Canada: Calibrating Your Climate Change GPS – How to Navigate Alberta’s New Emissions Reduction Regime

Last Updated: August 24 2007

Article by Selina Lee-Andersen, © 2007, Blake, Cassels & Graydon LLP

Originally published in Blakes Bulletin on Energy - Oil & Gas, July 2007

As the first province to introduce legislation requiring large emitters to reduce their greenhouse gas (GHG) emissions, Alberta is moving swiftly to implement its new regulatory regime. Approved by the provincial legislature in April 2007, Alberta’s Specified Gas Emitters Regulation (the Regulation) will come into force on July 1, 2007, requiring large emitters of GHG gases in the province to meet new intensity-based reduction targets. For facilities established prior to 2000, this means that as of July 1, 2007, they must have achieved emission reductions of 12% off their baseline emissions intensity (which is based on their average emissions intensity from 2003-2005). While there is no grace period for established facilities to achieve this 12% reduction, there will a ramp-up period for new facilities established after 2000. For more information on Alberta’s new regulatory regime for GHG emissions, please see our March 2007 Blakes Bulletin on Energy – Oil & Gas, Regulatory Update: Alberta First to Introduce Legislation to Reduce Greenhouse Gases.

What Are "Emissions Intensity" And "Intensity Targets"?

Emissions intensity is the ratio of GHG emissions to a measure of economic output:

GHG Intensity


GHG Emissions

Economic Output

Typically, emissions intensity is expressed as emissions per dollar of gross domestic product in the context of an entire economy. However, emissions can also be measured against barrels of oil, per million cubic feet of natural gas, per tonne of coal, or per megawatt hour of electricity. GHG intensity targets are policies that specify emission reductions relative to productivity or economic output. Intensity targets may be contrasted with absolute targets, which specify reductions (in metric tonnes) relative to a historical baseline.

Does The Regulation Apply To Your Business?

The Regulation applies to all industrial facilities in Alberta that emitted 100,000 tonnes or greater of CO2 equivalent (defined under the Regulation as the 100 year time horizon global warming potential of a specified gas expressed in terms of carbon dioxide (CO2) equivalency as set out in the Regulation) in 2003 or in any years since. In particular, the Regulation stipulates that a 12% intensity reduction will be applied to that facility’s average 2003-2005 baseline emissions intensity for established facilities. To ensure the most accurate calculation of a facility’s baseline, Alberta Environment (AENV) has made the distinction between established facilities and new facilities. "Established facilities" are those that completed their first year of commercial operation before January 1, 2000 or have completed eight years of commercial operation. "New facilities" are those that completed their first year of operation on December 31, 2000 or a subsequent year and have completed less than eight years of commercial operation. The baseline emissions intensity for new facilities will be established based on their third year of operation. Once the new facility’s baseline is established, that facility will be required to reduce emissions starting the fourth year of commercial operation by 2% and then by 2% every year after until the 12% reduction target has been achieved.

Facilities which do not meet the 100,000 tonne threshold can still participate by reducing their GHG emissions intensity and reporting their emissions under the government’s Specified Gas Reporting Program. In addition, these facilities can participate by creating emissions offset projects. Reductions that are generated by an emission offset project can generate credits, which can then be sold to facilities subject to the Regulation.

Baseline Application Process

If it is determined that the Regulation applies to a particular facility, the appropriate baseline application form must be completed. Guidance on how to prepare a baseline application form is set out in AENV’s Technical Guidance Document for Baseline Emissions Intensity Applications, issued in May 2007 (the Guidance Document). The establishment of a baseline is a fundamental step in the regulatory process because without a proper baseline, the ability of any facility to make meaningful emission reductions will be tempered by inaccurate information.

Two different baseline application forms are available – one for established facilities and one for new facilities. The following documents must be submitted to AENV on or before December 31, 2007 (pursuant to an Order in Council dated July 17, 2007, the baseline submission deadline was adjusted from September 1, 2007 to December 31, 2007):

  • completed Baseline Emissions Application form and supporting documentation;
  • signed Statement of Certification form;
  • signed Statement of Qualification form;
  • signed Statement of Verification form; and
  • a Confidentiality Request (if selected by the applicant).

Additional supporting documentation may be requested by AENV. Once the baseline application is submitted, AENV will inform the facility in writing whether the baseline emissions intensity for the facility has been accepted or whether the Director has prescribed either a facility baseline or an audit.

Reporting Of Specified Gases

The Regulation applies to any facility that releases 100kt or more of CO2 equivalent based on the sum of direct emissions of carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFC), perfluorocarbons (PFC) and sulphur hexafluoride (SF6). Each reporting facility is required to disaggregate and report emissions of CO2, CH4 and N2P by the following source categories:

  • stationary fuel combustion
  • industrial process
  • venting
  • flaring
  • other fugitive emissions
  • waste and wastewater
  • on-site transportation
  • raw gas
  • CO2 emissions from biomass combustion.

It is worthy to note that under the Regulation, the term "facility" (any plant, structure or thing where an activity listed in section 2 of the Schedule of Activities to the Environmental Protection and Enhancement Act occurs) is defined narrowly to include all buildings, equipment, structures, machinery and vehicles that form an integral part of the facility’s activities. Essentially, this definition limits the calculation of emissions to a single process from any given facility, meaning that companies with multiple facilities can only calculate emissions from each individual facility and not from their facilities overall. Prior to reporting, companies will not be able to move the benefit of efficiencies achieved at one facility to another, less efficient, facility. However, once reporting is completed, a company may use any credits earned by one facility to offset against the total emissions of another facility (assuming that both facilities are located in Alberta). This will require companies to make process improvements at each facility and ensure that the facility is operating more efficiently over time.

