SOURCE: O2Diesel Corporation

April 04, 2007 10:00 ET

Department of Defense Begins Testing of O2Diesel's New Alternative Fuel Blend

New Fuel Composed of 28% Renewable Sources

NEWARK, DE -- (MARKET WIRE) -- April 4, 2007 -- O2Diesel Corporation (AMEX: OTD) announced today that it has begun field testing a new renewable fuel being developed for the U.S. Department of Defense. A demonstration fleet at Nellis Air Force Base in Las Vegas, Nevada, is now using the new fuel, O2Biodiesel, composed of 28% renewable sources -- ethanol, biodiesel, and the company's patented and proprietary biomass-derived stabilizing additive.

Emission testing at the Southwest Research Institute in San Antonio, Texas, demonstrated the synergy between the additive package, ethanol, and biodiesel with respect to the key regulated air pollutants: particulate matter and oxides of nitrogen (NOx). While further emissions testing continues, the new fuel will undergo real-world challenges under military spec. These include storage and handling, and use in extreme conditions of heat, cold, humidity, and variations in types of use.

O2Diesel™ fuel, an extensively tested blend of 7.7vol% fuel grade ethanol treated with the company's patented and proprietary biomass-derived stabilizing additive combined with any available diesel fuel, significantly reduces emissions from a host of centrally fueled diesel-powered equipment, including urban buses.

The recently announced $1 million in new government funding and earlier appropriations have enabled O2Diesel™ fuel to be recognized for its emissions benefits and petroleum displacement opportunities in the growing and highly segmented 55 billion gallon per year U.S. diesel fuel market.

DOD, for example, is the largest single consumer of diesel & distillate fuels in the United States, and O2Diesel™ shows great promise in helping the armed forces reduce diesel engine emissions at U.S. military installations and meet DOD and presidential directives to cut petroleum consumption by as much as 20% in the very near future.

"Our new fuel will qualify for so-called 'EPACT' credits under the federal law that applies to Federal, State and other regulated fleets," stated Alan Rae, Chief Executive Officer for O2Diesel. "The ability to rapidly deploy the fuel with limited to no change in the fueling infrastructure is a good example of how CleanTech fuel technologies can easily be adopted and implemented by large fleet consumers of Diesel fuel," he continued. "Continued funding through the DOD will enable O2Diesel to complete all the regulatory requirements that any new fuel must meet prior to enterprise-wide deployment."

About O2Diesel Corporation:

O2Diesel Corporation is a pioneer in the commercial development of a cleaner-burning diesel fuel alternative that provides exceptional performance and environmental qualities for centrally fueled fleets and off-road equipment of all kinds. Engineered and designed for universal application, O2Diesel™ is an ethanol-diesel blend that substantially reduces harmful emissions without sacrificing power and performance. Extensive independent and government-recognized laboratory and in-use field tests have demonstrated the effectiveness of O2Diesel™. The introduction of this cost-effective, cleaner-burning diesel fuel is now underway in the United States and other global markets. For more information please refer to www.o2diesel.com

Forward-Looking Statements

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Statements in this press release regarding O2Diesel Corporation's business which are not historical facts are 'forward-looking statements' that involve risks and uncertainties. Forward-looking statements are subject to a variety of risks and uncertainties which could cause actual events or results to differ from those reflected in the forward-looking statements, including, without limitation, the failure to obtain adequate financing on a timely basis and other risks and uncertainties. Actual results could differ materially from those projected in the forward-looking statements, as a result of either the matters set forth or incorporated in this report generally or certain economic and business factors, some of which may be beyond the control of O2Diesel. These factors include adverse economic conditions, entry of new and stronger competitors, inadequate capital, unexpected costs, failure to gain product approval in the United States or foreign countries for the commercialization and distribution of our products, failure to capitalize upon access to new markets and failure in obtaining the quality and quantity of ethanol necessary to produce our product at competitive price. O2Diesel disclaims any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events. "O2Diesel" and "CityHome" are trademarks of O2Diesel Corporation.

Contact Information

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    Alan Rae
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