025.

Conclusion and suggestion

From the perspective of energy transformation and development approach, ENGIE firstly focuses on the four main businesses and the central area of its energy business restructuring, refining its core competitiveness, developing new projects of solar power generation, wind power generation, and green radon gas that can regenerate natural gas in the technology frontier and network hot market, and improving the level of engineering construction and operation with systematic and digital technologies. Energy saving, emission reduction, energy consumption reduction, improve the level of energy consumption; Secondly, the system software takes into account the decarbonization requirements of all the upstream and downstream supply chains, formulates humanized and differentiated decarbonization strategies and assessment indicators for the characteristics of itself and its distributors and customers, and makes the overall goal of decarbonization quantified, clarified and quantitative analysis method, so that it is easier to consider the implementation of new energy reform and the actual returns brought by the enterprises, distributors and customers. Finally, it is to become a leader in green debt financing, apply technology to innovate financial derivatives, and deepen cooperation with the international financial institutions where the project is located, so as to give strong assets to the implementation of new energy projects and orderly promote the transformation and development of new energy.

In the global and domestic dualcycle environment, Chinese energy companies are facing the incubation period of rapid development of new energy and digital economy. They should be connected with the international new energy industry chain and cutting.edge technology, and with the huge foreign capital pool and the investment tuyere pursued by international investors, so as to accelerate the decarbonization and transformation development. To achieve the goal of carbon neutrality and high.quality development of new energy, at the same time, to become an outstanding enterprise in the international energy field.