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  • Writer's pictureCourtney Burton

Understanding Alberta's TIER System for Carbon Credits

By: Courtney Burton

The Technology Innovation and Emissions Reduction (TIER) system is Alberta’s carbon pricing mechanism designed to regulate large industrial emitters.  Introduced in January 2020, TIER replaced the previous Carbon Competitiveness Incentive Regulation (CCIR) and expanded on the Specified Gas Emitters Regulation (SGER). TIER's primary goal is to manage and reduce carbon emissions from the province's most significant industrial sectors by setting regulatory standards and compliance requirements.

How TIER Works

TIER targets facilities that emit 100,000 tonnes or more of CO2 equivalent annually, mandating them to reduce their emissions intensity. The system provides a framework for achieving these reductions through a combination of direct actions, credit systems, and financial contributions.

Compliance Mechanisms

TIER sets emissions intensity targets based on sector-specific benchmarks. Facilities can comply in several ways:

  1. Direct Emission Reductions: Facilities can directly reduce their emissions by enhancing operational efficiency or adopting cleaner technologies.

  2. Emission Performance Credits (EPCs): Facilities that emit less than their set limit can earn EPCs. These credits can be banked for future compliance or sold to other facilities.

  3. TIER Fund Contributions: If facilities cannot meet their targets through direct reductions or credits, they can comply by contributing to the TIER Fund. Contributions to the TIER Fund support technological innovations, renewable energy projects, and carbon capture and storage (CCS) initiatives.

TIER credits can be generated as EPCS for facilities emitting below their set limits or as offsets by projects outside regulated facilities that quantifiably reduce or sequester emissions. Both EPCs and offsets require third-party verification to ensure accuracy and regulatory compliance. These credits are tracked in a formal registry system, allowing for transparency in trading, and facilities can buy, sell, or bank credits for future use, facilitating strategic compliance planning.

An example of TIER in action is carbon capture and storage (CCS) projects. CCS involves capturing CO2 emissions from sources like power generation and storing them underground in stable geological formations. Facilities implementing CCS can earn EPCs under TIER for the captured CO2. If the project goes beyond the facility's requirements, it might qualify as an offset project. Alberta's TIER system provides a flexible and structured approach for industrial facilities to manage their carbon emissions, promoting direct reductions, credit trading, and contributions to the TIER Fund.

To learn more about Alberta's TIER System, check out our podcast

Definitely Not Legal Advice Season 1 Episode 24 - Carbon Credits with Courtney Burton: Part 2:


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