Alberta Technical Guidance

7/31/2019 Alberta Technical Guidance

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Offset Project Guidance

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Technical Guidance for Offset ProjectDevelopers

Version 3.0: February 2012

Specified Gas Emitters Regulation


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Disclaimer:

The information provided in this document is intended as guidance only. This documentis not a substitute for the law. Please consult the Specified Gas Emitters Regulation andthe legislation for all purposes of interpreting and applying the law. In the event thatthere is a difference between this document and the Specified Gas Emitters Regulation or

legislation, the Specified Gas Emitters Regulation or the legislation prevails.

Any comments or suggestions regarding the content of this document may be directed to:

Alberta Environment and WaterClimate Change Secretariat12th Floor, Baker Centre

10025 106 StreetEdmonton, Alberta, T5J 1G4E-mail: [email protected]

Additional copies of this document may be obtained by contacting:

Alberta Environment and Water Information CentreMain Floor, 9820 - 106 StreetEdmonton, Alberta T5K 2L6Phone: (780) 427-2700 (Toll free by first dialing 310-000)Fax: (780) 422-4086E-mail: [email protected]

ISBN: 978-0-7785-8807-8 (Printed)ISBN: 978-0-7785-8808-5 (On-line)

Copyright in this publication, regardless of format, belongs to Her Majesty the Queen inright of the Province of Alberta. Reproduction of this publication, in whole or in part,regardless of purpose, requires the prior written permission of Alberta Environment andWater.

Her Majesty the Queen in right of the Province of Alberta, 2012


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Table of Contents

1.0 Purpose of Document........................................................................................ 71.1 Overview of Changes........................................................................................ 7

2.0 Regulatory Context for the Alberta Offset System........................................... 9

2.1 Scope of the Alberta Offset System................................................................ 102.2 Offset System Design Principles .................................................................... 102.3 ISO 14064-2: Project Quantification, Monitoring and Reporting .................. 112.4 Overview of the Offset Project Cycle............................................................. 122.5 Offset System Participants.............................................................................. 15

3.0 Offset Program Rules...................................................................................... 183.1 Offset Eligibility Criterion.............................................................................. 183.2 Contacting Alberta Environment and Water................................................... 183.3 Program Constraints........................................................................................ 183.4 Quantification Protocols ................................................................................. 253.5 Covered Emissions.......................................................................................... 25

3.6 Sources and Sinks ........................................................................................... 263.7 Flexibility Mechanisms................................................................................... 263.8 Ownership....................................................................................................... 273.9 Project Expansion ........................................................................................... 28

4.0 Offset Project Implementation........................................................................ 294.1 Project Eligibility............................................................................................ 294.2 Protocol Selection ........................................................................................... 294.3 Baseline Conditions ........................................................................................ 294.4 Project Condition ............................................................................................ 314.5 Risk Assurance Factors................................................................................... 314.6 Functional Equivalence (Consistency) ........................................................... 32

4.7 Conservativeness and Accuracy ..................................................................... 324.8 Additionality ................................................................................................... 334.9 Project Expansion ........................................................................................... 334.10 Project Documentation.................................................................................... 344.11 Offset Credit Transactions .............................................................................. 39

5.0 Data Management and Document Retention .................................................. 425.1 Data Management ........................................................................................... 425.2 Project Records and Supporting Data ............................................................. 435.3 Data Retention ................................................................................................ 445.4 Transparency................................................................................................... 445.5 Confidentiality ................................................................................................ 44

6.0 Third Party Verification.................................................................................. 456.1 Verification Fundamentals.............................................................................. 466.2 Verification Process ........................................................................................ 536.3 Subsequent Events .......................................................................................... 59

7.0 Government Audit .......................................................................................... 607.1 Project Selection ............................................................................................. 607.2 Audit Process .................................................................................................. 607.3 Materiality for Government Audits ................................................................ 61


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7.4 Error Correction and Reconciliation............................................................... 617.5 Audit Methodology......................................................................................... 647.6 Level of Assurance ......................................................................................... 647.7 Audit Report.................................................................................................... 647.8 Confidentiality Considerations ....................................................................... 64

7.9 Continuous Improvement................................................................................ 658.0 Alberta Emissions Offset Registry.................................................................. 668.1 Registry Credit Categories.............................................................................. 678.2 Timing............................................................................................................. 688.3 Fees ................................................................................................................. 688.4 Project Creation and Serialization .................................................................. 698.5 Corrections to Registry Submissions.............................................................. 728.6 Offset Credit Error Correction........................................................................ 72

GLOSSARY OF TERMS................................................................................................. 73


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List of Tables

Table 1: Example of effective start dates for select offset projects. ................................. 20Table 2: Specified gases and gas species subject to the Climate Change and Emissions

Management Act. ...................................................................................................... 26

Table 3: Standardized third party verification report format. ........................................... 57Table 4: Valid categories for offset credits....................................................................... 67Table 5: Transactions costs, document requirements and fees for the Alberta Emissions

Offset Registry. ......................................................................................................... 69

List of Figures

Figure 1: Alberta's 2008 Greenhouse Gas Reduction Commitments ............................. 10Figure 2 Offset project cycle for the Alberta offset system.............................................. 14Figure 3: Roles and relationships of offset system participants ....................................... 17Figure 4: Offset credit generation based on go-forward crediting with ex post verification

................................................................................................................................... 22Figure 5: Offset credits as a function of change between the baseline and project

condition. .................................................................................................................. 30Figure 6: Audit Process..................................................................................................... 61


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Related Alberta Environment and Water Publications

Climate Change and Emissions Management ActSpecified Gas Emitters RegulationSpecified Gas Reporting Regulation

Albertas 2008 Climate Change Strategy

Technical Guidance for Completing Annual Compliance ReportsTechnical Guidance for Completing Baseline Emissions Intensity ApplicationsAdditional Guidance for Cogeneration FacilitiesTechnical Guidance for Landfill Operators

Technical Guidance for Offset Project DevelopersTechnical Guidance for Offset Protocol DevelopersQuantification Protocols (http://environment.alberta.ca/02275.html)


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1.0 Purpose of Document

The purpose of this document is to assist offset market participants (project developers)in implementing offset projects for use in the Alberta offset system where the intended

final purchaser is a facility regulated under the Specified Gas Emitters Regulation (theRegulation).

Albertas offset market was initiated as a market instrument to support compliance underthe Specified Gas Emitters Regulation. TheRegulation requires all large, industrialfacilities in Alberta emitting over 100,000 tonnes of carbon dioxide equivalent (CO2 e)per year to reduce their emissions intensity by 12 per cent from their governmentapproved baseline emission intensity.

Facilities and sectors not subject to theRegulation that are able to reduce theirgreenhouse gas emissions according to a government approved protocol and that meet the

requirements of section 7 of theRegulation are eligible to generate offset credits whereone tonne of CO2 e reduced is equal to one offset credit. These credits, once registeredand serialized on the Alberta Emissions Offset Registry (the registry), become a tradableunit that can be bought and sold in the Alberta offset market. Credits remain active untilsuch time as they are submitted to Alberta Environment and Water for compliance by aregulated facility, or sold outside the Alberta market place. Credits submitted to AlbertaEnvironment and Water are subject to government review and may be identified for asupplemental government audit. More information on the government audit process isavailable in Section 7.

Offset credits are one of three market-based compliance options available to regulated

facilities. Facilities may also purchase Climate Change and Emissions ManagementFund Credits (fund credits), or use Emission Performance Credits (EPC), which areemission reductions generated at regulated facilities that have reduced their emissionsbelow their net emissions intensity limit. For more information on these complianceoptions, see Section 4 of the Technical Guidance for Completing Specified GasCompliance Reports.

1.1 Overview of Changes

The following is a summary of key changes included in this guidance document relativeto the January 2011 Technical Guidance Document for Offset Project Developers.

