The Canadian government announced Thursday it will require all diesel fuel and home heating oil sold in the country to contain at least 2 per cent oil from renewable sources.
Environment minister Peter Kent and Agriculture minister Gerry Ritz made the announcement at a biofuel factory in rural Ontario.
Renewable fuels are produced from resources such as vegetable oil, methanol from biomass, or biodiesel.
"When we announced our Renewable Fuels Strategy, we were clear that the 2 per cent requirement would be implemented subject to technical feasibility," said Kent. "After positive results, we are moving forward with this requirement which will result in further reductions in greenhouse gas emissions and ultimately in cleaner air for all Canadians."
Government officials said the regulations are expected to benefit the environment and provide markets to the country's farmers and fledgling biofuels industry.
The government already requires an average of 5 percent renewable content, usually ethanol made from corn, in gasoline.
The government says federal and provincial biofuel regulations will reduce greenhouse gas emissions by 4 megatonnes -- about the equivalent of taking 1 million vehicles off the road.
"We are aggressively working to cut Canada's carbon footprint," Kent said while making the announcement.
Ritz said the regulations will create jobs in the farming and food sectors. "This will boost their bottom lines in a very practical way."
Tim Haig, president of BIOX, a biofuels company, said the regulations will create new markets for biofuels.

"This announcement to proceed with mandated minimum blending volumes demonstrates the federal government's commitment to the renewable fuel industry in Canada. As the largest biodiesel producer in Canada, BIOX is already actively selling biodiesel in North America, specifically into the U.S. market which is under a similar minimum blending requirement," said Haig.