Ethanol Credit Trading in the New Ontario RFS

26 November 2004

Ontario Premier Dalton McGuinty announced that gasoline sold in Ontario will contain an average of 5% ethanol by 2007. (Earlier post.)

Under the new Renewable Fuel Standards (RFS), effective January 1, 2007, a wholesaler’s annual gasoline sales must achieve an average of at least 5% ethanol content. This may be accomplished by the actual blending of ethanol or through the trading of renewable fuel credits.

A wholesaler with a blend greater than 5% will acquire credits—via a mechanism as yet undefined—to sell to companies that choose to blend less than 5%.

“Forcing all gas companies to use ethanol was simply too costly and too difficult, the premier said following an announcement staged in front of the plant amidst bales of hay and employees in hard hats.

“It’s a real challenge to mandate a five per cent blend for folks in northern Ontario,” McGuinty said.

“That could be a heck of a challenge. It could be a heck of a cost connected with that. The purpose here is to reduce emissions by having an average five per cent component rather than across the province.”   (Cnews)

The ethanol level in Ontario gasoline is currently at an average of approximately 1%.