Alberta Environment has been renamed Alberta Environment and Water. Thisdocument has been updated to reflect the new name;

Section 3.3.4 provides clarification on deadlines for claiming historic credits in theAlberta offset system. Note that project developers wishing to claim 2002 to 2010vintage offset credits must submit completed project registration packages to theAlberta Emissions Offset Registry by March 31, 2012. All project registrationdocumentation and supporting information for 2011 vintage year credits must be


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submitted to the registry on or before September 30, 2012. Starting with the 2012vintage offset credit, all new offset project claims must meet requirements for go-forward crediting as described in this guidance document;

Section 3.3.5 provides clarification on the credit start date for offset projects;

Section 3.3.6 provides clarification on the credit duration period for offset projectsincluding considerations for implementing projects under flagged protocols, projectsthat become a regulated facility, and requirements for consecutive years of projectreporting;

Section 3.3.7 provides clarification on requirements for a project to be considered fora 5-year extension;

Section 3.8 provides clarification on ownership requirements for offset credits;

Sections 4.10.1, 5.2, and 6.1.10 provide clarification on project record requirementsfor project developers and third party verifiers. Note project developers must collectand retain sufficient information to support project implementation and greenhouse

gas reduction quantification. Third party verifiers cannot sign off on projects thathave incomplete or insufficient supporting documentation. Projects that do not havesufficient supporting records to support reductions being claimed will not be acceptedby Alberta Environment and Water as a compliance option under the Specified GasEmitters Regulation;

Section 4.10.5 describes the new requirement for offset project developers tocomplete a statutory declaration as part of the offset project registration starting April1, 2012. The declaration is a legally binding assertion stating that offset creditsserialized in the Alberta offset system have not been listed in any other registry;

Section 4.11.4 provides clarification on business risk considerations in implementing

an offset project. Project developers are encouraged to assess business risk duringproject development and should consider documenting risks and risk mitigationstrategies in the offset project plan; and

Section 6.1.9 provides an example materiality calculation for errors in an offsetproject verification.


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2.0 Regulatory Context for the Alberta Offset SystemIn 2002, Alberta passed the Climate Change and Emissions Management Actsignaling itscommitment to manage greenhouse gas emissions in the province. In 2003, Albertapassed the Specified Gas Reporting Regulation requiring all facilities emitting over

100,000 tonnes of carbon dioxide equivalent (CO2e) annually to report their emissionsand in 2007, Alberta passed the Specified Gas Emitters Regulation (theRegulation)reinforcing its commitment to regulate greenhouse gas emissions from large industrialemitters. ThisRegulation requires all facilities in Alberta emitting over 100,000 tonnesof CO2e per year to reduce their emissions intensity by 12 per cent below their 2003-2005baseline emissions intensity. New facilities (those facilities that began operation on orafter January 1, 2000 and that have completed less than 8 years of commercial operation)have been given a graduated reduction obligation increasing 2 per cent per year startingin their fourth year of commercial operations to the12 per cent reduction obligationstarting in the 9th year of commercial operation.

The Alberta offset system has been established as a market-based compliance option forfacilities regulated under theRegulation. Facilities unable to meet their emissionreduction obligation through direct facility improvements may choose to purchase offsetcredits (greenhouse gas emission reduction credits) generated at facilities and sectors notsubject to the Specified Gas Emitters Regulation.

The Alberta offset system also supports Albertas commitment to reducing provincialgreenhouse gas emissions. In its 2008 Climate Change Strategy, Alberta committed to a50 megatonne reduction in provincial greenhouse gas emissions by 2020, and a 200megatonne reduction by 2050 (Figure 1 below). Voluntary and regulatory emissionsreductions, along with other actions such as the implementation of consumer rebate

programs for energy efficiency and support for public transit, changes in technology use,and implementation of carbon capture and storage will be part of a suite of actionsrequired to meet the provincial emission reduction objectives.


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Figure 1: Alberta's 2008 Greenhouse Gas Reduction Commitments

2.1 Scope of the Alberta Offset System

The Alberta offset system compliments the Specified Gas Emitters Regulation byproviding a market-based compliance option for regulated facilities. Eligible offsetprojects must be able to demonstrate real, quantifiable and verifiable emissionsreductions that would not otherwise have occurred had the offset project not beenimplemented. That is, offset credits must be generated from activities that go beyond

business as usual practices (sector common practice) to create incremental change nototherwise required by law.

Note: Offset projects must be additional to business as usual activities, sector commonpractice, and regulatory and other emission reduction requirements. Offsets cannot be

generated from activities that would otherwise have occurred.

2.2 Offset System Design Principles

The Alberta offset system has been designed to encourage cost-effective reductions and

removals of greenhouse gas emissions in sectors that are not otherwise required by law todo so. The following key principles guided the development and implementation of thesystem:

Reduce Provincial Emissions: offset projects must result in real, quantifiable, andverifiable reductions and/or permanent removals in greenhouse gas emissions inAlberta;


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Net Benefits: project conditions must result in a net benefit in greenhouse gasemission reductions and removals, and improved environmental practices that wouldnot have otherwise occurred had the project not been implemented;

Incremental Change: protocols must support incremental change technologies andpractices;

Balance Conservativeness and Accuracy: Emissions and reductions and removalsneed to be quantified accurately based on best available methodologies and mustresult in conservative estimates for reductions and removals achieved;

Ability to Implement: protocols must be developed to credit actions that can beimplemented in Alberta;

Verifiable: reduction and removal activities must be supported by regulatory qualitydata that supports a high level of assurance that the reductions or removals haveoccurred;

Transparency and Accountability: Alberta supports full transparency ofquantification protocol development, and offset projects and supporting informationfor projects registered on the Alberta Emissions Offset Registry;

No Leakage: offset projects must result in real emission reductions incremental toany shifts in emissions that may occur as a result of the project condition;

Maximum Scope: the Alberta Offset System should, over time and to the extentpractical, promote and enable projects across all sectors of the economy;

Building and Linking: Alberta will continue to build on offset work undertaken inother jurisdictions to adapt emission reduction opportunities to suit Albertas uniquecircumstances and will seek alignment between systems as deemed appropriate;

Reasonable Program Administration: Alberta Environment and Water, will, to theextent practicable, seek to balance administrative costs against programimplementation.

The system has been designed to achieve greenhouse gas emission reductions whilebalancing environmental integrity with the ability to commercialize market opportunities.Specific principles must be considered individually and as an integrated package of ideasand concepts that ensures a balanced and effective offset system.

2.3 ISO 14064-2: Project Quantification, Monitoring and Reporting

The Alberta offset system uses the ISO 14064-2 platform for establishing and quantifyinggreenhouse gas reduction projects. Protocols and offset projects must be developed andimplemented according to this standard.

Albertas quantification protocols serve as a consistent framework and approach for thedevelopment and verification of offset projects for specific activities. Where practical,Alberta draws on related protocols from other jurisdictions to inform its protocoldevelopment process. These include, but are not limited to:

Clean Development Mechanisms (CDM);

The Climate Action Reserve (CAR);

The World Resources Institute (WRI);


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World Business Council on Sustainable Development (WBCSD);

The Intergovernmental Panel on Climate Change (IPCC); and

The National Inventory Report: Greenhouse Gas Sources and Sinks in Canada(Environment Canada, Annually since 1990)

More information on protocol development is available in the Technical Guidance forOffset Protocol Developers.

Note:Emission reduction quantification methodology must be tailored to reflect Alberta-specific conditions, and may not, in all cases mirror quantification methodologies and

approaches used in other jurisdictions.

