Action on Climate Change
We understand the risk and we’re adapting to meet the challenge
Our corporate goal is to reduce 19.7 million tonnes of GHG emissions by 2030, while we grow renewable energy and gas. Our modeling shows that our target aligns us, under many scenarios, with science based target setting, which highlights the resilience of our business to 2 degrees of global warming. We have not officially validated a science based target, but continue to monitor and model our future performance with the Sectoral Decarbonization Approach from the Science Based Target Initiative.
Aligned with our corporate strategy, our business units or operations consistently seek energy-efficiency improvements, development of emissions offset portfolios to achieve emissions reductions at competitive costs, and development of clean combustion technologies.
We seek investment in climate change related mitigation solutions, such as renewable energy development, where we can maximize value creation for our shareholders, local communities, and the environment. Conversion of our large coal fleet to gas-fired generation highlights this approach, which will allow us to run our assets longer than the federally mandated coal retirement schedule. Our goals for undertaking such actions are to enhance value for our shareholders, ensure low-cost and reliable power for Albertans, and reduce the environmental impact from coal-fired generation.
Our investment and growth in renewable energy is highlighted by our diverse portfolio of renewable energy generating assets. We currently operate over 2,200 MW of hydro, wind and solar power. We are one of the largest producers of wind power in Canada and the largest producer of hydro power in Alberta. Production from renewable energy in 2018 resulted in avoidance of approximately 2.9 million tonnes of CO2e, which is equivalent to removing over 620,000 vehicles from North American roads over the same year.
The following highlights identified climate change risk or opportunities, which have been assessed and integrated in to business operations.
|Risk or Opportunity||Management Approach|
|Policy Requirements||TransAlta supports smart regulation and carbon pricing that ensures economic growth and certainty for investment. We have demonstrated cooperation and collaboration on climate related to policy, while ensuring protection of value for employees and shareholders, seen in our off-coal agreement with the Alberta Government, totaling $524 million and Memorandum of Understanding to convert coal plants to gas.|
|Carbon Pricing||We participate and contribute with several carbon pricing structures (California, Alberta, Ontario and Australia).We apply regionally-specific carbon pricing, both current and anticipated, as a mechanism to manage potential risks in the carbon market and to anticipate future impacts of regulatory changes on our facilities. This also allows us to model for future electricity prices and analyze the viability of acquisitions . This information is then directed to our business units for further integration.
Identified climate change risks or opportunities and carbon pricing are recognized in annual TransAlta forecasting processes. We capture economic profit from carbon markets through the generation of renewable energy credits or offsets. Further, our emission trading function seeks to commoditize and profit from carbon trading.
|New Technology||We have demonstrated upside in growing renewable and gas power generation. From 2000 to 2018, our renewable capacity grew from approximately 900 MW to more than 2200 MW. We have recently announced development of three wind projects, totaling over 330 MW of future capacity.|
|Adaption and mitigation||Our clean power strategy ensures all new investments must meet clean standards to mitigate potential risks related to carbon policy and pricing. Our target is for 100 per cent of our net generation to be from gas & renewables capacity by 2025.Using existing infrastructure significantly reduces capital costs compared to new gas builds, and avoids approximately $15/MW of carbon related pricing (assuming a $30 carbon price). Our new gas facility at South Hedland is built with adaption in mind. The facility operates with a best-in-class emission intensity, and uses less water than traditional gas plants using dry cooling towers as opposed to normal wet cooling towers (wet cooling tower have heavy water consumption). The plant is designed to withstand a category 5 cyclone, which can frequent NW Western Australia. Category 5 is the highest cyclone rating. The facility is built above normal flood levels to mitigate flood-related risks.|
|Water Stress||Our thermal plants require water for operation and most of our thermal facilities are operated in low water stress environments. Our Sarnia facility is our most water-stressed area of operation is at Sarnia, however, 98 per cent of the water is recycled due to the nature of the facility.All our coal facilities hold licenses to pull water from low-stressed areas. Water is purchased for our Australia locations although they are not currently water-stressed, despite operating in remote locations. Water purchasing allows us to minimize local water stress should this become an issue. Our operating costs increase exposure due to water in Australia being low due to our small thermal operations.|
Metrics and Targets
In 2018, we estimate that 20.8 million tonnes of GHGs with an intensity of 0.77 tonnes per MWh (2017-29.9 million tonnes of GHGs with an intensity of 0.86 tonnes per MWh) were emitted as a result of normal operating activities. Our significant reduction in GHG emissions is the result of coal closures and reduced coal power generation from our Sundance facility in Alberta and increased co-firing with gas at our merchant coal facilities. Notably, our 2018 emissions reductions, supported achieving our 2021 target to reduce GHG emissions by 30 per cent over 2015 levels of 32.2 million tonnes CO2e. This target was achieved well ahead of schedule and supports our clean power transition.
