Pembina Institute Understanding changes to Alberta’s industrial carbon pricing system | 2 For many facilities under TIER, in their first year, 10% of a facility’s emissions might be subjected to the carbon price (meaning 90% would be what’s known as ‘free allocations’); then in the following year that would increase to 11%, with 89% free allocations — thereby incentivizing the facility to reduce i. [...] The cancellation of this unnecessary double crediting is a welcome change that improves the integrity of Alberta’s TIER system and reduces risk of oversupply in the TIER credit market; this increases pricing and decarbonization investment certainty. [...] Increasing the tightening rate for all facilities from 1% to 2% in 2023 (and then, for oilsands facilities, to 4% in 2029) is a welcome improvement, but falls short of what is needed to set TIER on the right trajectory to ultimately achieve Canada’s 2050 net-zero goal. [...] Nevertheless, these amendments add to the suite of federal and provincial measures and policies that already exist or are under consultation (such as the investment tax credit for CCUS, the oil and gas emissions cap, and carbon contracts for difference). [...] This is why it is crucial to price as many emissions as possible (including electricity and IP emissions), reduce the amount of emissions that facilities can emit for free each year (‘free allocations’) through an appropriate tightening rate of 4%, and reduce the expiry period for credits to align with other emissions credit systems.
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