Alberta TIER Regulation

Alberta TIER Regulation Program Solutions

The Alberta TIER regulation is a regulatory framework designed to reduce greenhouse gas emissions from large industrial emitters in Alberta. It serves as an alternative to the federal carbon pricing system under the Greenhouse Gas Pollution Pricing Act, which allows the province to maintain its own carbon pricing mechanism while meeting federal standards. Designed to bridge the gap between emissions reduction and economic growth, the TIER program presents a unique opportunity for large industrial facilities to enhance their environmental stewardship while fostering innovation.

Leveraging our expertise in emissions reduction strategies, carbon offset mechanisms, and compliance regulations and reporting, Targray empowers businesses to navigate the TIER program with confidence. With a clear focus on emissions performance standards, our carbon experts ensure seamless integration and measurable results. Contact a member of our team to learn more about our solutions.

Scope and Applicability

The Alberta TIER program emerged as a proactive response to the complex challenge of curbing greenhouse gas emissions while acknowledging the province’s significant industrial landscape. The program’s primary focus is on large industrial facilities that emit 100,000 tonnes or more of greenhouse gases annually, encompassing sectors ranging from oil and gas to manufacturing and refining.The TIER program’s emissions performance standards establish limits on the amount of greenhouse gas emissions a covered facility can produce per unit of production or output.

Large Emitters:

The standards apply to industrial facilities emitting 100,000 tonnes of CO₂e (carbon dioxide equivalent) or more annually and are tailored to each industry, recognizing the nuances and complexities of different sectors. This provides industries with the flexibility to adopt innovative technologies and strategies while maintaining their competitiveness.

Opt-in Provisions for Smaller Emitters:

Facilities that emit between 10,000 and 100,000 tonnes of CO₂e per year can opt into the program. Recent amendments have lowered this opt-in threshold to 2,000 tonnes of CO₂e for certain emissions-intensive and trade-exposed industries, making it accessible to smaller emitters as well​. Opting in allows smaller facilities to be regulated under TIER rather than the federal carbon pricing system, potentially providing more flexibility in how they manage and reduce emissions​.

Emission-Intensive, Trade-Exposed (EITE) Sectors:

Facilities that belong to sectors characterized by high emissions and international competition can opt in to avoid competitive disadvantages. This includes industries like cement manufacturing, steel production, and certain types of mining​.

Aggregate Facilities:

Owners of multiple conventional oil and gas facilities can apply to be regulated as an aggregate facility. This approach allows for collective compliance and potentially more efficient management of emissions across multiple sites​.

The Credit System

The Alberta TIER (Technology Innovation and Emissions Reduction) program includes a comprehensive credit system to facilitate compliance with emissions benchmarks for large industrial emitters. This system provides flexibility and incentivizes emissions reductions and technological innovation.

 

Types of Credits

1. Emissions Performance Credits (EPCs):

EPCs are generated by facilities that reduce their emissions below their established benchmark. Facilities that exceed their emission benchmarks can purchase EPCs from facilities that have surplus credits. This trading system encourages facilities to reduce emissions more than required, as surplus reductions can be monetized​.

2. Emission Offsets:

Emission offsets are generated from projects that reduce or sequester greenhouse gases outside the facility’s direct operations. Examples include afforestation, methane capture from landfills, and renewable energy projects. These offsets must be registered and serialized on the Alberta Emission Offset Registry to ensure their validity and transparency​.

3. Sequestration Credits:

Introduced to support carbon capture, utilization, and storage (CCUS) projects, sequestration credits are awarded for the permanent geological storage of CO₂. Emission offsets from CCUS projects can be converted into sequestration credits if they meet specific requirements. These credits can then be used to meet compliance obligations under TIER or be traded​.

4. Capture Recognition Tonnes:

Large emitters holding sequestration credits can convert them into capture recognition tonnes, which can be used to reduce their net emissions. These tonnes can be used under both the TIER program and federal regulations, improving the economics of CCUS projects by allowing credits to be recognized in multiple compliance frameworks​.

