This consultation was open from:
June 20, 2025
to July 20, 2025
Decision summary
We decided to proceed with domestic bio-based content requirements for both diesel fuel and gasoline placed in the Ontario market under the Cleaner Transportation Fuels (CTF) regulation. At least 75% of the renewable content required in diesel fuel and 64% of the renewable content required in gasoline must be made in Canada, effective immediately.
Decision details
Biofuel producers expressed concern with the clean fuel production credit (45Z) in the U.S. that incentivizes the production of fuels such as biodiesel and ethanol by awarding a credit on a per-gallon basis. This incentive is not available to Canadian biodiesel and ethanol producers, giving American producers a strong competitive advantage already resulting in the loss of production and jobs in Ontario.
To address these concerns from biofuel producers in Ontario, and to support the circular economy, we are introducing domestic content requirements under the Cleaner Transportation Fuels regulation mandating that at least 75% of the renewable content required in diesel fuel and 64% of the renewable content required in gasoline be produced in Canada.
The domestic content requirements support the circular economy in Ontario and will help safeguard Ontario’s biofuel production by establishing business certainty and protecting jobs within the industry. It will also improve waste management, diverting more waste from landfills, as some feedstocks in biofuel production may be supplied from waste streams (e.g. animal fats, used cooking oil and organics, corn crops with high vomitoxin levels).
These changes are also expected to enhance Ontario biodiesel and ethanol producers and local feedstock suppliers’ ability to compete with lower-cost U.S. imports that are supported by federal subsidies through the 45Z tax credit. These new changes would help protect jobs, maintain market access, sustain domestic production levels, and help ensure long-term energy security and environmental sustainability in Ontario.
Domestic content requirements are now in effect. A prorated phase-in of requirements will be provided to help industry implement the requirements for the 2025 compliance period:
Diesel
- the minimum 75% Canadian content requirement will be prorated to 25% for the remainder of the 2025 compliance period due to the shorter timeframe for compliance. For subsequent compliance years the minimum domestic content requirement will remain at 75% on an annual basis
Gasoline
- the minimum 64% Canadian content requirement will be prorated to 27% for the remainder of the 2025 compliance period due to the shorter timeframe for compliance
- for subsequent compliance years the minimum domestic content requirement would remain at the full 64% on an annual basis for 2026 and 2027, 54% on an annual basis for 2028 and 2029, and 47% in 2030 onwards. The actual domestic content requirement remains the same while the renewable content requirement increases from 11% in 2025 to 13% in 2028 and then to 15% in 2030 as announced in 2020
The domestic content requirements are expected to be time-limited and temporary in nature. MECP will continue monitoring factors impacting Ontario’s clean fuels producers.
Reporting Requirements Amended
The regulation already includes a flexibility mechanism, whereby fuel suppliers can transfer surplus compliance volumes to other fuel suppliers that have not blended sufficient quantities of biofuels to achieve compliance. Reporting requirements have been amended to include these new domestic content requirements.
Addition of Bio-Based Gasoline Requirement
The domestic content requirement for bio-based gasoline was not included in the original proposal but has been incorporated into the final regulation. The environmentally significant aspects of this addition were considered as part of the broader decision on the domestic content requirement for diesel. Accordingly, this notice also fulfills the requirement under section 30 of the Environmental Bill of Rights to provide notice of this change.
Effects of consultation
Comments received had mixed reactions with domestic biofuel producers and feedstock suppliers being strongly supportive while fossil fuel suppliers and U.S. biofuel producers expressed opposition. All comments from the consultation were considered.
Some respondents raised concerns with the exclusion of an ethanol domestic content requirement as ethanol producers are facing similar economic impacts from U.S. subsidies as the biodiesel industry due to developments in the U.S. after the original proposal was posted.
On July 4th, 2025, the U.S. One Big Beautiful Bill Act (H.R.1) became law and contained changes that make corn ethanol eligible for higher credit subsidies from the investment tax credit 45Z. The H.R.1 also extended the expiration date for 45Z from December 31st, 2027 to December 31st, 2029. As these developments in the U.S. negatively impact Ontario’s ethanol producers in similar ways as set out for biodiesel producers in the original proposal, we have adjusted the proposal to include both bio-based diesel and bio-based gasoline domestic content requirements.
