Alberta TIER compliance fell 21% in two years, and the underlying pressure kept rising

Total compliance under TIER — the year-end obligation facilities were required to settle — fell from 20.1 Mt in 2023 to 18.6 Mt in 2024 and 15.9 Mt in 2025. The 2025 total is the lowest since TIER began in 2020 and about half the 31.0 Mt peak recorded under CCIR in 2019.

Two sectors account for the decline. Converted coal plants and conventional oil and gas aggregates together shed 5.6 Mt of obligation over the two years. Every other part of the regulated economy added 1.4 Mt.

Alberta Environment and Protected Areas compliance summaries 2020–2025 (2025 edition, 21 August 2026, restated basis); Alberta Carbon Registries exports of 1 August 2026; Climate Decode Alberta TIER supply, demand and price model.

Alberta has priced industrial carbon under three regulations since 2007. The Specified Gas Emitters Regulation required facilities above 100 kt to cut emissions intensity by 12% against their own baseline, with a $15/t fund price for any shortfall. Compliance held between 9 and 11 Mt a year from 2008 to 2015. Tightening then lifted the obligation to 12.2 Mt in 2016 as the target rose to 15%, and to 18.5 Mt in 2017 at a 20% target, with the fund price moving to $20/t and then $30/t.

The Carbon Competitiveness Incentive Regulation made the larger step in 2018 by replacing facility-specific historical baselines with product benchmarks set near sector-leading performance. Electricity shows the effect. The benchmark was set at 0.37 t/MWh for a coal fleet emitting close to 1 t/MWh, which sharply increased the share of emissions exposed to compliance. Total compliance reached 29.6 Mt in 2018 and 31.0 Mt in 2019, with fund payments of $533 million and $476 million.

Alberta Environment and Protected Areas, Alberta Industrial Greenhouse Gas Compliance summary, 2025 edition, page 4. The 2025 summary restated the 2020 and 2021 totals to 21.7 Mt and 20.5 Mt; those values are used here. Annual totals omitted between 2010 and 2015 ranged from 9.3 Mt to 10.4 Mt.

TIER took effect in 2020 and returned most industrial facilities to benchmarks based on their own 2016–2018 emissions intensity, initially set 10% below baseline. Electricity kept a product benchmark. Total compliance fell 9.3 Mt in the first year, though converted and converting coal units still accounted for 11.9 Mt, or 55% of the provincial obligation. Their contribution then fell steadily as units switched to gas and intensity improved: 9.3 Mt in 2021, 7.2 Mt in 2022 and 6.4 Mt in 2023.

The near-20 Mt provincial total from 2020 to 2023 masked two offsetting trends. Coal-to-gas obligation fell 5.5 Mt while the rest of the regulated economy added about 5.0 Mt, rising from 8.7 Mt to 13.7 Mt.

Benchmark tightening drove most of that increase. The general facility-specific benchmark moved from 10% below baseline in 2020 to 14% in 2023, oil sands mining and upgrading reached 20%, and the electricity benchmark began tightening in 2023. Rising oil sands output added to it, with in situ emissions increasing from 35.9 Mt to 41.3 Mt.

Total compliance fell 1.5 Mt in 2024. The coal-to-gas obligation declined from 6.4 Mt to 3.8 Mt as regulated emissions fell from 14.0 Mt to 10.1 Mt. Alberta’s last coal-fired unit stopped burning coal in June 2024. Converted units emitted about 0.57 t/MWh on gas against close to 1 t/MWh on coal, measured against a 0.355 t/MWh benchmark. Generation also shifted toward other resources, with wind and solar supplying 15.6 TWh, or 19% of Alberta output.

Obligations outside the converted coal fleet rose by about 1.1 Mt. Refining added 0.26 Mt, fertilizer 0.25 Mt, aggregates 0.30 Mt, gas-fired power 0.13 Mt and oil sands mining and upgrading 0.10 Mt. In situ oil sands moved the other way, reducing its obligation by 0.22 Mt.

Converted coal units generated 14.1 TWh in 2025, down from 17.8 TWh. Average emissions intensity improved from about 0.57 to 0.48 t/MWh as the repowered units ran cleaner and less. Regulated emissions fell from 10.1 Mt to 6.7 Mt, cutting the obligation from 3.8 Mt to 1.8 Mt.

