A West Vancouver gas station serving E85 fuel. Photo by Steve Bosch/PNG files

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Here’s an easy win in the current trade war with the United States: end all federal and provincial mandates for ethanol in gasoline.

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Canada blended 4.2 billion liters of ethanol into gasoline in 2025, with 70 per cent of it coming from the U.S. at a cost of approximately $3.5 billion at today’s prices. This will only go up as the Canada’s Clean Fuel Act encourages refiners to increase the blend of ethanol in gasoline from 10 per cent to 15. It’s an easy way to meet CO2 reduction targets and avoid financial penalties, but putting more ethanol into gas requires a significant transfer of money to American farmers and ethanol producers for dubious environmental benefits.

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When tetraethyl lead in gasoline was phased out beginning in 1970 and then fully banned in 1996, engines developed a problem with severe knocking. The most promising substitutions for lead turned out to be even more carcinogenic. But after it was discovered that a three-per cent ethanol blend stopped the knocking, refineries began adding it to gasoline.

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In 2007, the United States mandated a gasoline blend of 10 per cent ethanol, both to reduce foreign oil dependency and to help American farmers by turning a corn surplus into a shortage, which brought a 40-per cent price bump.

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Then, as part of the 2015 Paris Agreement to reduce carbon dioxide emissions, the United Nations Intergovernmental Panel on Climate Change (IPCC) ruled that the amount of carbon dioxide emitted in the burning of ethanol was the same as the amount absorbed by photosynthesis in the growing of the corn (or any other crop) used to produce the ethanol — therefore achieving net-zero carbon dioxide emissions. Canada mostly followed suit at the provincial level, while the federal Clean Fuel Act will most likely result in the ethanol blend increasing to 15 per cent.

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Blending ethanol into gasoline does not reduce carbon dioxide emissions from the tail pipe. Documents available from the U.S. Environmental Protection Agency confirm that ethanol-blended gas releases the same CO2 as regular gas for the same distance driven in the same car. That’s not surprising: it takes the same amount of energy released by combustion for the same trip. What is contested is the IPCC assumption that the emissions are completely offset by the CO2 sequestered by photosynthesis in the growing of the corn.

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Three per cent ethanol is all that’s needed to prevent engine knocks, and Canada’s farmers can supply that. Anything more results in billions of dollars of imports from the U.S., which increases Canadian gasoline prices but does not reduce tailpipe CO2 emissions. Ending all Canadian mandates for ethanol-blended gasoline would save $3.5 billion in American imports without introducing a new tariff and risking retaliation.

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