Alberta to Expand TIER Compliance Options Through Direct Investment and Opt-Outs

By: Courtney Burton

Executive Summary

Alberta is revising its industrial carbon pricing system, known as TIER. Large facilities that emit 100,000 tonnes of carbon dioxide equivalent or more of greenhouse gases each year must remain within their allowable emissions limit or, if they exceed it, comply by using credits or purchasing fund payments. On May 12, 2025, the government froze the fund price at $95 per tonne, cancelling the scheduled increase to $110, and that freeze remains in place. The forthcoming amendments will add a new option, allowing companies to meet their obligations by investing directly in approved on-site projects, such as technologies that cut emissions. Facilities just below the 100,000-tonne threshold will also gain flexibility: in 2025 they can opt out of TIER entirely or submit only a partial-year report. These changes will not go to a vote in the legislature. They will be enacted by Cabinet through an Order in Council, which is a regulation approved collectively by Cabinet and signed by the Lieutenant Governor.

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The Alberta government has announced that it will amend the Technology Innovation and Emissions Reduction Regulation, Alta. Reg. 133/2019, as amended (the “TIER Regulation”) under the authority of the Emissions Management and Climate Resilience Act, SA 2003, c E-7.8 (“EMCRA”). Drafting of the amendment is expected in the fall of 2025, with the amendments to be enacted by Order in Council. These changes will introduce a new compliance option for large emitters and create a temporary opt-out for certain smaller facilities.

At present, the TIER framework applies automatically to industrial facilities that emit 100,000 tonnes or more of carbon dioxide equivalent (“tCO₂e”) per year or import more than 10,000 tonnes of hydrogen annually, with the option for certain smaller, emissions-intensive facilities to opt in. Facilities with emissions of 2,000 tCO₂e or more that compete directly with regulated facilities and belong to emissions-intensive, trade-exposed sectors may opt into the regulation. Each regulated facility is assigned an annual allowable emissions limit under Part 2 of the Regulation. If its actual emissions exceed that limit, a net compliance obligation arises under section 15, which can be satisfied in five ways.

• First, a facility may reduce its own emissions so that it stays within its allowable limit. In that case, no compliance obligation arises, and no credits are needed.

• Second, a facility may retire emission performance credits (EPCs) created under section 20 by other regulated facilities that operated below their own limits.

• Third, a facility may use Alberta-based offset credits developed under the offset system in sections 18 and 19.

• Fourth, a facility may use sequestration credits and capture recognition tonnes under sections 20.1 and 20.2.

• Fifth, a facility may purchase fund credits by paying into the TIER Fund under section 21. The contribution rate was frozen by the Alberta government in May 2025 at $95 per tonne, cancelling the scheduled increase to $110 in 2026, and it remains fixed at $95 unless changed by Cabinet.

The cost of purchasing fund credits is fixed at $95 per tonne following the government's May 12, 2025 announcement to freeze the TIER price. This move cancelled the scheduled increase to $110 in 2026 and departed from the previously planned annual $15 increases that were designed to align with federal carbon pricing through 2030. The rate is held at $95 unless Cabinet makes a further change. For facilities that choose the fund option, compliance costs are therefore stable at this level under the current policy.

The proposed amendments would add a sixth compliance route, allowing regulated facilities to satisfy their obligations by making direct investments that have received prior approval in emissions-reducing technology at the facility level. To implement the new direct investment pathway, it is likely that the government will need to amend Part 3 of the TIER Regulation, which currently sets out the recognized compliance instruments — emission offsets (ss. 18–19), emission performance credits (s. 20), sequestration credits and capture recognition tonnes (ss. 20.1–20.2), and fund credits (s. 21).

A second change involves facilities just below the 100,000-tonne threshold. Under the current Regulation, these facilities are not automatically covered unless they apply to opt in under section 3, which is reserved for emissions-intensive, trade-exposed operations. The government has announced that forthcoming amendments will allow certain sub-threshold facilities that are currently opted into TIER to opt out for 2025, or alternatively to file partial-year compliance reports. Implementing this change will require amendments to sections 2 through 4 of the Regulation, which currently define coverage and the opt-in process. The effect will be to relieve opted-in sub-threshold facilities from the administrative burden of a full compliance cycle.

The TIER Regulation is made under the authority of EMCRA, and amendments are enacted by Order in Council. An Order in Council is a provincial Cabinet decision that takes legal effect once signed by the Lieutenant Governor. Cabinet as a whole must approve the amendment, and the Lieutenant Governor formalizes it by signature. No bill is introduced or debated in the Legislative Assembly. In practice, this makes the process a Cabinet-level decision rather than a legislative vote, with the Lieutenant Governor's role essentially confirming Cabinet's decision.

In summary, the forthcoming changes to the TIER Regulation will add a direct investment compliance option alongside the existing instruments in Part 3, and will provide opt-out and partial-reporting flexibility for certain sub-threshold facilities. These amendments will require revisions to Part 3 (to add the investment pathway), sections 2 to 4 (to enable opt-outs), and likely some adjustments to reporting provisions. Together with the freeze on fund credit prices at $95 per tonne, the amendments show Alberta's intent to cap compliance costs while giving regulated emitters a new incentive to invest in emissions-reducing technology. Implementation will proceed by Order in Council under EMCRA, meaning Cabinet has the authority to bring the changes into effect on the government's announced timeline without legislative debate.