Projects

Alberta’s Carbon Pricing System

Technology Innovation and Emissions Reduction Regulation

The Technology Innovation and Emissions Reduction Regulation (TIER) is Alberta’s industrial carbon pricing and emissions trading system. The regulation is designed to help industrial facilities invest in innovative approaches to reduce emissions using clean technology to ensure they can remain competitive in a global market. Compliance payments under this system are collected in the TIER fund and is the source of funding for ERA’s investments in emissions reduction technologies.

Regulated Facilities and Exemption from Federal Requirements

TIER Regulated facilities include those that emit 100,000 tonnes or more of carbon dioxide equivalent (tonnes of CO2e) per year or those that import more than 10,000 tonnes of hydrogen annually. Facilities that emit less than this may also opt in to the regulation. The minimum threshold for facilities that choose to opt in is 2,000 tonnes of CO2e or more.

Since Alberta has an industrial carbon pricing system that meets federal requirements, facilities that are regulated under the TIER regulation can receive an exemption to the federal fuel charge under the Greenhouse Gas Pollution Pricing Act (GGPPA). The TIER system protects Alberta’s regulated facilities from the full costs of complying with the GGPPA, while achieving cost-effective emissions reductions.

Compliance Obligations

Under the TIER system, facilities have a benchmark which establishes the amount of emissions that they are allowed to emit. If a facility emits more then what is permitted, the facility has an obligation to comply with the regulation. Compliance can be achieved in one of three ways:

1. using emission offset credits that are generated from projects using protocols in Alberta’s emissions offset system,
2. submitting emissions performance credits, or
3. purchasing credits by paying into the TIER Fund at the prescribed TIER Fund price which tracks the federal carbon price schedule.

More Information

For more information on Alberta’s TIER system, visit the Government of Alberta’s website on the Technology Innovation and Emissions Reduction Regulation. The government’s website contains a wealth of information to explain how benchmarks for regulated facilities are established, the reporting that facilities need to complete for compliance, the methodologies for quantifying emissions and how emissions are verified.

What are emissions reductions for a project and how do we calculate them?

Project emissions reductions are those emissions reductions that result from the ERA-funded project and are based on the actual units of equipment, technology, or processes implemented during the project time frame. Project emissions reductions may include both direct and indirect emissions reductions in Alberta. The project time frame includes the life of the funded project, including operation beyond the end of the contribution agreement period if the equipment, technology, or processes continue to operate.

To calculate emissions reduction for a project, a baseline emissions scenario must first be determined. The baseline scenario is the GHG emissions that would occur in the absence of the proposed project. The project emissions are the emissions after the project is implemented and for the duration of the project life. The difference between the baseline scenario and the project scenario (baseline emissions minus project emissions) is the emissions reduction. Emissions may be on-site, upstream, and downstream of the project site. As an example; a renewable power generation project that replaces an existing natural-gas-combined-cycle power plant has near-zero emissions and therefore the emissions reductions for the project would be equal to the emission generated from the natural-gas-combined-cycle power plant.

Where applicable, ERA follows GHG emission quantification methodologies, emission factors, and/or principles from the Government of Alberta’s carbon-pricing system, known as the Technology Innovation and Emissions Reduction system. This includes methodologies for GHG quantification protocols under the Alberta Emissions Offset System. All methodologies used to quantify emissions reduction for projects conform to the five accounting and reporting principles described under ISO 14064, namely: accuracy; completeness; consistency; relevance; and transparency.

What are market emissions reductions and how do we calculate them?

Market emissions reductions are emissions reductions that result from the commercial adoption of the technology into the Alberta marketplace and are based on the market rollout plan and anticipated market adoption. Market emissions reductions typically occur after project completion as the project is deployed in the marketplace. These are accounted for up to 2050. These emissions reductions may occur during the ERA-funded project period (e.g., within the start and end date as per the Contribution Agreement) if the technology is commercialized during the ERA-funded project period.

Market Emission Reductions (MER) are forecasted for each funded technology in which the technology is expected to result in emission reductions in the Alberta economy.

The GHG team utilizes the information provided by the proponents at the project proposal or completion stage to set up the forecast for each project in ERA’s GHG database.

The framework for forecasting MERs for each technology follows a simple two-step process:

1. Forecast the size of the market through 2050 in units or measure relevant to the market; for example, barrel of oil for the Crude Oil market, then
2. Apply the factors that will affect the commercialization of the technology in the market, including:
   • Market penetration limit: fraction of the market that will be affected by the technology
   • Commercialization start and end dates
   • Steady state start and end dates (the dates in which the technology will have reached full saturation of the market limit and the date in which the technology starts exiting the market because it is being superseded by another technology or is no longer relevant)
   • Emission reduction factor; for example, tonnes of carbon dioxide equivalent reduction per barrel of crude produced.

Funding Amount by Sector

These amounts represent the total of actual funds paid to projects that are now complete and funding commitments to projects that are active.

Project Value by Sector

These amounts represent the total estimated cost of the projects that ERA is supporting.