Increasing renewable content in fuels

Proposal details

The purpose of these proposed amendments is to support Ontario’s goal to achieve its share of Canada's 2030 emissions reduction target, as proposed in the made-in-Ontario environment plan.

Historically, ethanol prices have generally been lower than gasoline prices on a volume basis and blending ethanol in gasoline has been a more cost-effective way to enhance fuel performance compared to other octane enhancers (such as benzene, toluene, and xylene).

Proposed regulation amendments

We are proposing the following amendments to O. Reg. 535/05 (Ethanol in Gasoline) under the Environmental Protection Act, R.S.O. 1990, c. E.19:

1. require gasoline fuel suppliers to maintain an average of 15% renewable content (e.g. ethanol) in regular grade gasoline, by volume per calendar year as early as 2025
2. require renewable content (e.g. ethanol) used for compliance to emit significantly fewer greenhouse gas emissions than petroleum gasoline, on a lifecycle basis, concurrently
3. other potential updates related to a new lifecycle assessment model, e.g. updating the compliance formula.

We are also considering updates to ensure that O. Reg. 97/14 (Greener Diesel – Renewable Fuel Content Requirements for Petroleum Diesel) is consistent with the Ethanol in Gasoline regulation.

For both regulations, we will consider opportunities to:

• clarify requirements
• support innovation for Ontario businesses.

Purpose of regulation

The purpose of these proposed amendments is to support Ontario’s goal to achieve its share of Canada's 2030 emissions reduction target (reduce its emissions by 30% below 2005 levels by 2030), as proposed in the made-in-Ontario environment plan.

The environment plan was released for public consultation on November 29, 2018, for a 60-day period. It will help protect our air, land and water and reduce litter and waste while lowering greenhouse gas emissions and helping communities protect themselves from climate change.

The plan includes a proposal to increase the renewable content (e.g. ethanol) in gasoline to 15% as early as 2025 through amendments to Ontario fuel regulations.

We will work with stakeholders to support the implementation of these amendments.

Other information

Ontario’s Ethanol in Gasoline regulation currently requires an average of 5% ethanol in gasoline.

In 2020, amendments will come into effect requiring 10% bio-based content in regular gasoline. The bio-based content will be required to have an average of 45% fewer greenhouse gas emissions than petroleum gasoline, assessed across the fuel’s lifecycle. Lifecycle greenhouse gas emissions refer to emissions across the fuel’s production, delivery and use stages.

By increasing use of renewable content such as ethanol we will reduce emissions without raising costs at the pump. This is based on current ethanol and gasoline prices, and experiences in other jurisdictions with similar policies.

Other public consultation opportunities

Comments received through the Environmental Registry on the made-in-Ontario environment plan will also be considered in relation to this proposal.

We are interested in your feedback on this proposal within the broader framework of the proposed federal carbon tax.

Regulatory impact statement

If Ontario were to increase and implement the renewable content in regular grade gasoline from 10% to 15% in 2025, it could result in 1.2 megatonnes of greenhouse gas emission reductions.

We expect there will be no increase in the retail price of gasoline as a result of the proposed amendments. Historically, ethanol prices have generally been lower than gasoline prices on a volume basis and blending ethanol in gasoline has been a more cost-effective way to enhance fuel performance compared to other octane enhancers (such as benzene, toluene, and xylene).

Ontario’s fossil fuel suppliers may incur costs to comply with the proposed requirements. However, overall cost impacts to fuel suppliers will depend on the price difference between ethanol and gasoline and the cost of other octane substitutes, as well as the cost impacts of any distribution or retail upgrades that have to be made.

Based on comparing retail pricing before and after implementing renewable fuel policies, experience in Ontario and other provinces (British Columbia, Alberta, Saskatchewan; Manitoba) indicates no observable price impact from the implementation of similar policies.

The proposed federal carbon tax would provide a credit to ethanol when gasoline contains more than 10% ethanol. If the federal carbon tax is applied in Ontario, increasing ethanol blending from 10% to 15% would save gasoline consumers 1.2 cents per litre in carbon tax at full implementation. These savings would be additional to other cost benefits that ethanol provides.

The emission systems of more than 90% of the current passenger vehicle fleet is compatible with gasoline that has 15% ethanol, and this proportion is expected to be close to 99% in 2025 as older vehicles are replaced with newer models. No vehicle or equipment issues are associated with advanced biofuel technologies, like renewable gasoline, which are chemically similar to fossil gasoline.

Ethanol-free gasoline and lower ethanol blends can still be offered for vehicles or equipment that cannot accept higher blends. Marine, aviation, off-road and classic vehicle uses are exempt from the requirements of the regulation. Under the requirements for 2020 and beyond, premium grade gasoline will not have a renewable content requirement.

The price of diesel fuel is not anticipated to increase as a result of the proposed amendments to the Greener Diesel regulation.