With recent updates to the Technology, Innovations, and Emission Reduction Regulation (TIER), Alberta’s government identifies ways to work with industries, protect jobs, and enhance market strength. TIER’s main purpose is to support Alberta’s reputation for global investment and encourage industry action in emissions reduction technology.
“Making Alberta’s highly successful TIER system even more effective and flexible will make industries more globally competitive while maintaining Alberta’s leadership in emissions reductions,” to quote the government officials.
The history of the TIER program
The TIER program, which currently includes at least 60% of Alberta’s total emissions, helps industrial facilities reduce greenhouse gases. It was the first of its kind program in North America that offered businesses innovative ways to reduce emissions, invest in technology, save money, and create jobs.
Essentially, the TIER Regulation applies to facilities that emit 100,000 tonnes or more of greenhouse gases per year. It requires them to reduce their emissions to meet a specific benchmark, which can be either a facility-specific benchmark (based on historical performance) or a high-performance benchmark (based on the industry’s top performers).
TIER regulates the following sectors:
- Oil
- Gas
- Sands mining
- Electricity
- Forestry
- Chemicals
- Fertilizers and minerals
- Food processing
- Waste
Since 2019, Alberta has invested $1.6 billion from the TIER fund in additional sectors, reducing emissions by at least 70 million tonnes and supporting at least 20,000 jobs across the province.
The program was designed to provide stability and economic relief to gas, oil, electricity, and other large industry sectors. The TIER program was set to rise by $15 per reach and reach $170 per CO2E by 2030.
The areas of investment:
- Geothermal
- Hydrogen
- Energy storage
- Methane reduction
- Carbon capture
However, despite the obvious progress TIER achieved in almost two decades, on May 12, 2025, the Alberta government announced the freezing of the industrial carbon pricing system, known as the TIER program, at the current rate of $95 per tonne of carbon dioxide equivalent (CO2E). According to the Alberta government, “the freeze was enacted in response to the current tariffs imposed by the United States on Canada’s energy sector.” We discussed it in depth in Alberta Has Frozen the TIER Program. How Does It Work and What’s Next?
TIER Compared to Other Provincial Programs
While the federal Output-based Pricing System (OBPS) is implemented across the country, it does not apply in all provinces.
We discussed the OBPS system in detail in What the Output-based Pricing System is and How It Works. “The Output-Based Pricing System (OBPS) in Canada is a regulatory framework that is specific to industries, where these facilities are set to be incentivized to reduce their greenhouse gas emissions, by setting performance standards based on their output. Instead of paying a carbon price on any fuels used, facilities are charged based on emissions exceeding an output-based limit, which is determined by several factors.”
Several provinces that were previously under the federal system (New Brunswick, Ontario, and Saskatchewan) have transitioned to their own provincial systems, which are either equivalent to or more beneficial than OBPS.
Meanwhile, British Columbia, Alberta, and Quebec started introducing various types of carbon pricing systems in the early 2000s.
The outlook on the provincial programs:
- BC: a Greenhouse Gas Reduction Regulation program which integrates with the federal OBPS system.
- Manitoba: the federal government’s carbon pricing system is fully in effect.
- New Brunswick: follows the NB OBPS pricing and regulations.
- Newfoundland and Labrador: Use the federal OBPS for GHG emission tracking.
- Nova Scotia: the federal government’s carbon pricing system is fully in effect.
- Nunavut: the federal government’s carbon pricing system is fully in effect.
- Prince Edward Island: the federal government’s carbon pricing system is fully in effect.
- Ontario: uses an Emissions Performance Standards (EPS) system for its OBPS/GHG emissions.
- Quebec: a Cap-and-Trade system.
- Saskatchewan: has its own OBPS program.
- Yukon: the federal government’s carbon pricing system is fully in effect.
Current updates in the TIER System
As Premier Danielle Smith noted, “TIER has always been about Alberta leading the way – proving to the world that it’s possible to increase energy production, grow the economy and lower emissions at the same time.”
The press release also pointed out that, based on the success of the program, which provided businesses the certainty and flexibility they needed to invest in new technology, “we know this work is not finished. We will continue to press the federal government to match Alberta’s leadership with realistic policies and timelines so that together we can keep building an economy that is strong and ready for the future.”
Currently, the proposed updates to the TIER system include the following:
- To allow smaller facilities to leave or pull out for the course of the year (2025) to reduce costs. That was proposed because smaller facilities that fall below the regulatory emissions benchmark can expect disproportionate conformity costs under the TIER system (since it was mainly designed for large facilities). The change would help smaller businesses and industries save money and instead redirect available funds into emission reduction investments.
- To recognize on-site emissions reduction investments as an alternative way for industries to comply with the TIER system (in addition to the available options). That would also include paying into the TIER fund or buying credit. By encouraging innovation and rewarding companies for investing directly in emission reduction technology, the program would continue to support local jobs and reduce emissions. The regulated facilities can also comply by using credits (carbon offset, sequestration tonnes, and emission performance credits) or pay into the TIER fund at $95 per tonne of emissions.
It is worth mentioning that not everyone is as enthusiastic about the proposed updates to the TIER program. Environmentally involved activists raised concerns that although a large-emissions trading system like TIER is one of Canada’s most important climate policy, it requires further modernization. While they agree that it is designed to attract investment, drive emissions reduction, and protect competitiveness, there are still areas that need to be improved. “Alberta’s proposal for direct investment compliance risks compromising the credibility of TIER. It risks double-crediting companies for investments they may have made anyway and crediting activities that may not reduce emissions at all, while also increasing the oversupply of credits in the system,” and “without improvements, excess credit supply—and the low credit prices that result—will dilute incentives for investment,” as per Climate Institute.
Saving on industrial electricity and natural gas costs
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