A phased approach to implementation has been adopted to support industry in meeting requirements for the remainder of 2025. The Ministry of the Environment, Conservation and Parks will work with the regulated community to address any implementation issues and continue to monitor factors impacting the biofuels industry and the circular economy in Ontario, adjusting requirements as necessary.
Supporting materials
View materials in person
Some supporting materials may not be available online. If this is the case, you can request to view the materials in person.
Get in touch with the office listed below to find out if materials are available.
119 King Street West
9th Floor
Hamilton,
ON
L8P 4Y7
Canada
Connect with us
Contact
Stephanie McGill
40 St Clair Ave West
14th Floor
Toronto,
ON
M4V 1M2
Canada
Original proposal
Proposal details
Context
Ontario’s Cleaner Transportation Fuels (CTF) regulation sets out requirements for gasoline and diesel fuels placed in the Ontario market.
The CTF regulation requires fuel suppliers to blend four percent renewable content in diesel. The renewable content must emit 70% fewer GHG emissions than fossil diesel on a life cycle basis.
Renewable content means cleaner biofuels that are made with biological materials including crops, forest residues and organic waste.
Blending renewable content in gasoline and diesel reduces greenhouse gas emissions from the transportation sector and supports and sustains a circular economy in Ontario by recovering some waste products and transforming them into a value-added resource in the form of clean fuels.
Environmental Impacts of U.S. Subsidies
Subsidies for U.S. biofuel producers, specifically the 45Z tax credit under the U.S. Inflation Reduction Act, threaten to shut down Ontario’s biodiesel production.
The U.S. 45Z tax credit provides significant subsidies to American producers of cleaner fuels, such as ethanol, biodiesel, sustainable aviation fuel (SAF), and other transportation fuels. Such subsidies are not available to Canadian producers. The credit is awarded on a per-gallon basis, with the amount varying based on the fuel's lifecycle greenhouse gas emissions and whether a facility has satisfied labour requirements.
Renewable fuel policies such as the federal Clean Fuel Regulations (CFR) and provincial policies including those in Ontario, BC and Quebec are driving demand for increased volumes of renewable content such as ethanol and biodiesel in Canada. The 45Z tax credit is offering U.S. producers a strong competitive advantage over Canadian producers in this growing market for clean fuels. This is impacting the operational viability of Ontario’s facilities. The continued presence of U.S. subsidies could result in permanent closure of Ontario’s biodiesel facilities and impact Ontario’s resource recovery objectives if no action is taken.
Proposed Canadian Renewable Content Requirement for Diesel Fuel
In this policy proposal, we are seeking feedback on a domestic renewable content requirement for diesel fuel placed in the Ontario market. Ontario is proposing to require three percent of the renewable content required in diesel fuel to be produced in Canada. This requirement represents 75% of the renewable content that is currently blended in diesel fuel. This enables the continued processing of some Canadian waste feedstock at clean fuel facilities in Ontario.
Protecting the Environment and Sustaining a Circular Economy in Ontario
Local biodiesel facilities are critical players in sustaining a circular economy in Ontario. A circular economy is one where waste streams can be harnessed to produce value-added products, such as clean renewable fuels. Some feedstocks in biofuel production may be supplied from Ontario’s waste streams (e.g. animal fats, used cooking oil and organics).
The proposed domestic renewable content requirement would help maintain and sustain a circular economy in Ontario by supporting the continued operations of Ontario biodiesel facilities, which have a key role to play in effectively managing Ontario’s waste streams. This policy could also help recover more waste as a resource and is necessary to enable longer-term innovation and development of Ontario’s circular economy.
Temporary Measure Supports Waste Management
The domestic renewable content requirement for diesel fuel is being proposed as a temporary, time-limited measure which would be expected to be in place for the duration of U.S. subsidies that threaten Ontario’s biodiesel industry and would allow Ontario to utilize Ontario waste feedstocks to sustain our circular economy.
Supporting materials
View materials in person
Some supporting materials may not be available online. If this is the case, you can request to view the materials in person.
Get in touch with the office listed below to find out if materials are available.
119 King Street West
9th Floor
Hamilton,
ON
L8P 4Y7
Canada
Comment
Commenting is now closed.
This consultation was open from June 20, 2025
to July 20, 2025
Connect with us
Contact
Stephanie McGill
40 St Clair Ave West
14th Floor
Toronto,
ON
M4V 1M2
Canada
Comments received
Through the registry
29By email
0By mail
0