2.4 Overview of the Offset Project Cycle

Offset projects occur when a company or individual (the project developer) undertakes agreenhouse gas emissions reduction project that is not otherwise required by law and that

quantifies emission reductions and/or removals according to an approved quantificationprotocol. Figure 2 below outlines the general flow of an offset project from inception tofinal submission of offset credits to Alberta Environment and Water as a complianceoption under the Specified Gas Emitters Regulation.

The project developer must assess the proposed reduction opportunity against programrequirements to ensure the project meets the eligibility criteria for the Alberta offsetsystem, can be implemented according to a government approved protocol, and willresult in real, quantifiable emission reductions and/or removals1.

Once the project developer determines their project meets the program requirements, they

must develop a detailed offset project plan explaining how the project will meet therequirements of both theRegulation and the relevant quantification protocol(s). Thisproject plan must include a monitoring plan for the project. Projects must beimplemented according to the conditions outlined in the offset project plan and associatedmonitoring plan. Any changes in operations that occur must be documented in the offsetproject report discussed below.

Note: The offset project plan is developed before the project is implemented. The thirdparty verifier will compare the project report and operations against the offset project

plan and appropriate quantification protocol to assess project performance.

1 A complete list of approved quantification protocols is available athttp://environment.alberta.ca/02275.html. If a protocol does not exist for the activity in question, theproject developer may wish to develop a quantification protocol. Offset credits cannot be generated for anactivity that does not have a government approved quantification protocol. Information on the protocoldevelopment process is available in the Technical Guidance to Protocol Developers available on AlbertaEnvironment and Waters website.


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The offset project report is compiled annually or prior to third party verification. Itexplains how the project was implemented relative to the offset project plan includingany changes in operating conditions that occurred during project implementation. Theoffset project report will be reviewed by the third party verifier and is part of the requireddocumentation needed to register a project on the Alberta Emissions Offset registry (the

registry).

All projects registered on the registry must be third party verified by a charteredaccountant or professional engineer with relevant expertise in the project area. The thirdparty verifier will issue a verification report including a signed statement of verification,signed statement of qualifications and signed conflict of interest checklist, which must besubmitted to the registry as part of the supporting documentation for the offset project.

The registry will perform a completeness check on all documents submitted, and mayrequest clarification or corrections if errors or inconsistencies in project documentationare detected. Once all supporting documents and payments are received2, the registry

will issue unique serial numbers for the verified emission reductions and/or removals.

Offset credit transactions occur outside the registry and are done through contractualagreement between the buyer and seller. Transfer of ownership of serialized credits istracked by the registry and may be provided to Alberta Environment and Water uponrequest.

Alberta Environment and Water reserves the right to review offset credits submitted forcompliance and may request a supplemental government audit on one or more offsetprojects where credits have been used as a compliance option. These audits areundertaken to support facility compliance with the Specified Gas Emitters Regulation.Errors identified through this government audit will be corrected according to AlbertaEnvironment and Waters error correction policy described in Section 7.4.

It is an offence under the Climate Change and Emissions Management Actto knowinglyprovide false or misleading information. Where it is determined that this has occurred,Alberta Environment and Water will take appropriate action including, but not limited torevoking all offset credits associated with the project. Companies that have submittedrevoked credits will be required to seek alternate compliance through payment into theClimate Change and Emissions Management Fund.

2 An invoice will be sent to the project developer along with payment details. Payment is due on receipt ofthe invoice. Late payments may result in projects being temporarily suspended until payment has beenreceived.


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Note:All offset credits submitted for compliance under the Specified Gas EmittersRegulation are deemed part of the facility compliance submission, and may be subject to

a supplemental government audit.

Offset credits are a revocable license. Unsupported offset credits will be revoked andfacilities that submitted these credits for compliance will be required to seek alternate

compliance through payment into the Climate Change and Emissions Management Fund.

Figure 2 Offset project cycle for the Alberta offset system.


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2.5 Offset System Participants

Below is a list of key participants in the Alberta offset system specific to developingoffset projects and transacting offset credits. Not all offset projects will involve allparties listed below, and may include parties not mentioned here.

2.5.1 AggregatorAn aggregator is a person or company that, through contractual arrangement, works withsuppliers of small volumes of offset credits established under the same protocol to poolthese smaller projects into a sufficiently large volume to manage verification andtransaction costs. The aggregator is considered to be the project developer for anaggregated project and is responsible for developing project documentation, engaging athird party verifier, liaising with the Alberta Emissions Offset Registry, negotiating credittransactions, and is the project contact person for government audits.

2.5.2 Auditor

For the purposes of the Alberta offset system, an auditor is defined as a person orcompany hired by the Government of Alberta to conduct a government review of anoffset project where offset credits have been submitted to Alberta Environment andWater as a compliance option under the Specified Gas Emitters Regulation.. Auditorsmust meet the requirements for a third party auditor stated in section 18 of theRegulation.

2.5.3 Alberta Emissions Offset Registry

The Alberta Emissions Offset registry is a publicly accessible website (listing service)that serializes, tracks and provides transparency to offset credits registered in the Albertaoffset system.

2.5.4 Broker

A broker is an intermediate person that may buy and sell offset credits, or bring togetherbuyers and sellers within the offset market. Offset credits may be traded between one ormore brokers before being sold to the regulated facility submitting the credits forcompliance.

2.5.5 Government of Alberta

Alberta Environment and Water, on behalf of the Government of Alberta, is theregulatory body that establishes the program rules and oversees the implementation of theSpecified Gas Emitters Regulation and the Alberta offset system. Alberta Environmentand Water reviews all offset credits submitted for compliance and retains final right toaccept, request more clarification, or revoke offset credits. Alberta Environment andWater will also review and update guidance documents, regulations, quantificationprotocols and related materials from time to time as needed and at a maximum of every 5years.


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2.5.6 Project Developer

The project developer is responsible for initiating and implementing the offset project.The project developer must determine how the project will be implemented against anapproved quantification protocol. The project developer is responsible for developingproject documentation, engaging a third party verifier, liaising with the Alberta

Emissions Offset Registry, negotiating credit transactions, and is the project contactperson for government audits.

For aggregated projects, there will be a project developer who is the company orindividual undertaking the reduction activity and the aggregator who helps compile thelarger, aggregated project. The aggregator is deemed to be the project developer for thepurposes of compiling and registering a project on the registry.

Note: The project developer (or aggregator) must provide appropriate documentation tosupport third party verification, including access to relevant files and personnel as

requested by the third party verifier and/or a government auditor.

2.5.7 Regulated Facility

Regulated facility refers to a facility that is regulated under the Specified Gas EmittersRegulation. Regulated facilities are the end user for offset credits generated in theAlberta offset system.

2.5.8 Third Party Verifier

The third party verifier is an independent third party that meets the requirements of athird party auditor stated in section 18 of the Specified Gas Emitters Regulation. The

person(s) making up the verification team must have sufficient qualifications toundertake a review of the offset project and associated greenhouse gas assertion.

Figure 3 below shows the roles and relationships between the different participants of theAlberta offset system.


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Figure 3: Roles and relationships of offset system participants

Project Developer:Implements an offset project

Aggregator: Aggregates orpools small projects under acommon rotocol

Alberta Emissions Offset Registry:Registration of

offset project and serialization of offset credits

Broker: Credits may bebought, sold or held by one or

more intermediateowners

Regulated facility: Purchase of credits for useas a compliance option under the Specified GasEmitters Regulation

Government of Alberta:Receives offsetcredits as a compliance option for regulated facilitiesthat have not met their emissions intensity reductionobli ation.

