Guidance on using eligible Alberta emission offsets as recognized units for compensation under the federal OBPS

Overview

Persons responsible for covered facilities under the federal OBPS may provide compensation by remitting compliance units, making an excess emissions charge payment; or a combination of both.

Compliance units can be federal surplus credits or offset credits issued under the Greenhouse Gas Pollution Pricing Act (GGPPA), or recognized units.  

Emission offsets generated under the Alberta Emissions Offset System from an offset protocol that appears on the List of Recognized Offset Programs and Protocols for the Federal OBPS and that also meet the conditions of section 78 of the Output-Based Pricing System Regulations (OBPS Regulations) are recognized units.

Steps to remit Alberta emission offsets as recognized units under the federal OBPS

Figure AB1: Steps to remit Alberta emission offsets as recognized units under the Federal OBPS

1. Create an account in the Alberta Emissions Offset Registry (AEOR)

Consult the registry manual on the AEOR website for instructions on how to create an account in the AEOR.

2. Find Alberta emission offsets that are eligible for remittance

To determine if Alberta emission offsets are eligible for remittance as recognized units under the federal OBPS, ensure:

1. They are issued in relation to a project registered under a protocol on the List of Recognized Offset Programs and Protocols for the Federal OBPS; and
2. They meet all the eligibility criteria in section 78 of the OBPS Regulations.

Consult the General Guidance for Using Eligible Provincial Offset Credits as Recognized Units for Compensation under the Federal OBPS for more information on the criteria in section 78 and see below for important information related to Alberta emission offsets and paragraphs 78(4)(c), (d) and (e) of the OBPS Regulations.

2.1. Meeting criteria in paragraph 78(4)(c) of the OBPS Regulations (activity start)

Paragraph 78(4)(c) of the OBPS Regulations provides that at the time of remittance, a recognized unit must have been issued in respect of a project located in Canada that began in 2017 or later.

To meet the condition in paragraph 78(4)(c), ensure the “activity start date” for the offset project from which an Alberta emission offset was generated is January 1, 2017 or later.

The activity start date can be found in either the offset project plan or project report posted on the AEOR website for that offset project. The “offset start date” listed on the AEOR signals the beginning of the crediting period and may not be the same as the “activity start date.”

You should request that the project proponent confirms the project, or all subproject activity start dates are on or after 2017 before remittance in CATS to ensure that the project and any subprojects that have been added or changed do not affect the eligibility of the emission offsets for use as recognized units under the OBPS. ECCC recommends that purchase contracts include this requirement and that you request confirmation of the activity start date from the project developer immediately prior to remitting the recognized units in CATS.

2.2 Meeting criteria in paragraph 78(4)(d) of the OBPS Regulations (verification)

Paragraph 78(4)(d) of the OBPS Regulations requires that at the time of remittance, a recognized unit must:

have been verified by a verification body that

1. is accredited as a verification body to the ISO Standard 14065 by the Standards Council of Canada, the ANSI National Accreditation Board or any other accreditation organization that is a member of the International Accreditation Forum, and
2. is not suspended by the accreditation organization that issued its accreditation nor suspended at the time the verification relative to the issuance of the unit or credit occurred or at the time the verification report related to the issuance of the unit or credit was signed

Eligible Alberta emission offsets must represent reductions or removals that were verified by an accredited verification body. The verification body must not be suspended at the time of remittance or have been suspended when the relevant verification was conducted or when the relevant verification report was signed. To determine whether a verification body is accredited, access the verification report associated with the relevant offset project report within the AEOR project details web page and confirm the verification body’s identity. Check the accreditation status of that verification body on the website listing of the relevant accreditation body, such as the Standards Council of Canada or the ANSI National Accreditation Board.

2.3 Meeting criteria in paragraph 78(4)(e) of the OBPS Regulations (status for compliance use)

Paragraph 78(4)(e) of the OBPS Regulations requires that at the time of remittance, a recognized unit must:

be designated for use exclusively as a compliance unit for remittance to the Minister under section 174, paragraph 178(1)(a) or subsection 181(2) of the Act.

