We are proud of what we do, and the fact that we are a positive force in so many lives.

We have good reason to be proud. With operations that stretch across Canada and into the United States (U.S.) and Australia, TransAlta is a part of everyday life for many people, as we have been for 100 years. Since generating our first megawatt of electricity in 1911, we have transformed ourselves from a small Alberta-based utility into an international wholesale power producer and the largest publicly traded provider of renewable energy in Canada.

But we also realize our activities have impact on the people whose lives we touch and on the places where we operate – and we measure our progress as a company accordingly. Our goal is to provide reliable, competitive power in a responsible, sustainable way. It is a job we take seriously, and it guides how we shape our business strategy and the work we do every day.

Today, power producers face a host of challenges. The changing economics of generation fuel choices, a fragile global economy and environmental imperatives such as climate change are compelling us to find new and better ways to provide electricity.

Global demand for energy will continue to grow. Nearly two billion people around the world today have little or no access to electricity. According to the International Energy Agency, the world will need 40 per cent more energy by 2030. It is estimated that an investment of about $25 trillion will be needed to keep pace with that demand.

This growth will have a major impact on all types of energy. We will need access to a wide array of fuels to meet demand and ensure quality of life, and we will need to ensure development balances environmental, economic and social concerns.

It is widely accepted that fossil fuel emissions need to be addressed, and we support emissions reductions in our industry. But we have to remember it is not the fuel that is the problem – it is emissions.

In order to tackle that problem, we need consistent policies and priorities across all regions. TransAlta is committed to working with government and industry to help develop sound, workable policies. We also continue to lead the way in investing in energy technologies that advance the responsible use of our resources.

”We also realize our activities have impact on the people whose lives we touch and on the places where we operate – and we measure our progress as a company accordingly.”

Part of our solution has been to green our portfolio, and renewables now account for nearly one-quarter of our generation capacity. But renewables are not the whole answer. Coal will continue to be an important part of the energy mix well into the future. The product we provide is essential; low-cost availability is critical to the economy.

Our activities in 2010 reflect our commitment to reposition coal in a carbon-constrained world. In 2010, we decommissioned our oldest coal plant, Wabamun 4, and prepared to produce power at Keephills 3, which will be North America’s newest and cleanest coal plant when it comes online in 2011. We also announced plans to develop a 700 MW natural gas plant at our Sundance facility that will allow us to accelerate the retirement of our older coal-fired units.

The global need for energy continues to increase, and coal will continue to play an important role in meeting this growing demand. The fact is, as predicted by the International Energy Association (IEA), about 44 per cent of the world’s electricity in 2030 will be made by coal. Alberta’s coal contains more than twice the combined energy of all the province’s other non-renewable resources. It is critical to find a way to use this bountiful energy supply in a way that minimizes our industry’s impact. The key to doing this is through human innovation and technology.

Globally, CCS is emerging as one of the most promising long-term solutions, with the potential to make coal carbon neutral. TransAlta is at the cutting edge of this new technology, with plans to build one of the first large-scale CCS projects in the world.

Project Pioneer is a ground-breaking initiative, not only for TransAlta but for industry worldwide. In 2010, the Global Carbon Capture and Storage Institute acknowledged our leadership with $5 million in funding to support knowledge sharing as we move toward construction.

We continue to green our portfolio. In 2010, we added 189 MW of renewable wind power on time and on budget at three sites: Summerview 2 and Ardenville in southern Alberta, and Kent Hills 2 in New Brunswick. We stayed on track with the projects we plan to deliver in 2011 and 2012. This includes Keephills 3, the Bone Creek hydro project in British Columbia. And we successfully integrated our Canadian Hydro acquisition, adding 694 MW of capacity.

We also looked at our oldest coal facilities over the past year and decided some could be replaced using lower emitting fuels. We reached a landmark agreement with Washington State in the beginning of 2011 to transition our Centralia thermal plant to natural gas. This transaction required long and challenging negotiations with labour leaders, legislators, community members and environmental representatives. But in the end, we reached a consensus that allows us to move away from coal-fired electricity in the state in an orderly fashion while maintaining grid stability and protecting jobs, the economy and our operations. This is a pace-setting agreement and we are now proactively working on its implementation.

Our emissions intensity improved in 2010 with the addition of wind and hydro facilities to the portfolio through the late-2009 Canadian Hydro acquisition. Greenhouse gas emissions increased five per cent as customer demand increased with the improved economy. We will continue to focus on solutions to improve both intensity and absolute emissions.

In 2010 we also launched an arm of the company to market power from renewable energy sources to commercial and industrial customers. This marks a significant step forward for the company: we have been marketing renewable power for close to 10 years, but never with this focus. We are ensuring customers are getting what they need to meet their sustainability goals, while achieving our own.

We accomplished all of this while also achieving our best safety performance in the company’s history. This is a tremendous feat that can be attributed directly to TransAlta’s employees. Their focus and commitment are unmatched. Our safety philosophy, Target Zero, aims for a 100 per cent injury-free workplace. We are that much closer to making it a reality.

TransAlta has a diverse portfolio of fuels – coal, hydro, natural gas, wind, biomass and geothermal – and we use them all to produce electricity to service our markets and create value for our investors. Our approach is responsible and sustainable, and will help ensure continued affordability as we meet the challenge to reduce our environmental footprint.

TransAlta has a long history of environmental leadership. It is our strong belief that technology – driven by dedicated, innovative people – is the key to a balanced approach to powering our society. We will continue to invest in solutions to help us achieve our goal of providing more electricity with less impact.

We have 100 years of experience behind us, and a powerful future ahead of us. Our continued focus on people, place and progress will help position TransAlta to affordably, safely and responsibly meet the growing demand for energy, every day.

Steve Snyder
President and chief executive officer