TransAlta President and CEO Steve Snyder speaks about the future of the Canadian energy sector at the Energy Council of Canada award reception
After being named 2010 “Canadian Energy Person of the Year” at the Energy Council of Canada award reception, Steve Snyder, TransAlta President and CEO, dedicated his acceptance speech to a topic of significant interest to Canadians alike – the future of Canada’s energy sector. Posing the question: “How do we build a strong Canadian energy sector that can meet future demand in a smart, competitive and sustainable way?”; Steve explored the global energy challenge, Canada’s energy potential, and the need for a portfolio approach, for technology and for leadership. These remarks were given in Calgary, Alberta on Wednesday, October 27, 2010.
Check against delivery
Premier Ed Stelmach, elected officials, special guests, ladies and gentlemen. Thanks to all of you for your warm welcome and for being here to share in tonight’s event. And Don, thank you so much for that kind intro. I’m so glad you read it the way I wrote it.
I especially want to thank the Energy Council of Canada. The Council plays an important role in promoting national dialogue on energy issues. And I’m particularly honoured to be joining an outstanding group of past award recipients, all of whom have contributed leadership to our energy sector.
The reality of this award, though, is that it is really recognition of what TransAlta has accomplished. And, so it’s on TransAlta’s behalf that I’m here tonight. Joining me are TransAlta’s Board of Directors, and members of our senior management team.
I thank them for their tremendous support. And, most importantly, I thank my wife Jane for all her support so freely given.
There are two “perks” that come with awards. One is you get to be embarrassed by a video; the second is that you get the opportunity to stand up and chat on a topic of your choice.
Tonight I plan to explore a topic that’s of strong interest to me …and that’s the future of our energy sector.
It’s certainly an issue that underlined many of the conversations at last month’s World Energy Congress in Montreal, which, as you know, was hosted by the Council. The Congress was a fantastic opportunity for different leaders to share ideas on the future of our industry.
For me, this questioning inevitably led to a larger question …and that’s: how do we build a strong Canadian energy sector that can meet future demand in a smart, competitive, sustainable way?
And so tonight I’d like to share a few thoughts in this regard. I’d like to talk about:
- first, a portfolio approach to energy development;
- second, the importance of technology in responsibly producing energy resources; and
- and third, the kinds of actions we can take to help shape energy policy in this country.
As you’d expect, much of what I have to say is based on the perspective of my company, TransAlta.
A company that is Canada’s largest investor-owned electricity generator and trader. That has a 100-year history. That has a presence across Canada.
We are the largest developer of wind power in the country.
In many ways, we’re a microcosm of the Canadian energy scene: we have multiple geographies, multiple markets and multiple fuel sources.
Now let me get to the heart of my talk …starting with the kind of global energy scenario we face as a country.
THE GLOBAL ENERGY CHALLENGE
At the World Energy Congress, experts reminded us that global energy demand growth has reached unprecedented levels.
According to the latest numbers from the International Energy Agency, the world will need 40 percent more energy by 2030 than it does now.
Today nearly 2 billion people around the world have little or no access to electricity. And are aspiring to a better quality of life. I think it’s inevitable that an increasing demand for all forms of energy will continue.
This growth will have a major impact on all types of energy: fossil fuels, nuclear and renewables. By some estimates, something like $25 trillion in investment will be needed to keep pace with energy demand just by 2030 alone.
The numbers are staggering. The challenge to meet energy demand is daunting.
The conclusion is clear: We will need access to every available fuel …and we will need them ALL to meet demand and increase prosperity.
What does this mean for Canada?
CANADA’S ENERGY POTENTIAL
Well, this energy outlook is good news for our country …IF we are smart about it.
In Canada, we’re fortunate to have an incredibly rich, diverse abundance of energy resources.
We have a world-class resource in the oil sands, the second-largest proven oil resource in the world. We possess significant natural gas assets, including shale gas in Quebec and the Prairies and offshore deposits. We’re rich in uranium resources. We have significant hydro and wind power opportunities. And we possess billions of tonnes of coal.
Our energy endowment is massive. And given these resources, we should feel very good about our country’s promising energy future.
But for a major energy-producing country such as ours, rich in fossil fuels, the situation is complex. Certainly we can expect Canadian energy supplies to remain in high demand in the future. We offer a safe, abundant, reliable energy supply from a country with democratic traditions and open markets. At the same time, we can expect resource development in our industry to feel the brunt of environmental concerns at home and outside our borders.
So what’s the best energy development strategy for our country?
In part, it’s to pursue a portfolio approach that diversifies our energy supply in a balanced way. Let me explain.
THE NEED FOR A PORTFOLIO APPROACH
In our different businesses, we’re used to thinking of a portfolio approach to manage potential risk to our overall investment.
That’s how we run our company at TransAlta. We’ve diversified our energy mix. We have a wide variety 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.
So how does this apply to energy development in Canada?
The answer is to use our portfolio of diverse energy resources in a balanced, realistic way …and to avoid picking fuel “winners and losers” and to avoid substituting out one fuel for another.
Let’s use Alberta as an example. Coal is a vital part of Alberta’s electricity generation. It has provided the basis of low-cost, reliable electricity that has powered Alberta’s economic growth for more than 60 years.
In fact, Alberta’s coal contains more than TWICE the combined energy of all the province’s other non-renewable resources.
It’s hard to see how it makes sense not to find a way to use this bountiful energy supply.
And here’s another example that’s also close to home for many of us in this room.
As we all know, some in Canada and in the United States have called for a halt to oil sands projects. that’s the environmental side of the equation. But, there’s also an economic one. and it’s major.