Auditor:Independent thirdparty hired by AlbertaEnvironment and Water to reviewan offset project

AuditResults

submitte

dtoAlberta

Environmentand

Water

AlbertaEnvironmentandWaterwillcommunicate

auditresultsbacktoprojectdeveloperand

facilities

Auditorworkswithproject

developertoaudittheproject

Project flow

Audit flow

Third party verification

of the offset projectand greenhouse gas

assertion

Transactionsmay include a

broker or benegotiated bythe project

developer


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3.0 Offset Program Rules

3.1 Offset Eligibility Criterion

Section 7 of the Specified Gas Emitters Regulation defines the minimum eligibility

criteria that must be met for an offset project to be eligible to generate offset credits foruse as a compliance option in Alberta. In order to qualify, project-based emissionreductions/removals must:

Occur in Alberta;

Result from actions not otherwise required by law and be beyond business asusual and sector common practices;

Result from actions taken on or after January 1, 2002;

Occur on or after January 1, 2002;

Be real, demonstrable, quantifiable, and verifiable;

Have clearly established ownership; and

Be counted once for compliance purposes;

In addition to the requirements stated above, Alberta also requires that offset projects:

Be implemented according to a Government of Alberta-approvedquantification protocol;

Be third party verified by a qualified person(s) meeting the requirements for athird party auditor under section 18 of theRegulation; and

Be registered on the Alberta Emissions Offset Registry.

3.2 Contacting Alberta Environment and Water

Project developers should direct any questions they have to [email protected], or

by mail to:

Director, Climate Change SecretariatAlberta Environment and Water12th Floor Baker Centre,10025 106 StreetEdmonton, Alberta, CanadaT5J 1G4

3.3 Program Constraints

3.3.1 Geographic Boundary

To be eligible under the Alberta offset system, offset projects must be located in Albertaand result in reductions of provincial greenhouse gas emissions regulated under theClimate Change and Emissions Management Act.


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3.3.2 Additionality

Greenhouse gas emission reductions/removals must be generated from actions that arebeyond regulatory requirements and business as usual activities/sector common practice.

Additionality for a reduction/removal activity is typically assessed during protocol

development and is reassessed periodically during the protocol review. Activities that arealready covered under the Specified Gas Emitters Regulation, or that have any otherfederal and/or provincial regulatory obligations are NOT eligible to generate offsetcredits under the Alberta offset system. Municipal bylaws that affect an activity will alsobe considered to ensure the activity being credited is additional and results in emissionreductions that would not otherwise have occurred.

3.3.3 Program Start Date

The start date for the Alberta offset program is January 1, 2002. This date coincides withthe release ofAlbertans and Climate Change: Taking Action (2002), which signaledAlbertas commitment to regulate greenhouse gas emissions in the province.

3.3.4 Project Start Date

The start date for a project is defined as the first day of operation of the offset project oractivity that is not for pilot or testing purposes. Projects must have a start date on or afterJanuary 1, 2002 to be eligible for offset credits.

Effective January 1, 2012, historic (retroactive) offset credits will no longer be acceptedin the Alberta offset system. The following deadlines apply for projects wishing to claimhistoric offset credits generated up to December 31, 2011 and undergoing third partyverification in early 2012:

Vintage year 2002 to 2010 credits must be verified and submitted3 to the

Alberta Emissions Offset Registry on or before March 31, 2012; Vintage year 2011 credits must be verified and submitted to the Alberta

Emissions Offset Registry on or before September 30, 2012; Aggregated tillage projects on First Nations lands are being given a one year

extension. First Nations must sign and submit an agreement to participate toCanada by March 31, 2012 and submit verified emission credits to the AlbertaEmissions Offset Registry by March 31, 2013.

Historic credits already serialized on the Alberta Emissions Offset registry will remainactive until they are submitted for compliance.

New projects being registered on the offset registry must demonstrate a project start datethat is on or after January 1, 2002, and will be eligible to generate credits on a go-forwardbasis from project registration on the registry.

3 The Alberta Emissions Offset Registry requires a complete registration submission package includingproject and verification documents and applicable registry forms to process requests for serialization ofoffset credits..


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Note: project documentation must be submitted to the Alberta Emissions Offset Registry

in the same calendar year in which the project wishes to start generating offset credits.

Table 1 below provides examples of project start dates for different protocol types.

Table 1: Example of effective start dates for select offset projects.

3.3.5 Credit Start Date

The credit start date is the point when a project is eligible to start generating offsetcredits. Projects must be able to demonstrate a project start date on or after January 1,2002 and are eligible to start generating credits for the year in which the project plan and

monitoring plan are developed and registered with the registry. This is known as projectcreation on the registry.

Projects can have a project start date/credit start date that occurs at any point in the year;however project creation (posting of the offset project plan and monitoring plan on theAlberta Emissions Offset Registry) must occur in the same calendar year. For example, aproject may have a credit start date of April 15. The project must be created on theregistry on or before December 31 of the same calendar year.

Note: The credit start date may be different from the project start date.

3.3.6 Credit Duration Period

The credit duration period is the amount of time an offset project can generate offsetcredits under the Alberta offset system. The credit duration period for Alberta is 8 yearswith a possible 5-year extension for most project types, except soil sequestration projects,which have a longer credit duration period.

Protocol Project Start Date

Energy EfficiencyDate equipment installation, operatingparameter changes or process reconfigurationare initiated or take effect.

Landfill Gas Collection andCombustion

Date of initiation for commercial operations thatis subsequent to any testing phases that may beneeded.

Beef Feeding Date the new feeding regime is implemented.

Tillage Management Applies an adjusted baseline for sector-wideadoption levels based on 2006 Census ofAgriculture, applied to all projects.


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Conservation cropping projects (reduced and no-till farming) have been given two 10-year crediting periods ending December 31, 2021. The summerfallow flexibilitymechanism has been given one 10-year crediting period ending December 31, 2021. Theextended crediting period has been implemented to recognize that biological sinks mustbe maintained for a 20-year period for the sink to reach saturationthe point where the

soil cannot absorb any additional carbon.

The afforestation protocol remains under review and is being considered for a longercrediting period to reflect the slower growth rate of trees. Crediting periods for thisprotocol have been proposed as three 20-year cycles after which point, the activity isconsidered reforestation and is no longer eligible for offset credits.

Credit generation must be for 8 consecutive years from the credit start date and may beeligible for an additional 5 years. This represents the maximum commitment period andincludes any years or periods of years in which a project may have been ineligible togenerate offset credits (for example: facility shut down or periods where offset credits

were sold to a different market).

If an offset project becomes a regulated activity under the Specified Gas EmittersRegulation or becomes subject to any other greenhouse gas regulations, eligibility togenerate offset credits will terminate when the regulation comes into force.

Protocols are subject to periodic review. Where protocols are retracted because theactivity is determined to be business as usual for the sector, projects initiated under theprotocol will be allowed to finish the 8-year crediting period, but will not be eligible for a5-year extension.

In cases where a protocol is flagged for revisions, existing projects can continue underthe existing protocol; however new projects wishing to use the protocol must contactAlberta Environment and Water to discuss their proposed project. New projects comingforward under flagged protocols must have approval from Alberta Environment andWater before they can be registered on the Alberta Emissions Offset Registry.


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8-year credit duration period

2002 2007 2012

Program Specified Gas Shift to reasonable assurancestart date Emitters Regulation passed and go-forward crediting

Project Project Third party start date creation* verification**

Figure 4: Offset credit generation based on go-forward crediting with ex post verification

*Project creation occurs for the same year in which the offset project is created on the registry. Project coffset project plan and associated monitoring plan.

The offset project is implemented and emissions reductions are quantified according to project plan.

**Third party verification is ex postand can happen annually or at pre-determined intervals as defined inexample assumes two verifications during an 8-year credit duration period, and one verification at the en


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3.3.7 Project Extension Period

Offset projects are eligible for a 5 extension if the project: Continues to meet regulatory additionality criteria; Continues to be beyond business as usual and/or sector common practice;

Does not have unresolved compliance issues that affect greenhouse gasquantification; Has addressed issues identified during government audit; and Has an approved quantification protocol.

