Action on Climate Change

We understand the risk and we’re adapting to meet the challenge

Climate Change Management

We recognize the impact and challenge climate change presents society and our business today and into the future. We have been at the forefront of open and transparent dialogue regarding climate change since the early 1990s when we supported the development of Canada’s Climate Change Voluntary Challenge and Registry Program.

The following highlights how we have transitioned our business to manage climate change risk and opportunity, how we have demonstrated leadership through action on climate change related issues and how we are positioned for climate resiliency in regards to our business, sector and customers.

  • We have reduced our annual emissions by approximately 25 million tonnes of CO2e since 2005, which is a 61 per cent reduction over the time period and highlights our decarbonization track record – this is the equivalent annual GHG emissions of a small country.
  • Our business is showing resilience when mitigating global warming by reducing GHG emissions — we have a target to reduce annual emissions by 19.7 million tonnes of CO2e by 2030 over 2015 levels. Since 2015, we have reduced our annual emissions by 15.8 million tonnes of CO2e or approximately 80 per cent of required GHG reductions to meet this target.
  • Our strategy involves moving away from GHG-intensive coal, and by the end of 2025 we will have achieved a 100 per cent mix of renewables and natural gas.
  • As a leader in North American renewable electricity, and on-site generation development and production, we are well positioned to build renewable energy facilities and lower-carbon gas facilities to support customer decarbonization goals.
  • We continue to increase financial value from natural or environmental capital-related business activities, while minimizing our environmental footprint and potential risk factors related to environmental impacts. Comparable EBITDA from renewable energy generation in 2020 was $353 million (2019 — $341 million).
  • In 2020, CDP (the global disclosure system for environmental impacts known formerly as Carbon Disclosure Project) recognized TransAlta with an A- score, ranking the Corporation among industry leaders on climate change management.

Climate Change Disclosure Materials

TransAlta aligns its reporting with the Task Force on Climate-related Financial Disclosures in its annual report and reports annually to CDP. Please see below for reports:

CDP

Governance

The highest level of oversight on business impacts related to climate change is at our Board level. Macro issues and opportunities such as coal GHG emissions and the phase-out of coal powered generation, cost-competitiveness of renewable energy and customer preferences toward lower-carbon energy have been at the forefront of strategic discussions with our Executive and Board. These deliberations resulted in our actions to transition away from coal, establish a 2030 GHG reduction target and grow our generation capacity with renewable energy and gas. Notably, five of our Board members have identified Environment / Climate Change as one of their top four relevant competencies.

The highest level of oversight on climate change at our executive level is with the President and CEO. Climate change related risks are monitored and actively managed through our company-wide risk management processes. Climate change risks and opportunities are identified and reviewed at the Board level and all levels of the Corporation. The business units and corporate functions work closely together and flow risks and opportunities upwards to executive and the Board. Risks and opportunities are reviewed by our CEO and executive team quarterly and are reported to subcommittees of the Board.

Strategy

TransAlta, and the electricity sector are at the forefront of reducing GHG emissions, utilizing innovation with lower-carbon and zero-carbon solutions (e.g. renewable energy, natural gas, distributed power generation, energy storage, etc.) and are showing a path to resiliency in a low-carbon world. Our investments and growth in renewable energy are highlighted by our diverse portfolio of renewable generation assets. We currently operate approximately 2,500 MW of hydro, wind and solar power, and in 2020, we completed construction and commercial operation of an additional 136 MW (net 67 MW) of wind generation in the US (2019 — 119 MW).

Today, our diversified renewable fleet makes us one of the largest renewable producers in North America, one of the largest producers of wind power in Canada and the largest producer of hydro power in Alberta.

In 2021, we are conducting scenario analysis to further inform our understanding of risks, opportunities, technologies and pathways with respect to a number of future climate scenarios. Based on this scenario analysis, TransAlta will set future emission targets with the long-term goal of carbon neutrality by mid-century, aligning us with efforts in the countries we operate and broader global efforts under the Paris Agreement.

With respect to our customers, we note that we are shifting our product offering from a GHG-intensive product, to a low-carbon product to meet the need to decarbonize and mitigate associated societal risks, but also to meet the changing goals of our customers. We continue to build renewable projects for customers seeking to meet their own sustainability goals, such as carbon neutrality on Scope 2, RE100 goals or net zero. We continue to support customers with on-site power generation goals, where collectively there is an opportunity to reduce GHG impacts through on-site cogeneration, where power and steam production replace existing higher GHG intensive boilers. Our conversion of coal facilities to gas will significantly reduce the GHG intensity of the Alberta grid, supporting Scope 2 emission reductions for our customers and Alberta commercial and industrial loads. We can also contribute to our customers’ sustainability goals through the use of environmental attributes.

Risk Management

Climate change risks are monitored and actively managed through our company-wide risk management processes. We do not have a formal process to review specific climate change risk, rather climate change risks and opportunities are identified at the Board level, Executive and Management level, Business Unit level and through our corporate function. One area that is constantly monitored is climate policy, including the impacts on cost, growth and compliance.

Climate change risks at the asset- or business-unit level are identified through our Environmental Management Systems, asset management function and systems, our energy and trading business, active monitoring, active participation and communication with stakeholders, liaison with our corporate function, active participation in working groups and more.

Our climate change risks are divided into two major categories:

  • Risks related to the transition to a lower-carbon economy; and
  • Risks related to the physical impacts of climate change.

All identified material risks are added to our Enterprise Risk Management risk register where they are assessed and scored based on likelihood and impact. Risks are not considered in isolation and major risks are the focus of management response and mitigation plans.

For further information please refer to our
TCFD climate disclosure.

Metrics and Targets

In 2020, we estimate that 16.4 million tonnes of GHGs with an intensity of 0.67 tonnes per MWh (2019 — 20.6 million tonnes of GHGs with an intensity of 0.75 tonnes per MWh) were emitted as a result of normal operating activities. This reduction of approximately 20 per cent or 4.2 million tonnes CO2e is primarily the result of co-firing with gas and lower production volumes at our merchant Alberta coal facilities and lower production from our Centralia coal facility.

Our renewable energy facilities also offset approximately 2.9 million tonnes of CO2e for our customers in 2020. Because we sell the environmental attributes generated from our renewable energy facilities, we do not net this amount from our total GHG, but it should be noted that this offset is occurring and our customers are reporting net GHG reductions from TransAlta renewable energy operating activities.

Our target is to reduce 60 per cent or 19.7 million tonnes of GHG emissions by 2030, over 2015 levels. Our action to reduce GHG emissions is aligned with the UN’s SDGs, specifically ‘Goal 13, Climate Action.’

By 2030, we expect to have reduced close to 30 million tonnes over 2005 levels.

The following graphs portray our total GHG emissions in
2005, 2015 and 2020, showing a decreasing trend over time.