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On December 3, 2025, the Alberta Government made amendments to the Technology Innovation and Emissions Reduction Regulation1 (TIER) through Order in Council 369/2025 (the TIER Amendment).2 Among other things, the TIER Amendment introduces two important new concepts: investment credits and credit reactivation. The TIER Amendment comes only a week after the signing of the Memorandum of Understanding between the Government of Canada and the Government of Alberta: Agreement to strengthen energy collaboration and build a stronger, more competitive, and more sustainable economy (the MOU).3
TIER establishes Alberta's industrial carbon pricing and emissions trading system for large emitters (annual emissions exceeding 100,000 tonnes of CO2e or annual imports of hydrogen exceeding 10,000 tonnes) and smaller emitters who opt-in. Currently, regulated entities can meet their compliance obligations using emission offsets, emission performance credits, or sequestration credits, or pay into the TIER fund at the prescribed price.4 The TIER Amendments add investment credits as another option to meet these compliance obligations.
Investment credits
Investment credits will be generated through the newly established direct investment pathway, which was proposed by the Government of Alberta in September this year.5 Each investment credit is deemed to represent one tonne of CO2e, and the number of investment credits generated is based on "eligible investments" in an "eligible investment project."
An "eligible investment" is a monetary investment that:6
- is made on or after January 1, 2025;
- is not an investment made at a facility for which a cost containment designation is in effect;7
- unless the investment is in a project which is specified as a pre-approved project in the Standard for Direct Investment, the investment cannot have been made before the project is approved as an eligible investment project;
- does not include any part of an investment made or granted by a government, an organization funded by the government, or from the TIER fund; and
- does not include any part of an investment that will be recovered through an investment tax credit or similar mechanism set out in the Standard for Direct Investment.
An "eligible investment project" is either: (i) a project specified as a pre-approved project in the Standard for Direct Investment document, or (ii) a project approved by the director which meets the criteria outlined in the Standard for Direct Investment. A person may apply at any time for their project to be approved by the director. As of the date of this Dentons Insight, the Standard for Direct Investment referenced in the TIER Amendment has not yet been published, so it is unclear which types of project or capital investments will be eligible for investment credits.
To generate investment credits, an audited investment statement must be submitted by June 30 of the year following the investment. The number of investment credits generated will be equal to the eligible investment amount divided by the TIER fund price for the year the investment was made.
Unless used for reactivation, investment credits must be used within five years of the eligible investment, can only be used by the person that generated them (non-transferable) and can only be used for the 2026 compliance year or later. Investment credits, along with emission offsets, emission performance credits or sequestration credits (including any of the foregoing which have been reactivated) are subject to the combined maximum percentage of credit usage of 90% in 2026 and onwards.
Credit reactivation
A person may reactivate their previously retired emission offsets, emission performance credits or sequestration credits using investment credits. To do this, an audited investment statement must be submitted by March 31 of the year following the year in which an eligible investment was made (three months earlier than the normal compliance deadline). Only offsets or credits that were retired in the three compliance years immediately preceding the year the eligible investment was made, but no earlier than the 2025 compliance year, are eligible for reactivation. Once reactivated, the offset or credit is treated as if it had never been used, and is subject to the same rules as an unused offset or credit.
The credit reactivation process may compel a definitive resolution of the long-standing debate regarding whether TIER offsets and credits should be considered as instruments for offsetting an emitter's Scope 1 and Scope 2 emissions under the Greenhouse Gas (GHG) Protocol—through their retirement—or whether TIER functions solely as a compliance mechanism.
Credit reactivation also creates tension with the fundamental concept of offsets, as environmental attributes that have already been "claimed" would become available for reuse, arguably resulting in double counting.
Other amendments
- Emitters who opted-in to TIER may opt out or apply for approval to submit a partial-year compliance report for 2025 by submitting an application by December 31, 2025.
- A large emitter may apply to be exempted from TIER obligations if the facility's direct emissions are less than 10,000 tonnes of CO2e per year for two consecutive years, but any such exemption will cease if the facility's direct emissions exceed 50,000 tonnes of CO2e in a year.
- The date of automatic review of TIER was extended to December 31, 2030, and the date of automatic expiry of TIER was extended to December 31, 2035.
Concluding remarks
The introduction of investment credits and credit reactivation raises questions about their impact to Alberta's industrial carbon pricing market. While a direct investment pathway creates flexibility for emitters, it will impact market demand and pricing for offsets and credits. As with many other jurisdictions, the line between emitters and project developers is not discrete. Many emitters are also offset and credit developers and a softened market (and less demand) could be net negative. Viewed against the backdrop of the MOU, it is unclear how the TIER Amendment underpins Alberta's ability to meet its obligations under the MOU, including the CA$130 minimum effective credit price by 2030. Creating this option that is based on investment dollars as opposed to quantified, and verified CO2e reductions risks the credibility of emission reductions generated under TIER. Until more concrete parameters are published in the Standard for Direct Investment, it is uncertain whether these direct investments may result in increased efficiency or emission reductions, as there may be an incentive to progress high-cost projects, whether or not the volume of reductions are satisfactory. Stakeholders will want to understand if similar third-party verification requirements will be placed on such investments, and the commercial impact of both the direct investment pathway and the value of TIER offsets and credits.
It remains to be seen who will receive the greatest benefits from the TIER Amendment. The direct investment pathway could address certain costs faced by carbon capture, utilization and storage (CCUS) hub developers, as many of the direct costs are not currently recoverable through ITCs. On the other hand, these changes, together with the proposed amendments to the GHG Protocol,8 will have a significant impact on renewable power developers, owners and operators in Alberta. Historically, renewable power developers have registered under TIER—delivering TIER offsets as the associated environmental attributes—or under WREGIS, issuing renewable energy certificates. Further, where a renewable facility is registered under TIER and generates offsets, the value of a TIER credit to support such "environmental" claims will be significantly reduced if reactivation is permitted. Under the proposed revisions of the GHG Protocol where virtual (or corporate) power purchase agreements (PPAs) may no longer qualify as a Scope 2 emissions reduction if the generating facility and the off-taker are not physically connected to the same grid, the "green" value of both the TIER offsets or of the renewable electricity will be significantly diminished.
The TIER Amendment makes salient changes that are likely to directly impact the TIER market and may weaken the carbon price signal. This may also not be the end of the (recent) period of instability, and the question of whether TIER will again change to address the minimum effective credit price of CA$130/tonne and the final agreement on industrial carbon pricing (on or before April 1, 2026) will be of significant interest to market participants.
Footnotes
1 Technology Innovation and Emissions Reduction Regulation, Alta Reg 133/2019.
3 See e.g., Government of Canada, "Canada-Alberta Memorandum of Understanding" (27 November 2025), online: https://www.pm.gc.ca/en/news/backgrounders/2025/11/27/canada-alberta-memorandum-understanding.
4 See e.g., Government of Alberta, "Technology Innovation and Emissions Reduction Regulation', online: https://www.alberta.ca/technology-innovation-and-emissions-reduction-regulation.
5 Government of Alberta, News Release, "Modernizing TIER to secure tomorrow" (16 September 2025), online: https://www.alberta.ca/release.cfm?xID=9394747127445-C0F9-96A7-43804C08764CE1D4.
6 Currently, there are no exact parameters about what form a monetary investment can take to qualify.
7 For the current list of cost containment program designees and facilities, see https://open.alberta.ca/opendata/compliance-cost-containment-program-list-of-designees-and-support.
8 See Dentons Insight: https://www.dentons.com/en/insights/articles/2025/november/28/proposed-scope-2-ghg-emissions-guidance.
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