Project developers wishing to apply for a 5-year extension must submit a written requestto the Director at the address provided in Section 3.2 requesting an extension for theproject. The letter must include rational for how the project continues to meet therequirements of the protocol and continues to be additional (beyond business as usual) forthe project and associated operations. The Director will review the request for extensionand may request additional information from the project developer.

Follow-up will be initiated within 30-days of receipt of the written request.

A copy of the Directors decision will be forward to the Alberta Emissions OffsetRegistry. The Directors decision will be posted on the registry as part of the supportinginformation for the offset project.

Offset projects that are granted a 5-year extension are required to update the projectbaseline and project assumptions to reflect the most current version of the quantificationprotocol.

Note: Extensions will not be given to projects for protocols that have been terminated orto projects that have become a regulated facility under the Specified Gas EmittersRegulation.

3.3.8 Protocol Versioning

Protocols will be reviewed at a maximum of every 5 years, or sooner as needed to ensureprotocols continue to reflect best available science and quantification methodologies. Ifinconsistencies and/or errors are identified in a protocol, Alberta Environment and Waterwill flag the protocol on its website. Project developers wishing to initiate new projectsunder the protocol must contact Alberta Environment and Water to discuss their specific

project. If the project meets program requirements, Alberta Environment and Water willissue approval for the project to be registered on the Alberta Emissions Offset Registry.Projects cannot be registered under a flagged protocol without approval from AlbertaEnvironment and Water.

New projects must be implemented using the most current version of the protocol.Existing projects can continue to use the version available when the project was initiated.If project developers wish to switch to a new version of the protocol, they will be


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required to reassess both the project baseline and project condition for the remainder ofthe credit duration period.

Projects granted a 5-year extension must be revised to meet the requirements of the mostcurrent version of the quantification protocol.

3.3.9 Real, Demonstrable and Quantifiable

The project must demonstrate that it causes a net reduction of greenhouse gases regulatedunder the Climate Change and Emissions Management Actand that these emissionreductions and/or removals are quantified according to accepted methodologies.

3.3.10 Counted Once

Emissions reductions must be unique and can only be counted once for compliance.Offset credits serialized and registered on the Alberta Emissions Offset Registry cannotbe registered on any other registry where the intention is to buy, sell or trade tonnes that

are already active in the Alberta market. Once the offset credits are used for compliance,they must be retired from the Alberta Emissions Offset Registry and removed fromcirculation.

3.3.11 Third Party Verification

All offset credits must be verified by an independent third party verifier before they canbe registered on the Alberta Emissions Offset Registry. More information on third partyverification is available in Section 6.0.

3.3.12 Registered on the Alberta Emissions Offset Registry

All offset credits submitted to Alberta Environment and Water as a compliance option

must be registered and serialized on the Alberta Emissions Offset Registry.

3.3.13 Offset Credit Transactions

All offset credit transactions must be done through contractual arrangements between thebuyer and seller.

3.3.14 Ownership

Each party must be able to demonstrate ownership for offset credits and have the legalright to transact on these credits. Ownership is negotiated through contract betweenaffected parties. Ownership is discussed further in Section 3.7 below.

3.3.15 Government AuditAlberta Environment and Water retains the right to audit a percentage of offsetcredits/offset projects submitted for compliance under the Specified Gas EmittersRegulation. Audits are conducted according the requirements outlined in Section 7.0.


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3.4 Quantification Protocols

Government-approved quantification protocols have been developed to support theAlberta offset system. These protocols provide standardized quantificationmethodologies for specific greenhouse gas emission reduction opportunities in Alberta.The protocols have been developed using the best available science tailored to Alberta

conditions, good practice guidance from other jurisdictions, provincial/national expertise,and experience gained through similar international projects. While quantificationprotocols serve as a guide for setting up a project and quantifying associated emissionreductions, it remains the responsibility of the project developer to demonstrate how theproject meets the requirements outlined in the protocol, and that the activity continues tocomply with all applicable regulatory requirements.

More information on the protocol development process is available in the TechnicalGuidance for Protocol Developers. A complete list of approved protocols is available at:http://environment.alberta.ca/02275.html .

3.5 Covered Emissions

Offset projects must result in emission reductions of greenhouse gas emissions regulatedunder the Climate Change and Emissions Management Act. These emissions includecarbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFC),perfluorocarbons (PFC), and sulphur hexafluoride (SF6). Table 2 provides a list of thespecified gases including their 100-year global warming potential used to calculate thecarbon dioxide equivalent (CO2 e) emissions.

Any changes to this list including the addition of new gas species or changes to the globalwarming potential of the gases will be assessed during the review of the Specified Gas

Emitters Regulation.

Specified Gas Formula100-year

GWP

Carbon dioxide CO2 1

Methane CH4 21

Nitrous Oxide N2O 310

Sulphur Hexafluoride SF6 23900

Perfluorocarbons (PFC)

Perfluoromethane CF4 6500

Perfluoroethane C2F6 9200

Perfluoropropane C3F8 7000Perfluorobutane C4F10 7000

Perfluorocyclobutane c-C4F8 8700

Perfluoropentane C5F12 7500

Perfluorohexane C6F14 7400

Hydrofluorocarbons (HFC)

HFC-23 CHF3 11700

HFC-32 CH2F2 650


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HFC-41 CH3F 150

HFC-43-10mee C5H2F10 (structure:CF3CHFCHFCF2CF3)

1300

HFC-125 C2HF5 2800

HFC-134 C2H2F4 (structure: CHF2CHF2) 1000

HFC-134a C2H2F4 (structure: CH2FCF3) 1300HFC-143 C2H3F3 (structure: CHF2CH2F) 300

HFC-143a C2H3F3 (structure: CF3CH3) 3800

HFC-152a C2H4F2 (structure: CH3CHF2) 140

HFC-227ea C3HF7 (structure: CF3CHFCF3) 2900

HFC-236fa C3H2F6 (structure: CF3CH2CF3) 6300

HFC-245ca C3H3F5 (structure: CH2FCF2CHF2) 560

Table 2: Specified gases and gas species subject to the Climate Change and EmissionsManagement Act.

3.6 Sources and Sinks

An emission source is any process or activity that releases a greenhouse gas into theatmosphere. An emission sink is any process, activity, or mechanism that removes agreenhouse gas from the atmosphere.

All applicable sources and sinks including all energy and material flows for the projectand baseline conditions must be identified in the protocol development process followingguidance from ISO 14064-2. Each quantification protocol contains a detailed list ofincluded and excluded sources and sinks applicable to the specific reduction/removalactivity.

Project developers are required to develop an offset project plan for each project (orcollection of aggregated projects) that explains how the project will meet therequirements of the quantification protocol. This includes explaining how the projectwill track, monitor and quantify emissions associated with each source and sink identifiedin the protocol. Where a source or sink is identified in the protocol, but is not applicableto the project, rational for this exclusion must be provided in the project plan.

3.7 Flexibility Mechanisms

Some protocols have flexibility mechanisms that allow a broader application of theprotocol. These flexibility mechanisms allow for closely related project activities thatuse related or similar quantification methodologies to be captured under one protocol.

The flexibility mechanism must result in equivalent or greater quantification rigour. Anexample of this would be using site specific parameters in the place of generic emissionfactors.

If a project developer is using a flexibility mechanism in their project, the rationale forthis decision, including supporting quantification methodology, assumptions, etc. for theflexibility mechanism must be clearly stated in the project plan.


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3.8 Ownership

Project developers wishing to sell offset credits in the Alberta offset system must be ableto demonstrate clear, legal claim of the greenhouse gas reductions/removals achievedfrom an offset project. Where two or more parties may have claim to the offset credits,ownership must be clearly established through contractual agreement between affected

parties before the third party verifier can sign off on the greenhouse gas assertion and theoffset credits can be registered on the registry.

