Alberta-Based Greenhouse Gas Reduction Program and
Offset Credit System

Currently active, intensity-based cap-and-trade system. (as of 1/2011).

environment.alberta.ca/01838.html
www.environment.alberta.ca/1238.html


Overview
Market Size and Scope
Offset Project Eligibility
Additionality Requirements and Project Methodologies
Project Approval Process


Overview

Type of Standard and Context

Alberta’s offset credit system is a compliance mechanism for entities regulated under the province’s mandatory GHG emission intensity-based regulatory system. As part of the 2002 Climate Change and Emissions Management Act (CCEMA) and the 2007 Specified Gas Emitters Regulation passed by the Alberta legislature, large final emitters (any facility in the provice that emits more than 100,000 metric tons of CO2e of GHGs per year) are required to reduce their GHG intensity by 12% per year. The Regulation, which took effect on July 1, 2007, represents the first GHG emissions legislation in Canada.

Emissions intensity, under the Alberta CCEMA regulation, is defined as the quantity of GHGs released by a facility per unit of production. The CCEMA regulation has set different emissions intensity reduction targets for established and new emissions sources. For “established” emitters (facilities that started commercial operations on or before January 1, 2000), emissions must be reduced by 12% below their approved baseline emissions intensity (based on the average of the facilities’ emissions for the years 2003-2005). For “new” emitters, (facilities tht began commercial operation after January 1, 2000 and have completed less than 8 years of commercial operation) the regulation has established reductions at an incremental level of 2% per year beginning in the fourth year of operation (until the full 12% annual reduction level is achieved). Alberta's offset system also used to support provincial committment to reducing GHG emissions, in 2008 Alberta committed to a 50 Mt reduction in GHG emissions by 2010 and 200 Mt by 2050.

In Feb. 2008, the Offset Credit Project Guidance Document Version 1.2 was released. In Dec. 2009, the Technical Guidance for Offset Project Developers Version 2.0 was released.

Regulated facilities that are not able to meet their reduction obligation through direct facility improvements can meet the emissions intensity reduction target through three compliance mechanisms:

• purchase or use of Emissions Performance Credits*;

• contributions to the Climate Change and Emissions Management Fund at a price of CND 15 per metric ton of CO2e; or

• purchase of Alberta-based offset credits.

* Regulated entities that are able to do better than their emission reduction target can generate Emission Performance Credits (EPC) which are serialized by Alberta Environment. These credits can be banked for use in future years or sold to other regulated facilities that have not met their emissions reduction obligation.

Standard Authority and Administrative Bodies

The Alberta provincial government has the overall program authority for the Alberta-based offset credit system. Third-party verifiers serve to verify baselines, annual compliance reports, and offset credits being registered on the Alberta Emissions Offset Registry. Third-party verifiers must be professional engineers or chartered accountants with appropriate experience. Third party verifiers must complete and submit a Statement of Qualification, which states that the review team has adequate areas of knowledge and expertise as part of the required verification documentation.

Regional Scope

The regional scope of the Alberta offset system is the Canadian province of Alberta.

Recognition of Other Standards/ Linkage with Other Trading Systems

Alberta has emphasized that they working with other jurisdictions and the federal government to identify how Alberta’s offset system will will be linked to or incorporated into Canada’s GHG offset program (see Canada’s Offset System for Greenhouse Gases) or other programs as they come on line.

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Market Size and Scope

Tradable Unit and Pricing Information

The tradable units in the Alberta offset system are referred to as ‘Alberta-based offset credits’ or Verified Emissions Reductions or Removals (VERRs) and are measured in units of metric tons of CO2e.

Participants/Buyers

Offset projects can be developed in unregulated sectors such as small industrial facilities emitting under 100,000 tonnes CO2e per year, and agricultural sectors. Market participants include project developers, aggregators, brokers, and end buyers. End buyers are the regulated facilities that intend to submit offset credits for compliance (as of June 2008, regulated facilities comprised close to 100 large emitters accounting for approximately 100 MmtCO2e per year, nearly one half of total provincial emissions).

Current Project Portfolio

As of January 2011, 68 projects were registered and 11 million credits generated. For updated information, go here.

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Offset Project Eligibility

Project Types

The Alberta offset system takes a top-down approach to approving eligible project types. Offset projects must meet the requirements for an offset project stated in section 7 of the Specified Gas Emitters Regulation. Projects must also be generated in accordance with a government approved protocol that articulates minimum requirements for specific offset reduction activities in the province. As of January 2011, Alberta Environment, the provincial environmental regulatory agency has 31government approved offset project quantification protocols.

As of January 2011, quantification protocols are available for the following projects types: acid gas injection, anaerobic wastewater treatment, beef feeding, beef-feed days, beef lifecycle, biofuel, biogas, biomass, compost, dairy cattle, energy efficiency, energy efficiency for commercial and instituteional buildings, engine fuel management and vent gas capture, enhanced oil recovery, streamlined enhanced oil recovery, instrument gas conversion to instrument air, landfill bioreactor, landfill gas, modal freight, nitrous oxide abatement from nitric acid production, nitrous oxide emissions reductions in agriculture, non-incineration of thermal waste, pork, road rehabilitation, run-of-the-river electricity systems, solar electricity systems, tillage, waste heat recovery, streamlined waste heat recovery and wind-powered electricity systems. (The latest approved protocols are available on the program website.)

