For Release: October 7, 2005

Mcguinty Government Takes Next Step On Cleaner Air
Ethanol Growth Fund Now Accepting Applications;
Five Per Cent Standard Takes Effect January 1, 2007

TORONTO - The McGuinty government is protecting the health of Ontarians with measures that will make its goal of five per cent ethanol in gasoline a reality and lead to cleaner air, Minister of Agriculture, Food and Rural Affairs Leona Dombrowsky and Environment Minister Laurel Broten announced today.

"This truly is a red-letter day for all the people of Ontario," said Dombrowsky. "We're now ready to begin creating our future of cleaner air and greater prosperity by producing renewable fuels."

"Our government has delivered on another promise to improve air quality for Ontarians," said Broten. "We are taking action to reduce harmful emissions from vehicles to ensure we have safe, livable communities for this generation and the next."

To further protect the air Ontarians breathe, the government:

• Has finalized Ontario Regulation 535/05 - requiring an average of at least five percent ethanol in all gasoline sold in Ontario beginning January 1, 2007 (the Renewable Fuels Standard)
• Is now ready to accept applications under the Ontario Ethanol Growth Fund (OEGF).

When added to gasoline, ethanol helps to mitigate climate change by reducing greenhouse gas emissions, results in cleaner vehicle exhaust and reduces our dependency on non-renewable fossil fuels. The requirements of the new regulation will reduce greenhouse gas emissions by an amount equivalent to taking 200,000 cars off the roads.

Through the 12-year, $520 million Ontario Ethanol Growth Fund (OEGF), it is anticipated that when the Renewable Fuels Standard goes into effect, Ontario ethanol plants will be producing as much as 750 million litres of ethanol annually. The OEGF provides:

• Capital assistance to help meet financial challenges
• Operating assistance to address changing market prices
• Support for independent retailers selling ethanol blends
• A research and development fund to pursue opportunities for research and innovation.

"We are now issuing an invitation to all proponents with an interest in the domestic production of ethanol," said Dombrowsky. "Providing construction assistance of up to $32.5 million and variable operating grants will help Ontario's producers contribute to cleaner air ."

Additional information about the OEGF and the application process are available on the ministry's website at: http://www.omafra.gov.on.ca/english/policy/oegf/index.html

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Contact:
Dave McLeod
OMAFRA Communications
(419) 826-3198

Anne O'Hagan
Minister Broten's Office
(416) 325-5809

Dr. Maurice Bitran
OMAFRA
(519) 826-4172

John Steele
MOE Communications Branch
(416) 314-6666

www.ene.gov.on.ca
www.ontarioconserves.gov.on.ca

ONTARIO ETHANOL GROWTH FUND

On June 17, 2005, the Ontario Government announced a new $520-million, 12-year fund to support the production of ethanol fuel in Ontario.

The McGuinty government is committed to reducing greenhouse gas emissions by increasing the use of ethanol in gasoline. In November 2004, Ontario announced a Renewable Fuels Standard, requiring an average of five per cent ethanol in all gasoline sold in Ontario by January 1, 2007.

The Ontario Ethanol Growth Fund (OEGF) provides:

• Capital assistance to help meet financial challenges
• Operating assistance to address changing market prices
• Support for independent blenders of ethanol
• A research and development fund to pursue opportunities for research and innovation.

Capital Assistance
Under the OEGF, capital assistance in the form of a capital grant or loan guarantee may be made available to eligible new or expanding ethanol plants being built in Ontario. The purpose of this program is to assist manufacturers in addressing financing challenges when building new or expanding ethanol plants. Successful applicants may be offered a one-time capital grant or a loan guarantee based on a process that will take into account eligible costs, plant capacity and financial situation. Capital assistance will not exceed 10 cents per litre of plant capacity.