In some cases, quantification protocols may assign ownership at a particular point. Inthese cases, ownership is typically assigned to the person undertaking the reductionactivity and is assumed to be at the point where the majority of the records will bedeveloped and maintained. It is the project developers responsibility to ensure that theseassumptions are valid for their project condition based on other contractual agreementsthat may affect ownership of the offset credits.

Offset credits that do not have appropriate proof of ownership and/or assignment of

ownership will not be accepted as a compliance option under the Specified Gas EmittersRegulation and will be revoked from the Alberta Emissions Offset Registry.

3.8.1 Soil Sequestration Projects

Ownership of carbon sequestered in the soil is assigned to the legal land owner. Proof ofpractice for the activity (records proving farming practices resulting in sequesteredcarbon in soil) may reside with a party that is different from the land owner. In thesecases, both proof of practice AND sign-off from the land owner are required for projectsto be eligible to generate offset credits.

The rights to carbon sequestered in soil accrue to the current land owner and transfer

upon sale of the property unless explicitly identified in the sale. Land titles and taxassessments may be used to determine land ownership.

3.8.2 Soil Sequestration Projects on First Nations Lands

Ownership of aboriginal lands is held by Canada. First Nations wishing to participate insoil sequestration projects are required to sign an Agreement with Canada. Thisagreement transfers the assignment of ownership rights, including liabilities, for offsetcredits to the First Nations. All other program records requirements apply.

Note: First Nations wishing to claim historic offset credits for 2002 to 2011 inclusively

must sign an Agreement with Canada on or before March 31, 2012. All project

documentation must be compiled and be third party verified by March 31, 2013.

Ownership for Mtis Settlement Lands is held by the Mtis Settlement General Councilin trust. Lands held by Mtis Settlement title must have ownership sign-off by adesignated authority with the right to legally bind the lands. Lands registered in the nameof a member must obtain sign-off from the registered member.


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3.8.3 Considerations for Aggregated Projects

Aggregating a number of small projects into a single, larger project can help managetransaction costs for offset projects. Aggregators typically use one of two businessmodels for ownership of offset credits: Direct Purchase or Agent. Both models areacceptable in the Alberta offset system and should be clearly identified in the contract

with the land owner/land lessee.

Option 1: Direct Purchase (The aggregator owns the credits)In this scenario, the aggregator purchases the offset credits from theindividual project developer. The aggregator must be able to demonstrateto the satisfaction of the third party verifier, regulated facility, and AlbertaEnvironment and Water that ownership and title have transferred from theproducer of the credits (e.g.: farmer, building owner) to the aggregator atthe time of verification.

Option 2: Agent (The aggregator acts as an agent)

The aggregator acts as an agent on behalf of the offset credit producer. Inthis case, the contractual agreement between the credit producer andaggregator must clearly stipulate the right of the aggregator to act as anagent on behalf of the credit producer. Title remains with the projectdeveloper until the offset credits are sold to a buyer.

3.9 Project Expansion

Expansion portions of a project may be eligible for offset credits. Project expansion isdiscussed in Section 4.9.


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4.0 Offset Project ImplementationThis section provides basic information for project developers wishing to implement anoffset project in Alberta.

4.1 Project Eligibility

The project developer (person or company wishing to implement a greenhouse gasemission reductions/removals project) must evaluate their activity against the eligibilitycriterion stated in Section 3.1 above and the approved quantification protocol. If theproject meets these minimum criteria, the project developer can implement the project.

If the activity in question does not have an approved quantification protocol, the projectdeveloper should review the Technical Guidance for Protocol Developers to determinewhether they wish to initiate development of a quantification protocol for the activity.

Note: If the project is a result of activity initiated before January 1, 2002, is otherwise

required by law, cannot be quantified, or is generating emission reductions for use in

other systems, such as Renewable Energy Certificates (RECs), the project will not be

eligible under the Alberta offset system.

4.2 Protocol Selection

The project developer must select the appropriateprotocol(s) for the offset project being developed.Offset protocols are stackable. That is, an offset

project may incorporate multiple activities fromseveral different protocols into a single project. Ifthis is being done, the offset project plan mustidentify all protocols being applied to the project,and clearly document how the project meets all therequirements of each of the protocols. The projectplan must identify any opportunities for doublecounting between the various protocols andexplain actions taken to prevent double countingwithin the project.

4.3 Baseline ConditionsThe baseline condition for a project is a reasonable representation of conditions thatwould likely have occurred during the offset credit period had the offset project not beenimplemented. In other words, the baseline represents business as usual and the projectrepresents a change from this practice. Greenhouse gas emission reductions achieved by aproject are measured by comparing the emissions generated in the project to theemissions generated in the baseline. The difference between these two conditions yieldsthe emission reductions and/or removals for the offset project.

Note: Alberta Environment andWater is not required to approve anyoffset protocols if the protocols arefound to be deficient or inconsistent

with Alberta policy and/or programobjectives.

It isprudent business practice not tosign people up to contracts for aspecific activity until the activity hasan approved protocol as the termsand conditions in the draft protocolare subject to change based on therotocol review rocess.


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Figure 5: Offset credits as a function of change between the baseline and project condition.

Baselines can be calculated in a number of different ways depending on availableinformation and activity type. Specific baseline scenarios acceptable for a project typeare identified in the quantification protocol and must be used for all projects implementedunder that protocol. Baseline assumptions and quantification must be clearly documentedin the offset project plan.

Types of baseline conditions that may be encountered are:

Historic Benchmark: is site-specific and constructed to reflect activities in aspecified base period. For example, a project quantifying emission reductions dueto changes in nitrogen fertilizer application may use the rate of nitrogen fertilizerapplication at the project farm averaged over the previous three years as thebaseline;

Performance Standard: uses an assessment of comparable activities within agiven industry or sector. It assumes that the typical emissions profile for anindustry or sector is a reasonable approximation of the baseline scenario. Forexample, the grid intensity factor for electricity assumes a sector level intensityfor power generation in Alberta and credits the displacement of that electricity byrenewable energy at a fixed rate;

Comparison Approach: uses actual measurements of parameters from a controlgroup to compare with the project condition. Reductions/removals from thecontrol group are monitored throughout the project and compared with theemissions from theproject site. A control group may be used as the baseline formore than one project.

Projection Based: uses projections of reductions or removals in the future toestimate the baseline activity that would have occurred in the absence of theproject. Projections may include straight-line growth assumptions or more

Time

The top line representsbusiness as usual emissions.The bottom line representsthe project condition.

Offset credits are awardedfor the difference between

baseline and projectemissions.

Emissions

= Offset

credit

BaselineEmissions

Project

Emissions


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complex modeling, and may be based on a set of constant parameters or be variedover time according to predefined procedures. The compost protocol uses aprojection based baseline recalculated annually based on the volume of weightreceived to determine what the most likely alternative disposal method for thatwaste stream would have been in the absence of the compost project.

Adjusted Baseline: takes into account current practice levels of a particularproject and specifies that the same baseline is used for all projects of a certaintype, regardless of historical practices. This baseline type is used in conservationcropping projects only and is not being accepted for new protocols. Moreinformation on adjusted baselines is available in the Technical Guidance forProtocol Developers.

Baselines may be either static or dynamic over the credit duration period:

Static: the emissions profile for the baseline activity does not change during thecredit duration period. Both the input parameters for baseline calculations and the

quantification methodology remain constant; or Dynamic: the quantification methodology does not change over the credit

duration period, but the input parameters may change due to a number of factorsincluding weather conditions, project operational parameters, etc.; thus theemissions profile may change with time under a dynamic baseline condition. Forexample, a composting project using a dynamic baseline need to track parameterssuch as mass of material processed during the project to ensure an accuratebaseline condition.

