Abstract The life cycle of ethanol derived from sawdust by enzymatic hydrolysis process is evaluated to determine if environmentally preferable and economically viable ethanol can be produced. Two scenarios are considered to estimate net energy consumption, greenhouse gas (GHG) emission and production costs. The estimated net energy consumption, GHG emission and production costs are 12.29–13.37MJ/L, 0.75–0.92kg CO2 e/L and about $0.98–$1.04/L, respectively depending on the scenarios of this study. The result confirmed that environmental benefit can be gained with present technologies; however, economic viability remains doubtful unless Feed-in Tariff (FiT) is considered. The production cost of ethanol reduces to $0.5/L, if FiT is considered to be $0.025/MJ. This study indicates that the implementation of FiT program for ethanol industry not only helps Ontario mitigate GHG emissions, but may also attract more investment and create rural employment opportunities.