TransAlta chief executive John Kousinioris.Handout
In December, TransAlta Corp. TA-T shut down the last of its domestic coal-fuelled power plants and, on its own, allowed Canada to achieve 8 per cent of its greenhouse-gas reduction target.
Environmentalists and investors cheered the Calgary-based company’s pivot to renewable energy, which came nine years ahead of government deadlines.
TransAlta chief executive John Kousinioris is justifiably proud of his team’s achievement. However, the CEO who blazed a path for the energy transition that many Canadian companies must follow warns executives and politicians that they need to account for the human costs that come with weaning the economy off fossil fuels.
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Roughly 1,100 employees lost their jobs as TransAlta closed three Alberta coal-powered plants and its three mines, including the country’s largest coal mine, located 100 kilometres west of Edmonton. More workers will be laid off in three years’ time, when TransAlta shuts down a facility in Washington State.
“The toughest part of the transition is the impact on the work force,” Mr. Kousinioris said in an interview. “We had employees who had been with the company for decades, multi-generation employees, and for these individuals, losing their jobs is really, really challenging.”
Mr. Kousinioris joined TransAlta as chief legal officer in 2012, coming over from law firm Bennett Jones LLP, where he was co-head of the corporate law group. At the time, the company had just opened a $1.5-billion coal-powered station it expected to operate for 50 years.
In 2015, then-Alberta premier Rachel Notley’s NDP government rocked the power sector by announcing a climate-change strategy that dictated coal plants, which supplied 55 per cent of the province’s electricity, would be closed by 2030. As one of Alberta’s largest power producers from coal plants, TransAlta faced an existential crisis – its stock price fell by more than 60 per cent in the months that followed Ms. Notley’s announcement.
“There had to be a profound shift in our strategy in a relatively short period,” said Mr. Kousinioris, who was named TransAlta’s CEO last April. “We moved to a three-legged-stool strategy, as a provider of power that is clean, reliable and affordable.”
To pay for mothballing coal plants in favour of natural gas, solar and wind facilities, TransAlta struck an agreement with the Alberta government in 2016 that sees the province pay the company $37.4-million annually for 13 years. Closing the coal facilities helped TransAlta reduce its GHG emissions by 61 per cent or 25 million tonnes each year, which is 8 per cent of Canada’s total annual GHG emission reduction target.
“Everyone’s goal was creating a just transition at TransAlta,” said Mr. Kousinioris. “Candidly, I don’t love that expression, because if you’re on the receiving end of losing your job, it doesn’t feel that just.”
Since the Alberta government announced coal-plant shutdowns six years ago, TransAlta’s share price has increased fourfold.
In 2019, TransAlta raised $750-million in a financing from Brookfield Asset Management Inc. The cash injection helped TransAlta finish conversion of its Alberta coal plants to natural-gas facilities. Mr. Kousinioris said: “Natural gas is the bridge to the future, whether that future is hydrogen, carbon capture and storage or wind and solar with battery storage.”
Over the past three years, TransAlta has been on the acquisition trail, snapping up wind and solar projects in Canada, the U.S. and Australia.
Last July, TransAlta partnered with Australian mining giant BHP Group Ltd. on an AUD$73-million battery storage project tied to a solar facility that powers a nickel mine in Western Australia.
TransAlta has an opportunity to expand its renewable portfolio as China’s state-controlled CNOOC Ltd. sheds Canadian assets – a strategic shift reported last week by Reuters. TransAlta owns a 50 per cent stake in the 70-megawatt Soderglen wind farm in southern Alberta, and operates the facility. CNOOC inherited the other 50 per cent of the project when it bought Nexen Inc. for $15.1-billion in 2013.
“The successful delivery of its clean-energy growth plan should support TransAlta’s credibility in the eyes of investors,” said analyst Maurice Choy at RBC Capital Markets in recent report. He said the company is “being viewed or valued more like a generator with predominantly North American renewable-energy assets, versus largely as an Alberta thermal generator.”
A generation back, Canada signed a free-trade agreement with the U.S. and Mexico that paved the way for economic growth, but also led to the loss of domestic manufacturing jobs. In hindsight, government and corporate leaders recognize more should have been done to retool the work force in the face of globalization.
TransAlta’s CEO warns that the same challenges exist as the economy shifts from labour-intensive fossil-fuel power sources to reliance on hydro, solar and wind facilities that require far fewer workers.
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Andrew Willis