A federal mandate was announced in 2006, under which fuel producers and importers would be required to have an average annual renewable fuel content of 5% of the volume of gasoline they produce or import, commencing in 2010. "Renewable fuel" is a broad term that encompasses a range of fuels made from renewable resources such as agricultural crops and other organic matter. For example, a renewable fuel such as ethanol contains 35% oxygen, which, when blended with conventional gasoline, results in a more complete fuel combustion and reduces harmful emissions. A proposed draft Federal regulation regarding this mandate is expected in the fall of 2008.

Various provinces including Ontario, Quebec, Saskatchewan and Manitoba have either enacted or drafted legislation that will require a minimum ethanol content for fuel producers. For example, regulation 535/05, a new regulation enacted in 2007 in Ontario, requires an average of 5% ethanol content in gasoline, a standard which is projected to take 200,000 vehicles off the road. Ontario is planning to administer this with a credit-trading system under which wholesalers using more than 5% would acquire credits that they can sell to companies that choose to blend less than 5%. Responding to the demand for ethanol, the Integrated Grain Processors Co-operative is building a $140 million ethanol facility in Aylmer, Ontario, and Husky Oil is constructing a second ethanol plant in Minnedosa, Manitoba that is scheduled for completion in late 2007.