Management Review
Discussion with Steve Snyder, President and Chief Executive Officer
What is TransAlta's sustainability goal?
We want to continually improve our ability as a power generation company to respond to different economic, environmental and social needs, while ensuring all our shareholders and stakeholders benefit from our efforts. How we operate our plants productively and safely, improve revenues and margins, meet or exceed environmental standards, strengthen the communities where our employees live and work - all creates long-term value through a responsible sustainable business model.
In terms of carrying out this sustainability approach at TransAlta, what were some significant events in 2004?
All in all, we had a good year, with continued progress. Our environmental and social activities continued to be highly recognized among our peers and the investment community. In early 2005, TransAlta was named one of the world's most sustainable companies in a global business ranking launched at the World Economic Forum. And, for the sixth year in a row, we were selected to the Dow Jones Sustainability World Index, a prestigious investor index which tracks the performance of top sustainability leaders worldwide.
We also continued to make progress in reducing our emissions. For example, we've cut our sulphur dioxide emissions company-wide by over 55 per cent since 2000. In the United States especially, we're at the forefront of industry in dealing with this issue. At Centralia, Washington, we've invested about $400 million in scrubber equipment to make sure we not only meet today's emission targets but foreseeable targets over the next 20 years.
Our Target Zero safety initiative has been embraced across our fleet and has given us some tremendous results in safety performance. Hazard and near miss reporting frequency across the company over the past three years has increased from 3,000 in 2003 to 17,300 in 2004. This increase is positive - the more near misses reported, the more improvements are made. This, in turn, drives improved safety performance and reduced costs.
What is the company's greatest environmental challenge?
Finding cost-effective environmental solutions for the use of coal. This is a great challenge not only for TransAlta but for our electricity industry and our economy, since coal provides more than half of the electricity needed by consumers in North America.
At this point, there's no cost-effective, long-term alternative to the use of coal. So, we need to find a solution. Finding this solution is not going to happen overnight - it's going to take time. As an industry, we're working hard to deal with this issue. And TransAlta has been at the forefront of this effort.
In the short-term, TransAlta is investing in advanced generation technology that provides operating and environmental efficiencies (our new Genesee 3 plant, which we own along with EPCOR, uses the best available coal generation technology in Canada). Every time we look at maintenance of our plants, we're trying to add the best environmental technology possible. We're also growing renewables as a percentage of our energy portfolio, as quickly as we can. As a result, we're now one of the largest owners of wind power in Canada. And over the long term, we will continue to work with industry and government partners to pursue the development of clean coal technology. With incentives, this revolutionary technology could virtually eliminate all air emissions, including greenhouse gases, from coal-fired power generation in 20 to 30 years. The environmental ramifications of this work are vast.
Another issue that remains challenging for our company and our industry is mercury, which is present in coal in small amounts. Our challenge as an industry is to find and remove these very small amounts cost-effectively and reliably. So far, there are no clear cut technological solutions. It's a challenge we're working hard to address by supporting research into technologies to measure and control these emissions. Our hope is that any timetable that is set by government will give us enough time to ensure the proper technology is developed.
As CEO, what's your role in promoting sustainability?
As CEO, I try to set the right tone, the right emphasis - by reminding people where we are doing things right, and where we need to improve. It's my job to make sure there is the proper awareness of sustainability issues, starting at the Board of Directors and on down through the organization. And we do that in different ways. Each year our Board has a major strategic review session, which examines corporate strategy and direction including sustainability issues. I also prepare a weekly email update to all employees that summarizes how our company is performing on different issues. In that newsletter, I frequently discuss our commitments to sustainability.
Outside our company, we're also getting out our sustainability messages to our stakeholders and the public. That's something that I strongly believe in and encourage as a CEO. As a company, we share information on our sustainability activities and issues, through a variety of communication vehicles, including our website, our annual sustainability report, investor tours and regular meetings with government and regulatory bodies.
How are shareholders responding to TransAlta's sustainability approach?
From our shareholder meetings and correspondence, we know our shareholders have an increased interest in the issue of sustainability at TransAlta. Their message to TransAlta is a simple and challenging one: "We want you to be socially responsible. We want you to reduce your environmental footprint. But do it as cost-effectively as you can."
And that's what we're working hard to do. A good example is our approach on climate change. For the last 10 years, TransAlta has been carefully building a climate change strategy that has allowed us to understand what the least cost options available to us are, and how to prudently take action. As a result, we believe our company has a balanced, comprehensive climate change strategy in place, and is well positioned to address this issue over the long term, despite the changing policy environment.
Is there more to be done in terms of promoting sustainability at TransAlta?
There's always more to be done. For us, the big challenge is to find the resources to carry out our sustainability programs and initiatives in a time of market uncertainty, price constraints and escalating fuel costs, such as we're experiencing today in our electricity industry. We have to carefully consider where we are going to put our resources, how much we put in, how we execute our plans, to always make sure we get the very best results for the dollars spent - to the benefit of our company, our stakeholders and the environment. Because in the end, pursuing long-term sustainability is not just a business proposition - it's an effectiveness issue.