Ottawa's CO2 rules would hurt Alberta: TransAlta

TransAlta CEO Steve Snyder, whose company runs Canada's largest fleet of coal-fired generation plants, he was surprised when Environment Minister Jim Prentice said this week that any new stations will require costly carbon-capture equipment and old ones would be replaced by other power sources.

"Does this impact Alberta? Of course it does. We have the largest percentage of coal-fired generation in Canada... We have it because we have this huge carbon resource, which is very valuable," Snyder told reporters after TransAlta's annual meeting.

"This is a very tough challenge to solve CO2 and not bankrupt the province and meet all of our commitments."

TransAlta has six coal-fired plants operating and under development in Alberta.

Prentice told the Globe and Mail newspaper that the moves, to be imposed later this year, would help Canada generate 90 percent emission-free power by 2025.

Any new coal plants will require carbon capture and storage technology, which is still unproven on a large scale.

TransAlta has proposed to add such equipment to one of its Alberta plants in a project worth about C$500 million ($420 million). It is awaiting Alberta government funding.

Prentice said old plants would not be replaced by coal-fired stations after they are depreciated and hit the end of their usefulness.

"The challenge with that is, almost all coal-fired plant owners that I know of keep reinvesting in their plants to keep them efficient, and so there isn't any definite date, necessarily, when that happens," Snyder said.

Also, replacing a coal-fired plant with, say, a gas-fired one could be problematic if a future technology breakthrough allows coal plants to run with little or no emissions of greenhouse gases, he said.

Snyder also questioned Ottawa's commitment to developing carbon capture and storage technology when its subsidies are a fraction of the C$2 billion that Alberta has earmarked.

"I'm not quite sure why we seem to want to put billions of dollars into the automotive industry, an industry which seems not to produce a good product and hasn't been particularly well-run. But we don't want to put a fraction of that to solve carbon from coal plants," he said.

Prentice has asked to meet with electricity industry CEOs in May. Snyder said he intends to participate but warned that the gap between the government's goals and industry's ability to deliver drastic emission cuts is wide.

($1=$1.19 Canadian)

(Reporting by Jeffrey Jones; editing by Janet Guttsman)