SOURCE: O2Diesel Corporation

December 12, 2007 09:26 ET

O2Diesel Enters Final Phase of US Air Force Testing Prior to Deployment

NEWARK, DE--(Marketwire - December 12, 2007) - O2Diesel Corporation (AMEX: OTD) announced today that it received a "Projects Status and Outlook" update from the US Air Force (USAF), and has entered the final phase of testing. The USAF has been conducting a comprehensive performance research project to evaluate O2Diesel's clean burning renewable fuel alternatives for non-tactical military vehicles and other diesel powered equipment since 2002, with testing expected to conclude in the summer of 2008.

The update states that:

"Since 2002, the US Congress has earmarked almost $5 million in funds for a US Air Force comprehensive research project that evaluates O2Diesel™ as a fuel for non-tactical military vehicles and other diesel-powered equipment such as electric generators. Nellis Air Force Base (AFB) and the Nevada Air National Guard became the first military users of O2Diesel™ in demonstrations with their fleets. In addition, the Air Force is developing a new environmentally friendly fuel for the DoD that will contain at least 20% renewable content, including O2Diesel's proprietary additive, for a net 28% displacement of diesel petroleum fuel. This new fuel is already in use with no known adverse issues at Nellis AFB. The code name for the new fuel is 028.

"The emissions, durability, and operability tests have so far proven this technology and the Air Force benefits directly from the experience gained. The next phase of this project starts on December 7, 2007 involving cold exposure at Minot AFB ND, and subsequently at Barksdale AFB in Louisiana for high humidity testing. These test will conclude in the Summer of 2008."

The update concludes by stating that: "The Air Force is pleased with the results obtained up to this time and Pentagon fuel-vehicle sustainment logistics planners are tentatively projecting to deploy this technology for continental Air force use, contingent on the results of the cold and humid tests. In the event that the cold/humid weather tests show limitations, it is the intention to implement even with restricted use to meet Presidential Order 13423."

"Presidential Order 13423 requires all agency fleets of more than 20 vehicles to reduce the fleet's total consumption of petroleum products by 2 percent annually through the end of fiscal year 2015, and increases the total fuel consumption that is non-petroleum-based by 10 percent annually," said Eric Burgeson, former Chief of Staff to the Department of Energy (DoE) and now advisor to O2Diesel Corp. "The DoD is the single largest user of distillate fuels in the continental U.S. with purchases in FY06 exceeding $5.5 billion."

Alan Rae, CEO of O2Diesel Corporation, stated, "This endorsement is extremely satisfying, and the opportunity that comes with it is the result of all the hard work and effort dedicated to this program by both O2Diesel and the personnel at the Air Force. Given the scale of the DoD's diesel fuel use there is the potential for up to 120 million gallons of O28 by 2009."

"Our work with the Air Force has proven to be very exacting but invaluable," continued Rae. "The depth of knowledge gained through testing both in the laboratory and in the field has been indispensable in proving O2Diesel™ both as a standalone solution to enhancing air quality but also as the basis for the development of new renewable fuel blends such as O28. The final months of testing with the Air Force will take place in some of the harshest climatic conditions to be found anywhere but our experience gained in markets such as the EU, India and Brazil, gives us confidence in our ability to meet these challenges."

More About O2Diesel: The Company and Its Fuel Technology

O2Diesel Corporation (AMEX: OTD) and its U.S. subsidiary O2Diesel, Inc. 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 prices. 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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    Mark McPartland
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