Operating Grants
Operating grants under the OEGF will help ethanol production facilities manage fluctuating input and output prices, in addition to providing operating assistance to ethanol plants in production from 2007 until 2017. The value of operating grants to successful applicants will be calculated using a formula based on fluctuating market prices of corn, ethanol and crude oil. No operating grant will exceed a value of 11 cents per litre of ethanol produced. The province will support up to a total production capacity of 750 million litres/year.

Support for Independent Blenders
Independent gasoline distributors/retailers who were blending ethanol prior to June 17, 2005 may be eligible for assistance in order to meet the requirements of the Renewable Fuels Standard. The government expects to announce details of the program in the future.

Research and Development Fund
A research and development fund will help farmers, environmental and bio-based businesses create research and investment opportunities in the ethanol manufacturing sector, and will help create a platform for a wider bio-based economy. The government expects to announce details of the fund in the future.

How to Apply
All details regarding eligibility, application procedures, proposal evaluation and disbursement of funds are available in the document Ontario Ethanol Growth Fund: An Invitation to Proponents, which is posted on the ministry's website at: http://www.omafra.gov.on.ca/english/policy/oegf/index.html

Contact:
Dr. Maurice Bitran
Ontario Ethanol Growth Fund Secretariat
(519) 826-4172

ETHANOL IN GASOLINE

Ontario Regulation 535/05 - Ethanol in Gasoline, announced today by the McGuinty government, requires that by January 1, 2007, gasoline sold in Ontario will contain an average of five per cent ethanol. The new regulation is part of the government's commitment to reduce emissions and improve air quality across the province.

What is ethanol?

Ethanol is an alcohol produced by fermenting sugar or converted starch, usually from grains such as corn or wheat. It can also be made from cellulosic materials such as forestry waste (e.g., wood waste) and agricultural crop residues, or it can be derived chemically from ethylene or ethane. Ethanol is typically blended with gasoline.

Environmental Benefits of Ethanol

Ethanol-blended fuel reduces emissions of carbon monoxide, particulate matter and some toxics, like benzene (a known human carcinogen). It also delivers greenhouse gas emissions (GHG) reductions of 800,000 tonnes annually, equivalent to removing 200,000 cars from the road. Through these GHG reductions, Regulation 535/05 will help Canada meet its obligations under the Kyoto Protocol.

Blending gasoline with five-per-cent ethanol also reduces the use of and our dependency on non-renewable fossil fuels. However, emissions of aldehydes (such acetaldehyde) and oxides of nitrogen (NOx) are expected to rise slightly, although no known health impacts are expected.

As well, the use of renewable feedstocks, such as grains and wood products, means that the production of ethanol is more sustainable. Producing, refining and using a litre of ethanol-blended gasoline emits fewer greenhouse gases than a litre of ordinary gasoline.

Highlights of Ontario Regulation 535/05 - Ethanol in Gasoline

Beginning January 1, 2007, gasoline sold in Ontario will contain an average of at least five per cent ethanol. This may be accomplished by the actual blending of ethanol, or through the trading of renewable fuel credits.

All ethanol blends will be required to meet technical standards and fuel specifications to ensure quality and drivability.

Key industry stakeholders, as well as health and environmental organizations, were consulted during the drafting of Regulation 535/05. We listened to their concerns and employed their comments to strengthen the regulation.

Ontario Regulation 535/05 - Ethanol in Gasoline:

• Requires wholesalers and importers to achieve a five per cent average of ethanol content in their gasoline
• Provides for simple, but enforceable, reporting of the trading of renewable fuel credits to those who are unable to reach five per cent
• Provides incentives for cellulosic ethanol that recognize additional environmental benefits
• Uses technical standards for ethanol-blended gasoline to ensure drivability and to maximize environmental benefits
• Allows more time for infrastructure development in the North, delaying implementation there until 2010.

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Contacts:
Anne O'Hagan
Ministers Office
(416) 325-5809

John Steele
Communications Branch
(416) 314-6666

www.ene.gov.on.ca