Today more than $140 billion worth of oil sands investments is projected in the next decade. every $1 dollar invested in the oil sands will translate into $9 dollars of economic activity. And $3 of those $9 dollars will be created outside Alberta.
Given these economic realities, It’s time for a more mature, realistic view of our energy development opportunities as a country. we need to find a way to balance the economic/environmental equation rather than make one side a zero. It’s time to recognize that, like any good investment portfolio, diversification is critical to managing our country’s energy portfolio realistically.
We will need more oil, more gas, more coal, more nuclear, more renewables.
We must recognize that no single fuel source can provide the silver bullet answer to ALL our energy needs.
Certainly, renewables and low-emitting fuels should be part of Canada’s diverse energy portfolio.
However, The wind doesn’t always blow and the sun doesn’t always shine, so wind and solar can’t be counted on to meet all our energy needs.
It is clear that we need a broad portfolio of fuels to meet our nation’s future energy demands…and honestly that includes hydrocarbons. The world relies on fossil fuels and will continue to rely on fossil fuels for the rest of our lives and likely for the rest of our children’s lives.
But I say this with a caveat. There’s an expectation that as a country we should move toward an increasingly lower carbon future. And I don’t dispute that.
The biggest challenge for Canada’s energy sector is figuring out how it can grow the industry while at the same reducing emissions and other environmental impacts.
Can we do BOTH …and in a way that ensures our future prosperity?
I believe that the answer is “yes.” And to bridge us in the near term and more importantly transform our industry for the longer term, we must turn to technology.
THE NEED FOR TECHNOLOGY
The issue of the energy industry’s environmental footprint is complex.
Its very nature does not lend itself to simplistic solutions, like halting oil sands projects.
There’s another way to solve our industry’s environmental impacts, and that’s through technology.
Let’s use my company’s experience as an example.
At TransAlta, we believe that tough problems can be solved by human innovation. That’s why we’re developing cutting-edge clean coal technology at our Keephills 3 coal-fired plant in Alberta, which will be capable of capturing and storing carbon dioxide.
This kind of thinking can be usefully extended to how Canada develops its diverse energy portfolio responsibly and efficiently.
We need to remember that it’s not the fuel that is the problem — it’s the emissions. I firmly believe that Canadians will require us to use all available resources to meet our energy objectives. We now have to find how to use them in an acceptable way.
Here in Canada we have a proud tradition of innovation in our energy industry. Think of the changes that have occurred in our industry in recent years:
…from advanced SAGD recovery techniques that minimize the surface footprint
…to new technologies that unlock shale gas with less impacts… the list is long.
This is change that is ongoing and rapidly picking up the pace. Today we’re on the cusp of a technology revolution that is accelerating new developments in our energy sector. We’re seeing:
…global efforts to advance carbon capture and storage
…new developments in solar and geothermal
…new advances in cogeneration
These and other emerging technologies are powerful game-changers.
As an energy sector, we can do huge things. We have the talent and the people to unlock more of Canada’s energy potential …and do so in a clean, responsible and economically efficient way.
But unlocking our country’s rich energy potential isn’t just about technology.
It will also require leadership …and a clearer vision of our energy potential as a country.
THE NEED FOR LEADERSHIP
In Canada too often we constrain ourselves from developing our full energy potential. As a country, we struggle with competing economic and environmental priorities. We face pressures to shut down resource development. We get caught up in regional discussions that debate the merits of one region’s energy over another’s.
At times, it seems like we’re stuck in neutral …and are prevented from becoming the energy powerhouse that is our potential.
So, what will it take to shift out of neutral to the benefits of all Canadian’s. I’d say leadership and a more encompassing vision of what’s possible.
And so in my closing minutes I’d like to discuss some general principles for moving forward:
- First, it’s time for a more mature, broad-based, comprehensive discussion on the importance of our energy resources to Canada’s future: I recognize that resources are under Provincial jurisdiction. But there is a huge opportunity here to co-operate better and help Canada develop a diversified energy portfolio …one that uses ALL of Canada’s rich energy resources.
- Second, industry needs to take a lead role: In Canada we face the challenge of a federation with competing regional interests and government responsibilities. This is where new leadership is required. Industry has interests that cut across borders in Canada. Industry can play a lead role in justifying the need for event programs that can work for different parts of Canada and for all of Canada.
- Third, let’s support technology development: As an industry, we must continue to lead the way in investing in energy technologies that advance responsible use of our resources. we can’t do it alone. Government can play an important enabling role by creating a positive environment for technology investment.
- Fourth, we need a policy that engages Canadians: We should encourage the development of energy policies based on reality and common sense — and ones that mass consumers can believe and support. In this regard, it has to be motivating. A message that says “let’s develop all available energy resources responsibly while maintaining quality of life” will be more saleable — and realistic — to the average Canadian and, therefore, hopefully to Canadian policy-makers.
- Finally, we can build on existing initiatives: Fortunately, in promoting the need for broader energy policies, we can build on the work of organizations such as the Energy Council of Canada, the Canadian Council of Chief Executives and the Energy Policy Institute of Canada. All of these organizations have a collaborative role to play in helping to bring together industry and others in support of a national energy approach to energy for Canada.
So, let’s take full advantage of what we have — enormous natural resources, hugely capable people — to create a stronger energy advantage for Canada.
Transitions of this magnitude take time …but despite what the naysayers claim, I believe we have the time to get it right. What we don’t have time for …is to get it wrong.
Thank you again for this award and your kind invitation to speak this evening.
Steve Snyder – President & Chief Executive Officer
President and CEO Steve Snyder speaks after being named the 2010 “Canadian Energy Person of the Year.”