To satisfy this criterion, Alberta emission offsets must have a status of Pending Retire – Federal OBPS in the AEOR. This status change must be requested in registry user accounts, consult step 4 below for more details on making a status change request in the AEOR.

3. Acquire eligible Alberta emission offsets

Consult the AEOR User Manual prior to acquiring eligible emission offsets (purchase or transfer).

3.1. Purchase eligible Alberta emission offsets

Purchases of Alberta emission offsets occur outside the AEOR through bilateral agreements between buyers and sellers. The public AEOR project listing shows who holds an emission offset. Only purchase eligible emission offsets that appear on the AEOR website as Active, and not any other status such as Locked in Transaction, Removed, Cancelled, Pending Retirement, Retired or Retired for Compliance.

3.2. Transfer ownership of Alberta emission offsets in the AEOR

You can only remit emission offsets as recognized units under the federal OBPS if you own and hold those offsets in your registry user account in the AEOR. While terms of sale and financial transactions are stipulated in private contracts, all transfers of emission offset ownership between accounts are required to be publicly recorded in the AEOR for tracking and transparency purposes. A purchase of emission offsets should not be considered final until the emission offsets have been transferred into the buyer’s registry user account. For detailed instructions about transferring emission offsets, you have purchased to your registry user account in the AEOR, consult the AEOR User Manual.

4. Request status change to Pending Retire- Federal OBPS in the AEOR (before June 30th)

Alberta emission offsets must be in the Pending Retire - Federal OBPS status in the AEOR prior to being remitted as recognized units for compensation under the federal OBPS in CATS. To change the status of emission offsets from Active to Pending Retire - Federal OBPS, submit a status change request from your registry user account. This status change request is subject to transaction fees as per AEOR rules and requirements. For detailed instructions on requesting a status change consult the AEOR User Manual.

After the request is submitted, the AEOR will show the status of the Alberta emission offsets as Pending Retire - Federal OBPS within regular processing times (estimated up to 10 business days).

The emission offsets cannot be transferred to another account while under desktop review. At any time before the emission offsets are remitted as recognized units under the federal OBPS, the account holder can request a status change back to Active status should they no longer intend to remit the emission offsets as recognized units for compensation under the federal OBPS. Requests are subject to any applicable transaction fees^{Footnote 1}.

Once emission offsets are in Pending Retire- Federal OBPS status, you can take the first steps toward remitting them in the Credit and Tracking System (CATS). However, be aware ECCC cannot confirm whether the emission offsets are eligible for use as recognized units before completion of desktop reviews (step 4. a. below) by the Alberta Regulator and if necessary, reverification.

If you intend to remit recognized units in time for the regular-rate compensation deadline under the federal OBPS, make the request to change the status of emissions offsets from Active to Pending Retire - Federal OBPS by June 30th of the year you intend to remit them. If you submit your status change request after June 30th, there is no guarantee the Alberta Regulator will complete their desktop review in time for the units to be used before the regular-rate compensation deadline under the federal OBPS.

4. a. Desktop Review

The Alberta Regulator will conduct a desktop review of supporting documentation for all Alberta emission offsets in Pending Retire – Federal OBPS status. The desktop review is an overall review of the registration submission and can have one of the following results:

1. The Alberta Regulator does not select the submission for reverification at this time.

   a) Alberta emission offsets already submitted to ECCC (in CATS) by this time will be subject to ECCC review (step 5 below).

2. The Alberta Regulator selects the registration submission associated with the project from which the emission offsets were issued for reverification. The project reverification will be conducted by an independent qualified third-party assurance provider selected by the Alberta Regulator (step 4. b. below).

4. b. Reverification (if selected by the Alberta Regulator)

The Alberta Regulator will inform ECCC if a project is selected for reverification. ECCC will inform you directly that the registration submission associated with the emission offsets has been selected for reverification by the Alberta Regulator. The emission offsets will not be eligible for use as recognized units under the OBPS for that compliance period. In this case, you:

1. Must remit an alternate form of compensation in the CATS, and
2. May initiate a status change request within the AEOR for the associated emission offsets from Pending Retire - Federal OBPS back to Active status; or
3. May retain the emission offsets in Pending Retire - Federal OBPS status and wait for the reverification process to be completed. Depending on the results of the reverification, the emission offsets could remain eligible for remittance as recognized units in the following compliance period so long as they continue to meet the criteria in section 78 of the OBPS Regulations.