Estimating Your Emissions

AENV has identified four methods for estimating emissions, which are described below in order of accuracy:

  • Monitoring or direct measurement, which uses emission monitoring systems, predictive emission monitoring (correlations developed between measured emission rates and process parameters) or source testing (e.g., stack sampling).
  • Mass balance, which determines emission from the difference in the input and output of a unit operation, where the accumulation and depletion of a substance is included in the calculations.
  • Emission factor, which is a value that relates the rate or quantity of a specified gas release with an activity associated with the release of that specified gas.
  • Engineering estimates, which use: engineering principles, knowledge of the chemical and physical processes involved, the design features of the source, or an understanding of the applicable physical and chemical laws.

While the methodologies selected to calculate emissions do not need to be identical to those used by other facilities in the industry, AENV has indicated in the Guidance Document that the methodologies must be: (i) widely accepted by the industry to which the facility belongs; or (ii) consistent with the guidelines approved for use by the United Nations Framework Convention on Climate Change on the Preparation of National Greenhouse Gas Emissions Inventories by Annex 1 Parties (Decision 18/CP.8).

In future years, facilities must use the same methodologies that were used for the establishment of the baseline emissions intensity in order to properly determine compliance. However, changes in methodology may be warranted as a result of changes in the characteristics of a source, which will likely result in the need to restate the facility’s baseline emission intensity.

Third Party Verification

AENV has not pre-approved third parties who are qualified to perform verification under the Regulation. However, minimum qualifications are set forth in section 18 of the Regulation, which requires third party auditors to be registered in a province or territory of Canada (or otherwise approved by AENV in a jurisdiction outside of Canada) as (i) a professional engineer, (ii) a chartered accountant, or (iii) a member of a profession that has substantially similar competence requirements as a profession referred to in (i) and (ii) above. In the Baseline Application form, the applicant will need to identify how the third party satisfies the requirements of the Regulation.

Literature on the topic of greenhouse gas emissions typically uses the term "verification" to describe the process by which an objective third party reviews an assertion (such as a regulatory submission) and provides an opinion or conclusion on that assertion. While AENV uses the term verification in its regulations, it also uses the term "assurance" in relation with audit and audit-related processes. In the Guidance Document, AENV distinguishes between two basic types of conclusions that can be provided through assurance service providers: (i) audit; and (ii) review. Audit, also known as positive assurance, offers the highest level of assurance because the conclusion of the third party reviewer is structured as a direct factual statement expressing the opinion of the reviewer.

In particular, the reviewer provides a high (though not absolute) level of assurance through procedures such as inspection, observation, enquiry, confirmation, recalculation, re-performance and analytical procedures. A review, also known as a negative assurance, provides a more limited level of assurance because the conclusion of the third party reviewer is based on the identification of anomalies rather than the confirmation of the assertion. Review level of assurance can be obtained through enquiry, analytical procedures and discussion. Not surprisingly, the level of effort required to complete verification rises with the level of assurance.

AENV states in the Guidance Document that it requires a review level of assurance for the Baseline and Annual submissions. In addition, AENV has identified the following review standards as appropriate for ensuring a consistent level of quality in the review process:

  • ISO 14064 Part 3 – Greenhouse Gases: Specification with guidance for the validation and verification of greenhouse gas assertions.
  • Standards for Assurance Engagements, Canadian Institute of Chartered Accountants (CICA) Handbook – Assurance Section 5025.
  • International Standard on Assurance Engagements (ISAE) 3000 – Assurance Engagements Other Than Audits or Reviews of Historical Financial Information.

In establishing an initial materiality level for errors, omissions or misreporting, third party auditors should take note that AENV has stated that an error, omission or misreporting over 5% of the reported value is material. If the Director is not satisfied with the baseline emissions intensity submitted by any facility, he or she may prescribe an audit of the facility.

Falling Short Of Your Reduction Targets

For those facilities unable to meet their intensity reduction targets through improvements in operational efficiencies, the following compliance tools are available:

  • Payment of $15 per tonne of CO2 (also known as Fund Credits) into the Climate Change and Emissions Management Fund;
  • Purchase offsets (also known as Emission Offsets) generated from Alberta-based projects by facilities not subject to the Regulation (these projects must have taken place after January 1, 2002); or
  • Purchase credits from facilities that reduced their emissions intensity below target. These so-called Emission Performance Credits may be banked or traded to other Alberta facilities.

Looking Ahead

AENV continues to consult with stakeholders on the province’s climate change initiatives, particularly in respect of the protocols for offset programs and use of the technology fund. As the first one out of the gate in Canada, there are many watching Alberta to see what lessons can be learned from its experience with intensity-based targets. In the short to medium-term, observers will likely see significant efforts by companies to increase efficiency in their individual production processes, particularly because facilities have been defined so narrowly. As the anticipated federal climate change initiatives come online over the next few years, it is anticipated that the provincial and federal authorities will work together to harmonize standards and ensure that companies are not burdened by the requirements of two competing regulatory systems.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions