The Ontario government is increasing its mandate for ethanol in gasoline to 10 per cent from the current 5-per-cent requirement, as part of its effort to cut greenhouse gas emissions from fuels.

In a notice issued this week, the Ministry of Environment and Climate Change indicated it would amend its ethanol-in-gasoline regulation to increase blending requirements to 10 per cent by 2020, while reducing emissions from the fuel. It will also provide incentives for emerging technologies such as renewable gasoline and biocrude. "By 2020, the proposed actions are projected to result in greenhouse gas pollution reductions that are equivalent to taking up to 130,000 cars off our roads each year, and up to 300,000 cars off our roads each year by 2030," ministry spokesman Gary Wheeler said in an e-mail.

The province's two largest corn-based ethanol producers applauded the move, saying it would not only contribute to Ontario's climate-change strategy, but provide a boost to the local economy as well.

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"Ethanol is the cleanest, cheapest way to reduce carbon in gasoline available today," said Howard Field, president of Greenfield Global. He added that the new standards "will help the province achieve its GHG emission targets while ensuring continued local investment, innovation and job creation."

The Ontario move comes as the federal government works on its own clean-fuel standard, which is expected to include incentives for greater ethanol use and perhaps an increased federal mandate, which currently sits at 5-per-cent ethanol content for gasoline.

In anticipation of the provincial move, IGPC Ethanol Inc. embarked earlier this year on a $200-million expansion of its farmer-owner ethanol refinery Aylmer, Ont., in order to double its production.

"We're right in the middle of a very major construction project right now," IGPC president Jim Grey said in an interview.

The move to require lower GHG emissions from fuel will provide a competitive advantage for Ontario ethanol producers over their U.S. competitors in the Midwest, who rely on carbon-intensive, coal-fired power to produce the fuel additive.

Canadian ethanol reduces GHGs by 62 per cent compared with gasoline, said the lobby group, Renewable Industry Canada.

The association is urging the federal government to incorporate a higher mandate on its planned clean-fuel standard. Mr. Grey – who also serves as chair of RICanada – said countries that have reduced or removed mandates have seen ethanol use drop. The petroleum-refining industry has expressed concerns about increasing mandates, particularly if provinces move on their own and create a patchwork of differing standards. "We are disappointed that Ontario has moved forward in a way that further fragments the national policy environment for refiners," said Peter Boag, president of the Canadian Fuels Association, which represents refining and marketers of petroleum production.

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Mr. Boag noted that the federal government is proceeding with its own clean-fuels standards and urged governments to agree on a "coherent and co-ordinated national approach to achieving transportation emissions reductions.

Refiners in Ontario are currently blending up to 7 per cent or 8 per cent ethanol in their regular grade gasoline. Producers no longer receive subsidies for the ethanol they provide.

However, the use of crops for fuel remains controversial, as corn growers in North America increase production to satisfy the ethanol market.

Mr. Grey acknowledged that the increasing demand for ethanol has been a boon for corn farmers who had been struggling before governments began mandating its use.

"Ontario this year is actually going to export corn, there is just so much of it," he said. "In the [U.S.] Midwest, production of corn is just staggering down there; it's driving corn prices down and ethanol production keeps ramping up."