The 1.4 Mt reduction in the aggregate oil and gas obligation came from a change in who was in the programme. Many conventional operators had opted smaller facilities into TIER because regulated facilities were exempt from the federal fuel charge. When the charge was set to zero on 1 April 2025, Alberta allowed eligible facilities to file partial-year reports covering 1 January to 31 March. Of 513 compliance reports received, 229 covered only that period. Aggregate-sector regulated emissions fell from 22.8 Mt to 12.1 Mt and the obligation from 2.17 Mt to 0.80 Mt.

Across the remaining sectors, obligations rose about 0.6 Mt. Oil sands mining and upgrading added 0.51 Mt as emissions reached 40.4 Mt and the benchmark tightened by two points. Pipelines added 0.49 Mt, gas plants 0.10 Mt and chemicals 0.07 Mt. Gas-fired power fell 0.16 Mt and fertilizer 0.14 Mt.

Sector values are read from the published position charts and reconciled to provincial totals. The 2020–2023 charts carry no data labels, so those values were digitised and carry estimated uncertainty of about ±0.05 Mt.

Coal-to-gas has 1.8 Mt of obligation left and aggregates 0.8 Mt. We model the TIER balance and EPC price to 2035, facility by facility.

Excluding coal-to-gas and aggregates, compliance rose from 7.2 Mt in 2020 to 11.9 Mt in 2023, 12.7 Mt in 2024 and 13.3 Mt in 2025. That is an increase of about 84% on 16% growth in regulated emissions, from 115 Mt to 133 Mt. Benchmark tightening explains most of the gap.

Over the same period the general facility-specific benchmark moved from 10% to 18% below baseline, oil sands mining and upgrading from 10% to 24%, and high-performance benchmarks to 6% below their starting level. The two oil sands sectors alone increased their obligation from 4.1 Mt to 7.5 Mt.

Credit supply expanded alongside it. Long facilities generated 7.2 Mt of emission performance credits in 2025, up from 6.3 Mt in 2020, led by aggregates at 2.1 Mt, oil sands mining and upgrading at 1.4 Mt, wind and hydro at 1.2 Mt and gas plants at 0.9 Mt.

Fund payments fell to $302 million in 2025 from $857 million in 2022. The obligation itself fell over that period, but the larger driver was a change in the instruments used to settle it. The fund share of settled obligation dropped from 85% in 2022 to 20% in 2025.

Facilities used credits to satisfy 80% of the 2025 obligation, the regulatory maximum for that year, against 10% in 2020. Our reconstruction of the registry ledger shows the credit bank growing from about 33 Mt at the end of 2020 to 54 Mt at the end of 2025.

A bank that size lets fund revenue fall faster than the obligation, and it delays the point at which a rising obligation shows up in the EPC price. The market has stock to draw on before scarcity binds.

What to watch. Coal-to-gas has 1.8 Mt of obligation left and aggregates 0.8 Mt, with the latter largely out of the 2026 base. Once those are gone, the headline compliance number moves with the underlying trend, which has risen every year since 2020. The credit bank determines how long that shows up in the fund rather than in the credit price.

Climate Decode · Advisory

What does your TIER position look like once coal is gone?

Facility-level obligation, EPC supply and bank trajectories, benchmark tightening and fund-versus-credit economics across Alberta TIER, Ontario EPS and the federal OBPS.

Method and Sources

Compliance totals, instrument mix and fund payments from Alberta Environment and Protected Areas, Alberta Industrial Greenhouse Gas Compliance summaries 2020–2025, 2025 edition dated 21 August 2026, on the restated basis. Credit issuance, holdings and bank reconstruction from Alberta Carbon Registries exports of 1 August 2026. Sector-level obligation splits are read from the published position charts and reconciled to provincial totals; the 2020–2023 charts carry no data labels, so those values were digitised and carry estimated uncertainty of about ±0.05 Mt. Benchmark trajectories, generation, emissions intensity and forward positions from the Climate Decode Alberta TIER supply, demand and price model.

Compliance means the year-end true-up obligation facilities were required to settle, not gross regulated emissions. Not investment advice.