In order to maintain its economic efficiency and ensure effective carbon reductions in the output-based allocation policy, the Pembina Institute recommends that offsets and Emissions Performance Credits (EPCs) that were generated under Alberta’s Specified Gas Emitters Regulation (SGER) system be transitioned into the new system at a value that reflects a reasonable expectation of permit holders through carbon price vintaging (see Annex 1) while avoiding windfall profits.
Similarly, the Output-Based Allocation (OBA) system should allow banking of allocations and offsets under the same carbon price vintaging system, allowing firms the flexibility to maximize emissions reductions at minimum cost, while retaining the policy stringency and avoiding economic inefficiencies.