5. Remit Alberta emission offsets as recognized units for compensation under the federal OBPS

Once the eligible Alberta emission offsets have a status of Pending Retire - Federal OBPS in the AEOR, and you are satisfied the emission offsets meet all eligibility criteria for recognized units, you can take steps to remit them as recognized units for compensation under the federal OBPS through CATS. ECCC recommends remittance of Alberta emission offsets as recognized units for compensation under the OBPS well in advance of the regular-rate deadline, December 15th of the year following the compliance period. For more information on how to remit recognized units in CATS, consult the CATS User Guide that is accessible from the left-hand pane on the “Home” tab in CATS.

6. ECCC reviews eligibility of recognized unit information

After the Recognized Unit Remittance Page is submitted through CATS and the Alberta Regulator has completed their desktop review, ECCC will determine whether the federal OBPS eligibility criteria for recognized units are satisfied. ECCC is not responsible for reviewing emissions offsets for eligibility prior to the regular-rate or increased-rate compensation deadlines. ECCC is not responsible for financial losses associated with emission offsets that do not meet federal OBPS eligibility criteria for remittance as recognized units.

6.1 Eligible at the time of remittance

ECCC will update your compensation balance in CATS after it confirms units are eligible in CATS. ECCC will notify the Alberta Regulator who will change the status of the emission offsets in the AEOR from Pending Retire - Federal OBPS to Retired - Federal OBPS.

6.2 Not eligible at the time of remittance

If ECCC determines that Alberta emission offsets do not meet all federal OBPS eligibility criteria for recognized units, the Alberta emission offsets will not be accepted as recognized units. ECCC will mark the recognized units as ineligible in CATS.

Compensation, at the applicable rate, must still be provided for the compensation obligation. If the determination is made after the regular-rate compensation deadline, the applicable rate will be the increased-rate. Compensation at the increased-rate must be provided by the increased-rate compensation deadline, February 15th of the year following the regular-rate deadline.

You may submit a status change request in the AEOR to change the status from Pending Retire - Federal OBPS to Active status subject to Alberta’s process and procedures. These status change requests will be subject to transaction fees in the AEOR^{Footnote 2}.

6.3 Eligible at the time of remittance and later found to be invalid

If Alberta emission offsets remitted as recognized units for compensation under the federal OBPS are determined to be eligible at the time of remittance by ECCC but are later determined to no longer be valid, subsection 181(1) of the Greenhouse Gas Pollution Pricing Act and section 75 of the OBPS Regulations will apply. The Minister of Environment and Climate Change may require remittance of the same number of compliance units to replace the number of invalid emission offsets remitted as recognized units. The obligation may be satisfied in accordance with subsection 181(3) of the GGPPA instead.

6.4 Buyer Liability

The Alberta Regulator will follow their normal procedures to address errors, reversals, or cancel invalid emission offsets as per the requirements outlined in the Alberta Emission Offset System and Alberta’s Technology Innovation and Emissions Reduction Regulation (TIER). The Alberta Emission Offset System takes a buyer liability approach to emission offsets. Specifically, the person using emission offsets as recognized units for compensation under the OBPS would be required to replace the recognized units if, at any time in the future, the emission offsets or project are determined by the Alberta Regulator to be invalid, or if there is an error, removal or reversal of project emissions reductions or sequestration.

Contracts for purchasing Alberta emission offsets often include provisions to address this possibility. Unless otherwise specified in a purchase contract, the person responsible may not be able to receive replacement credits or reimbursement of funds from the seller if ECCC determines the emission offsets do not meet one or more of the federal OBPS eligibility criteria. However, the Alberta emission offsets may remain eligible for compliance purposes under Alberta’s TIER.