 

Navigating Compliance

Facilities covered by the TIER program have several options to comply with their emissions benchmarks:

  1. Operational Improvements: Directly reduce emissions through technological upgrades and increased operational efficiency.
  2. Fund Credits: Purchase credits from the TIER fund for each tonne of emissions that exceeds the benchmark.
  3. Emissions Performance Credits (EPCs): Use credits generated by facilities that have reduced their emissions below their benchmark. Facilities that exceed their standards and yet manage to curtail emissions can earn emission performance credits.
  4. Emission Offsets:  Utilize offsets from approved projects that reduce or sequester greenhouse gases. Facilities that surpass their emissions limits can opt for compliance by purchasing emissions offsets. These offsets are generated from projects that reduce emissions outside the regulated facilities, such as reforestation initiatives or renewable energy projects.

Annual Limits: The percentage of a facility’s compliance obligation that can be met using credits (EPCs, offsets, sequestration credits) increases over time:

  • 60% in 2023
  • 70% in 2024
  • 80% in 2025
  • 90% in 2026 and beyond

Credit Lifespan: The validity period for credits has been shortened from eight or nine years to five years. This change is intended to encourage the timely use of credits and maintain an active market for new credits.

Credit Pricing: The price for purchasing TIER fund credits will increase annually in $15 increments, from $65 per tonne of CO₂e in 2023 to $170 per tonne by 2030. This progressive increase aligns Alberta’s carbon pricing with federal standards and provides long-term price certainty for businesses.

The TIER Fund

Alberta’s Technology Innovation and Emissions Reduction (TIER) fund embodies the province’s commitment to fostering technological breakthroughs that drive emissions reductions. Financed by levies from facilities failing to meet emissions standards, the TIER fund supports research, development, and deployment of innovative technologies across various industries. By encouraging the development of cutting-edge solutions, the TIER fund transforms environmental challenges into opportunities for industrial advancement.

Phased Implementation

Recognizing the need for a balanced transition, the Alberta TIER regulation is being implemented in a phased manner. The gradual approach allows industries to adapt, innovate, and refine their emissions reduction strategies over time. As the program matures, the emissions performance standards will become increasingly stringent, encouraging continuous improvement and fostering a culture of sustainability.

Transparency and Accountability

A cornerstone of the Alberta TIER program is the emphasis on transparency, accountability, and reporting. Participating facilities are mandated to measure and accurately report their emissions, showcasing their commitment to environmental stewardship. This transparency not only ensures that the program is operating effectively but also bolsters public trust in the province’s efforts to combat climate change.

Economic Realities and Environmental Responsibility

Alberta’s economic landscape is intricately intertwined with the energy sector, notably oil and gas. The TIER program acknowledges the delicate balance between economic vitality and environmental responsibility. By offering industries an avenue for emissions reductions through innovative means, the program navigates the complex web of economic realities while contributing to the broader global climate agenda.

A Collaborative Approach

In a bid to adhere to federal carbon pricing requirements, the province designed its TIER program to ensure compliance while catering to its unique industrial fabric. Alberta’s TIER program operates alongside federal carbon pricing mechanisms but offers an alternative that meets federal stringency requirements, allowing the province to maintain control over its emissions reduction strategies while aligning with national goals​.

This flexible and industry-specific approach to managing and reducing greenhouse gas emissions in Alberta helps both large and smaller emitters contribute to the province’s environmental goals. The program’s collaboration between provincial and federal entities underscores the significance of a unified approach to addressing climate change.

Conclusion

The TIER program represents Alberta’s approach to balancing economic and environmental goals, providing flexibility for industrial emitters to comply with emission reduction mandates while promoting technological innovation and investment in clean energy projects. Through its innovative blend of emissions performance standards, emissions offsets, the TIER fund, and phased implementation, the program embodies a pragmatic approach to sustainability. As Alberta strives to balance its industrial legacy with a sustainable future, the TIER program paves the way for the emergence of cleaner, more efficient industries.

The TIER Fund

Alberta’s Technology Innovation and Emissions Reduction (TIER) fund embodies the province’s commitment to fostering technological breakthroughs that drive emissions reductions. Financed by levies from facilities failing to meet emissions standards, the TIER fund supports research, development, and deployment of innovative technologies across various industries. By encouraging the development of cutting-edge solutions, the TIER fund transforms environmental challenges into opportunities for industrial advancement.

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