Our 2018 data are estimates based on best available data at the time of report production. GHGs include water vapour, CO2, methane, nitrous oxide, sulphur hexafluoride, hydrofluorocarbons, and perfluorocarbons. The majority of our estimated GHG emissions are comprised of CO2 emissions from stationary combustion. Emissions intensity data has been aligned with the “Setting Organizational Boundaries: Operational Control” methodology set out in The Greenhouse Gas Protocol: A Corporate Accounting and Reporting Standard. As per the methodology, TransAlta reports emissions on an operation control basis, which means that we report 100 per cent of emissions at facilities in which we are the operator. Emissions intensity is calculated by dividing total operational emissions by 100 per cent of production (MWh) from operated facilities, regardless of financial ownership.
The following are our GHG emissions in million tonnes CO2:
|Year ended Dec. 31||2018||2017||2016|
|Gas and renewables||2.4||2.5||3.0|
|Total GHG emissions||20.8||29.9||30.7|
Our total GHG emissions include both scope 1 and scope 2 emissions. The GHG Protocol Corporate Standard classifies a company’s GHG emissions into three ‘scopes’. Scope 1 emissions are direct emissions from owned or controlled sources. Scope 2 emissions are indirect emissions from the generation of purchased energy. Scope 3 emissions are all indirect emissions (not included in scope 2) that occur in the value chain of the reporting company, including both upstream and downstream emissions. Scope 1 emissions in 2018 were estimated to be 20.6 million tonnes CO2e. Scope 2 emissions were estimated to be 0.2 million tonnes CO2e. We estimate our scope 3 emissions to be in the range of six million tonnes.
Future performance on GHG emissions will reduce as we retire or convert coal plants to gas and grow our renewable energy and gas fleet, while optimizing our existing fleet. Our target to is to reduce 60 per cent or 19.7 million tonnes of GHG emissions by 2030 over 2015 levels, which is line with UN SDG Goal 13, Climate Action. Since 2015 we have reduced 9.1 million tonnes, which represents a reduction of 35 per cent.
The following highlights our longer-term track record on GHG emission reductions since 2005 and our projected emissions in 2030.
|Year ended Dec. 31||2030||2018||2005|
|Total GHG emissions||12.5||20.8||41.9|
In 2018, TransAlta maintained its scoring on the Carbon Disclosure Project Climate Change investor request. Our overall score was a B, which places us as ahead of our peers when it comes to carbon disclosure, management, performance and leadership. In 2017 we were highlighted by the Chartered Professional Accountants of Canada (“CPA Canada”) as the only company in Canada, out of 75 companies, that reports on climate change across all levels of disclosure: the Annual Information Form, this MD&A, and our information circular. Our 2016 Integrated Report was selected as a finalist for CPA Canada’s Award of Excellence in Corporate Reporting – of note, our Climate Change disclosure was highlighted as “outstanding” by CPA Canada Judges.
We recognize climate change risk and the 2015 Paris Agreement’s goal to prevent two degrees Celsius of global warming above pre-industrial levels. Our GHG reduction target has been established to align with the UN Sustainable Development Goals, specifically Goal 13, which calls for “urgent action to combat climate change and its impacts.”
Our 2030 GHG reduction target to prevent two degrees Celsius of global warming has been modeled against the Science Based Targets Initiative (SBTi), Sectoral Decarbonization Approach. SBTi is a partnership between the Carbon Disclosure Project, UN Global Compact, World Resources Institute and World Wildlife Fund. This partnership helps companies determine the amount of emissions reductions needed to prevent the worst impacts of climate change. Our GHG and clean power targets assume reasonably anticipated growth and operating scenarios.
Our GHG reduction target follows:
- Reduce our total GHG emission in 2030 to 60 per cent below 2015 levels (in line with our commitment to the UN Sustainable Development Goals and the prevention of two degrees Celsius of global warming.
We have also developed a clean power goal and targets in support of UN Sustainable Development Goal 7: ensure access to affordable, reliable, sustainable and modern energy.
Clean Power Goal:
- Become Canada’s leading clean power corporation by 2035 (In support of UN SDG Goal 7: Affordable and Clean Energy), related to ensuring access to affordable, reliable, sustainable and modern energy.
Clean Power Targets:
- We are planning the conversion of two coal units at Sundance, Alberta and three coal units at Keephills, Alberta to gas-fired generation in the 2021 to 2022 timeframe
- 100 per cent of our corporation-wide net generation capacity will be from gas and renewables by 2025;
- Continue to seek new opportunities to grow our portfolio of 2,265 MW of renewable assets
TransAlta aligns its corporate climate change goals with the UN Sustainable Development Goals and we have been recognized by CDP (formerly Climate Disclosure Project) as an industry leader on climate change management. Learn more:
How is TransAlta Showing Climate Leadership? Let Us Show You How