The baseline condition for a project will typically remain constant for the 8-year creditduration period. If a project is granted a 5-year extension, the project baseline must be

updated to reflect the most current version of the protocol available.

Note:Any regulatory changes that affect the offset project, including the project baseline,will need to be addressed when the regulation comes into force.

4.4 Project Condition

The project condition is a specific action targeted at reducing or removing greenhousegas emissions and may consist of one or more related activities developed according to agovernment approved protocol(s). The project condition may include modification ofexisting production, process, consumption, service, delivery or management systems, orintroduction of new systems.

4.5 Risk Assurance Factors

Some sequestration based projects such as soil sequestration activities resulting fromconservation cropping practices and afforestation projects are reversible. For example, ifthe soil is disturbed through the adoption of full-till farming, or if trees are removedeither through early harvest or natural disaster, the sequestered carbon would be releasedback to the atmosphere.


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Risk based assurance factors are based on historic information and known risks ofreversal. They provide a conservative estimate of reversals that may occur over theproject life. The factor applies to all credits generated under the protocol. These creditsare permanently retired against potential future reversal over the life of the project. The

remaining reductions and/or removals achieved by the project are considered permanentoffsets in the Alberta offset system.

These assurance factors are assessed during protocol development and apply to all offsetcredits generated under the protocol.

The government held credits are permanently retired from circulation and are used toaccount for future reversals that may occur. Government owned credits cannot be used tocover deliberate reversals or errors in an offset project that result in all or part of theprojects offset credits being revoked.

4.6 Functional Equivalence (Consistency)Emission reductions are calculated by comparing greenhouse gas emissions under onescenario (the project condition) with greenhouse gas emissions under another equivalentscenario (the baseline condition). In order for this comparison to be meaningful, theproject and the baseline must provide the same function and quality of products orservices. That is, both the project and baseline must use a common metric or unit ofcomparison. For example, if a project is designed to reduce emissions by recoveringwaste heat from an industrial process, the emission reductions are compared to anequivalent level of heat generation under the baseline condition. In this example, thecommon unit would be the waste energy recovered in the project condition and theequivalent amount of energy that would have been produced in the baseline condition.

4.7 Conservativeness and Accuracy

Offset projects must result in real, quantifiable, and verifiable reductions in greenhousegas emissions. Accuracy, or understanding uncertainty, enables projects to meet thesystem criteria for real and quantifiable emission reductions.

The accuracy of the project calculations varies depending on the methodology beingused. Direct measurement is considered more accurate than engineering estimates;however direct measurement may not be practical for every situation and in some cases,the most accurate methodology available may be cost prohibitive relative to the project.Accuracy associated with quantification methodologies is assessed during protocoldevelopment.

Project developers must address the uncertainty in the project calculations to ensure thatemission reductions being calculated represent actual emission reductions.

Conservativeness, on the other hand, ensures that emission reductions being claimed by aproject are not overstated. Conservativeness is assessed within the range of uncertaintyassociated with the quantification methodology. The project developer is required to


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document the analysis and decisions around the conservative estimate used in developingthe quantification methodologies for the reduction/removal activity.

Note: Conservative hedge factors cannot be used as a surrogate for an inability to

quantify uncertainty. Neither the protocol nor the project can apply a conservativediscount factor based on the fact that they are unable to obtain an accurate estimate of

the uncertainty parameters for the project.Project developers must be able to define the

uncertainty range for parameters being used in the project.

4.8 Additionality

Offset projects must result in a reduction in greenhouse gas emissions that are additionalor incremental to what would have happened had the project not been implemented (i.e.:the baseline). Additionality then, is the ability to quantify emission reductions that arebeyond business as usual activities and regulatory requirements.

Regulatory and industry common practice tests for additionality are assessed duringprotocol development. Projects need to demonstrate additionality by demonstrating theymeet the protocol conditions and that they result from actions taken on or after January 1,2002.

Protocols are subject to periodic review to ensure the activity being credited continues tomeet program additionality requirements and that quantification methodologies continueto reflect best available science and information. During this review, an activity thatpreviously qualified as an offset activity under the Alberta offset system may bedetermined to have become business as usual for the sector. This occurs when the

activity becomes widely adopted as best practice for the sector or becomes regulated.Alberta reserves the right to discontinue the quantification protocol for activities that areno longer additional. Existing projects will be allowed to complete their credit durationperiod; however, no new projects or project extensions will be allowed once a protocolhas been terminated.

Note: Alberta Environment and Water has adopted a 40 per cent up-take of an activity as

a threshold for business as usual/sector common practice. It is assumed that if 40 per

cent or more of the sector is able to implement the activity, there are minimal or no

technological, financial, or social barriers preventing the activity from going ahead and

the activity is no longer considered additional.

If an activity that was previously unregulated becomes regulated, offset credits associatedwith the activity cease when the regulation comes into force.

4.9 Project Expansion

Offset credits cannot be generated from actions before January 1, 2002. However, if thereis a project that was implemented prior to January 1, 2002 that has undergone significant


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expansion post 2002, it may be eligible to generate credits for the expansion activity. Theproject developer must be able to clearly show that the expansion activity meets allprogram additionality tests and would likely not have occurred as a business as usualexpansion. The following are examples of eligible expansion conditions:

1. The expansion condition can be clearly separated from the original projectcondition. An example of this type of project would be a wind farm that has addedadditional turbines. Each turbine can be considered as a stand-alone project andemissions reductions achieved by the new turbine can be easily separated from theexisting project.

2. The project condition is integrated with the existing project and the expansion. Anexample of this would be a biofuel facility where the production capacity hasincreased. In order to qualify for credit generation on expansion activities, theproject developer must provide a written proposal to Alberta Environment andWater and meet the following criteria:

Project production has increased greater than 25 per cent;

Project developers must have a clear, accurate basis for separating theemissions from the expansion phase and the existing project (i.e.separation between existing and expansion portions of the project must beable to pass verification)

Infrastructure investment is greater than 35 per cent of the cost to build anew facility capable of same level of production as the expansion volume

Projects wishing to apply for an expansion project must submit a written request to theDirector at the address provided in Section 3.2.

4.10Project Documentation

4.10.1 Offset Project Plan

This document is created before the project is implemented and must be submitted to theAlberta Emissions Offset Registry as part of the required project documentation.

The offset project plan is essentially a road map for the project. It describes how theproject meets all Alberta offset system criteria and how it will meet all the conditionsindentified in the quantification protocol. It must speak to any changes or variations inthe project condition relative to the quantification protocol and document projectassumptions, types of records used to monitor the project, and emissions calculations.

The offset project plan must include a simplified process flow diagram for the project,data flow diagrams, a monitoring plan, and other information used to support projectimplementation. This document describes the ideal project condition and is static for thecredit duration period. Any deviations in operations must be noted in the offset projectreport.

It is imperative that project developers carefully assess types of records needed andavailable to support project quantification. Projects must have sufficient and appropriate


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records to support projectquantification. Third party verifiersand government auditors will requesta sample of raw data and supportinginformation as part of the project

verification/audit. Projects that donot have appropriate supportingevidence will not be accepted as acompliance option under theSpecified Gas Emitters Regulation.

The third party verifier will compareproject performance and emissionreductions claims against thisdocument to assess projectimplementation.

The document may also be used byinvestors and others wishing topurchase the offset credits tounderstand the project and veracity ofthe emission reductions beingclaimed.

A template for an offset project planis available on Alberta Environmentand Waters website (http://environment.alberta.ca/02275.html) and is included inAppendix A. While the layout of the project plan may be adjusted to suit individualpreferences, the content specified in the template must be included in the final projectplan. If a section of the template is not applicable to a specific project, rationale for theexclusion must be provided. In general, the plan will contain:

Project scope: explains the function of the project including all of the relevantassumptions, and must clearly identify which activities are included/excluded forthe purposes of quantifying of greenhouse gas reductions.

