The Government of Alberta yesterday announced that it will introduce significant amendments to the Technology Innovation and Emissions Reduction (TIER) regulation this fall. The proposed changes will (1) add on-site emission reductions investments as a compliance pathway and (2) provide flexibility for small emitters to opt out of the TIER system in 2025. Premier Danielle Smith and Minister of Environment and Protected Areas Rebecca Schulz announced the changes in an afternoon news conference. This bulletin briefly summarizes the expected amendments and the government’s next steps.
Regulatory amendments. The proposed updates to the TIER system include:
- Compliance through direct investment in on-site emission reductions. Recognizing on-site emissions reduction investments as a new pathway for facilities to comply with the TIER system, in addition to the current suite of available compliance options. The government anticipates that a new standard will be developed to support the new compliance pathway, which is expected to be structured around project investments over an eight-year period (five years forward, three years back) and could include investments in projects such as the Pathways CCS project. A facility would be allowed to use this compliance pathway to fulfill up to 90% of its TIER compliance obligation. Under the current TIER regulation, a facility can meet its compliance obligation by (a) reducing on-site emissions, including by applying capture recognition tonnes (CRTs) to lower the facility’s total regulated emissions (TRE); (b) submitting emission offset credits (EOs); (c) submitting emissions performance credits (EPCs); and/or (d) purchasing fund credits by paying into the TIER Fund at the prescribed TIER Fund Price (currently frozen at $95 per tonne CO2e).
- Opt-out for small facilities. Allowing smaller facilities that currently participate in the TIER system to leave or opt out. TIER applies to large facilities that emit more than 100,000 tonnes of CO2e per year, while smaller facilities have been able to opt-in to the TIER system under certain conditions. Smaller facilities that opted in to the TIER system were exempted from the federal fuel charge, which was eliminated this past spring. The amendments are expected to provide an opt-out mechanism for these smaller facilities.
Next steps. Alberta has indicated that regulatory amendments implementing the changes will be drafted and incorporated into the TIER regulation this fall. The regulatory amendments will be announced through an Order in Council once approved. We anticipate that further information on the updates will be made available when the regulation is amended.
Market reactions. The Explorers and Producers Association of Canada and Pathways Alliance applauded the proposed amendments and said they would support competitiveness, while the Canadian Climate Institute said that the changes will weaken TIER and create more uncertainty for business.
For further information or to discuss the contents of this bulletin, please contact Lisa DeMarco at lisa@resilientllp.com or Jonathan McGillivray at jonathan@resilientllp.com.
