The second point is that big opportunities come from new technology. Many of the Canadian electricity industries have been working hard to develop clean combustion technology and have been exploring opportunities for carbon capture and storage.
Some of the hurdles are technical ones; some of them are economic. But solutions are on the horizon. Economical and reliable clean coal technology is perhaps five to eight years away. Retrofitting of existing fossil fuel plants is perhaps a decade away. The potential of carbon capture and storage varies by region, but in Alberta, where enhanced oil recovery might provide revenue, we are not far from a viable business case.
What kind of policy environment is required to allow us to achieve meaningful reduction goals? Our third point is that for the electricity sector more than any other, a focus on the long rather than the short term is crucial. In the period between 2010 and 2020, TransAlta is prepared to accept shorter-term targets as a means of getting started. But as explained earlier, there is a limited amount that we or a sector can do at this period to make sizeable changes in our mission's profile; thus the only option for achieving short-term reductions is to purchase reductions from other sectors in the form of offsets.
But capital spent there for compliance will dramatically dampen our ability to invest capital in the new technologies and accelerate capital stock replacement, which is our principal goal.
The quid pro quo is that we are prepared to adopt challenging long-term targets. How would that work? Our proposed model is that every plant reaching the end of its economic life would be required to be replaced with, or perform at the levels of, the best available economic technology of the day. Such a requirement would drive companies to find viable technology solutions or to retire the facility.
In the near term, we strongly support the concept of a technology fund as a principal compliance mechanism for the electricity sector. In our model, reasonably set near-term emission targets would create the impetus for company contributions to a technology fund.
It would be designed much like a trust fund. Companies prepared to build and implement new plants with new low-emission technologies would have access to this capital to overcome economic hurdles and gaps and to accelerate stock replacement.
We also support the need for a robust domestic offset system here in Canada and an active national emissions trading regime that also allows viable international credits to be transacted. Such a mechanism would facilitate the optimization of the company compliance position in any given year.
Don.