Project Locations

All projects are required to be based in the Canadian province of Alberta.

Project Size

There are no general restrictions on project size. Specific project size requirements, if any, are included in project protocols.

Small reduction projects may be aggregated into larger volume bundles for cost efficiency of verification and transaction costs.

Start Date 

Project-based emission reductions or removals under the Alberta offset system are required to have resulted from actions taken on or after January 1, 2002. After Jan. 1, 2012, projects will only be eligible to generate credits on a "go-forward basis" from the date of project registration.

Crediting Period

All projects, except reduced/no till and afforestation projects, have an initial crediting period of eight years with the possibility of extension for an additional five years from the project start date. The crediting period is 20 years for sequestration resulting from tillage management projects. Proposed afforestation projects will be eligible for three 20-year crediting periods for a total project crediting period of 60 years.

Co-benefit Objectives and Requirements

There are no specific co-benefit requirements for project eligibility. Other environmental benefits may be considered when determining the eligibility of an offset project.

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Additionality Requirements and Project Methodologies

Additionality Requirements

Projects are required to be real, demonstrable and quantifiable, and to not be required by law. Issues concerning additionality are addressed during the multi-stakeholder technical review process and during the public posting period. Project developers must demonstrate that the project activity results in emissions reductions that are beyond business as usual practices. No additional additionality screening tests are required.

Project Methodologies

A bottom-up approach is used to develop baseline quantification protocols under the Alberta offset system. Offset project developers propose baseline quantification methodologies that are then reviewed and approved by Alberta Environment. Monitoring requirements are not specified in the quantification protocols.

In order to address the issue of permanence in conservation projects, the Alberta offset system has developed an ‘assurance factor approach’ based on consultations with the industry, Canadian government agencies and experts. Assurance factors are used to discount the offset credits generated from carbon sequestration projects in any one year to the volume of offset credits that would be considered permanently sequestered. Once discounted, the liability is transferred from the project proponent to the Government of Alberta and the offsets achieved are valued as permanent. The Government of Alberta intends to continue to monitor the effectiveness of assurance factors in managing risk and maintaining environmental integrity.

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Project Approval Process

Validation and Registration

Validation is optional under the Alberta offset system. The Alberta government’s position is that validation is considered a business risk management tool. Validation, where under taken, is contracted by the project developer in the private sector to perform this task.

All offset credits must be registered on the Alberta Emissions Offset Registry to be considered for compliance under the Specified Gas Emitters Regulation.

Monitoring, Verification and Certification

Verification and monitoring of the offsets used to achieve compliance are required under the Alberta Offset System.

Offset project developers are required to prepare a monitoring plan, which includes details of the monitoring equipment to be used, the locations of the sampling points, the frequency of the sampling events and the data collection methodology. The plan must be presented to the third party verifier as part of the verification process, and may be requested by Alberta Environment during its offset credit review.

Prior to registration, all projects must be verified by an independed third-party verifier hired by Alberta Environment. A verification report must be submitted to the Alberta Emissions Offset Registry with the request for serialization of Offset Credits. The verification report must also be submitted to Alberta Environment by all regulated entities using offset credits to achieve compliance as part of the facility’s compliance submission. The regulator tracks all verified emission offsets from projects that are used for compliance and may randomly audit offset credits submitted for compliance to ensure the credits meet government requirements. Third-party verifiers are required to be professional engineers or chartered accountants in good standing with their professional organization. Alberta has plans to adopt requirements for accredidation of verifiers in the future.

Clear, legal ownership of the emissions reduction activities is required. Emissions reductions must be unique and can only be counted once for compliance.

Registries and Fees

Each offset project developer is required to develop an Offset Project Plan, which includes a description of the project and the baseline used, and a monitoring and quantification plan. This information is included in the Alberta Emissions Offset Registry, a registry supported by the GHG Clean Projects Registry for Alberta’s emission offset project participants only. The purpose of the registry is not to provide assurance of the validity of credits or to serve as an offset credit trading platform, but only to serve as a means of recording project and credit information, including assigning serial numbers, which are used to track offset credits.

All registry fees can be found in the Technical Guidance for Offset Project Developers.The registry fee for activating a project account and filing a completed application is USD 202 (CAD 200). A fee of USD 252 (CAD 250) is charged for the GHG Project Report, Spatial Locator Templage (if applicable) and Third Party Verification Report. A fee of USD 202 (CAD 200) is charged for the Validation Report (optional). To allocate a serial number to and display VERRs from a project there is a fee of USD 0.05 (CAD$0.05) per VERR. No additional fees are charged to transfer or retire VERRs.

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