Project description: describes the offset project including the baseline andproject conditions.

Project boundary: describes the boundaries for the offset project. The projectboundary may extend beyond the physical or geographical boundaries of theprojects infrastructure, or may be a smaller portion of a larger physical siteboundary.

Inventory of sources and sinks: is a complete list of sources and sinks relevantto the project conditions.

Third party verifiers are required to

sample records and raw data used to

compile the offset project and support thegreenhouse gas assertion (greenhouse gas

emission reductions claim for the project).

Failure to produce appropriate records asstipulated in the protocol and any other

supporting evidence needed to

substantiate the emission reduction claimwill result in the project being rejected by

Alberta Environment and Water and the

tonnes removed from the AlbertaEmissions Offset Registry.

If unsubstantiated offset credits from theproject have been submitted as a

compliance option under the SpecifiedGas Emitters Regulation, the regulated

facility that used the credits as acompliance option will be required to pay

alternate compliance into the Climate

Change and Emissions Management

Fund.


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Project baseline: describes the baseline, including all calculations used todetermine the baseline. If several baseline types are allowed in the protocol, theproject developer must provide a rationale for the baseline type that was selected.

Quantification Plan: describes the methodology being used to quantifygreenhouse gas emissions associated with the project. The quantification planshould include:

A full list of parameters required for quantification indicating whichparameters will be measured and which will be estimated;

A description of the measurement and estimation procedures for eachparameter;

Supporting information to justify the measurement and/or estimationprocedures (i.e. references for emissions factors, measurementequipment specifications);

Information on the data quality management procedures to be used;

and, Any flexibility mechanisms being used.

Monitoring Plan: explains how the measured parameters required for calculatingthe emission reductions or removals for the project will be monitored and inputinto the data management system. It describes exactly how measurements will becarried out and may include specifications for monitoring equipment to be used,locations of sampling points, frequency of sampling events, data collectionmethodology, and other details.

Quality Assurance/Quality Control (QA/QC) Plan: describes what controls are

in place to ensure the accuracy and correctness of data and associated calculationsand may include file access and security, manual vs. automated data transfers,independent data reviews, and staff training.

Process flow and data flow diagrams: provide a reference point for third partyverifiers to understand the processes associated with the project and how data isbeing handled.

4.10.2 Offset Project Report

The offset project report is completed annually or prior to verification. It describes howthe project was implemented and provides documentation and evidence to support the

project operating conditions that gave rise to the greenhouse gas emission reductionsand/or removals being claimed, including any anomalies or deviations that occurred.This report must include:

The time period covered by the report. This is known as the reporting period;

Project details and information demonstrating how the project wasimplemented relative to the project plan and approved quantification protocol;

Any changes in details and/or implementation of the project that arose duringthe reporting period including any anomalies or changes in project


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implementation relative to what was stated in the project plan. The third partyverifiers will verify changes against the project plan to support the projectreview;

Quantified emission reductions clearly articulated as tonnes of CO2 e removedor reduced per vintage year; and

Be signed by the project developer(s).

The project report template is available from Alberta Environment and Waters website(http://environment.alberta.ca/02275.html ) and is provided in Appendix B. Projectdevelopers are required to follow this template. While the layout of the project reportmay be adjusted to suit individual preferences, the content specified in the template must,in all cases, be discussed. Where the project developer feels a category is not applicableto the project, the project developermust provide rationale explaining why theinformation is not necessary to the project.

4.10.3 Spatial Locator Template for Aggregated Projects

A spatial locator template must be completed for all aggregated projects. Specificinformation collected will vary depending on the type of activity being aggregated and ingeneral, requires information to identify project conditions for each individual sub-project making up the larger aggregated project. For example, an aggregated tillagesystem management project is required to identify the year, legal land location, crop type,incidence of reversal (tillage event), and emission reductions associated with eachcontracted quarter section in the project.

A copy of the spatial locator template applicable to the project type can be requestedfrom the registry and should be presented to the third party verifier as part of thesupporting information for the project.

Note: Information collected in this spreadsheet contains potentially confidential

information. It is used to allow the registry to track serial ranges by sub-project and to

assess double counting between aggregated projects. This informationcannot beprovided to interested third parties.

4.10.4 Greenhouse Gas Assertion

The project developer must calculate the number of offset tonnes achieved during thereporting period and express a statement on the total tonnes of greenhouse gas emissionreductions and/or removals being claimed as offset credits. This is known as agreenhouse gas assertion. The third party verifier will verify the project condition against

the greenhouse gas assertion to determine whether the assertion is correct.

The assertion must identify emission reductions/removals of the individual greenhousegases (CO2, CH4, N2O, SF6, HFCs, and perfluorocarbons) identified in the ClimateChange and Emissions Management Actapplicable to the project. All emissions must bereported as tonnes of carbon dioxide equivalent (CO2 e) based on the conversion factorsin Table 2.


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Validationoccurs before the project begins (ex ante) and focuses on:

Whether appropriate baseline and project conditions are used; and

Whether the calculations of potential offsets are correct.Validation occurs once and requires technical expertise in the project area.

Verificationoccurs once reductions have been generated (ex post), and focuses on:

Whether the calculations of actual offsets are correct;

Data integrity and consistency with offset project plan and quantification protocol;

Whether data is complete and accurate and conforms to verification criteria; and

Whether there is sufficient and appropriate records to support the greenhouse gasreductions being claimed.

Verification occurs at the end of each reporting period and requires technical expertise in the

project area.

Note: Serialization must be done for whole tonnes. Greenhouse gas assertions

containing partial tonnes will not be accepted by the Alberta Emissions Offset Registry.

4.10.5 Statutory Declaration

Offset project developers are required to complete and submit a statutory declaration aspart of the project registration on the Alberta Emissions Offset Registry. The statutorydeclaration is a legally binding assertion stating that all offset credits being serialized forthe project have only been listed on the Alberta Emissions Offset Registry and have notbeen registered in any other offset system. Providing a false or fraudulent declarationmay result in the cancellation of the offset project and all associated offset credits beingrevoked from the Alberta Emissions Offset Registry. In addition, it is a contravention ofthe Criminal Code of Canada and could carry, upon conviction, penalties including finesor imprisonment.

A statutory declaration will be required for all projects and offset credits serialized afterApril 1, 2012, and will be provided as part of the mandatory project registrationdocumentation.

4.10.6 Validation (Optional)

Offset project validation is optional in the Alberta offset system. Validation is a businessrisk management tool that can support the project design and inform appropriatemonitoring, data collection, and calculations for the project prior to the project beingimplemented. Additional information on project validation is available in ISO 14064.Validation guidance is also available from the Climate Change and Emissions

Management Corporation at www.ccemc.ca .


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4.11Offset Credit Transactions

Offset credit transactions occur through bilateral negotiations between the buyer andseller. Below is some general guidance intended to support these negotiations, but doesnot replace legal advice and contracting obligations.

4.11.1 Contracting ConsiderationsContracting occurs within the private sector and is negotiated between affected parties.Neither Alberta Environment and Water nor the Alberta Emissions Offset Registryreview or provide advice on contracts. Persons entering into contract negotiations shouldseek legal advice from a qualified lawyer.

Below are some general contracting best practices that should be considered duringcontract development and contract negotiations.

Terms of the contract, including price being offered for the offset credits and anyadditional fees must be clearly disclosed during negotiations;

Other conditions, including future contracting obligations must be disclosed;

The contract model (direct purchase or agent model) must be clearly explained;

Liability terms and conditions must be clearly explained; and

Both parties must be given reasonable time to review the contract, which mayinclude having a copy of the contract reviewed by legal council.

Alberta Technical Guidance

Documents

Transcript of Alberta Technical Guidance