SOURCE: O2Diesel Corporation

May 17, 2005 14:58 ET

O2Diesel Responds to President Bush's Call for Expanded Use of Renewable BioFuels

NEWARK, DE -- (MARKET WIRE) -- May 17, 2005 -- O2Diesel Corp. (AMEX: OTD), a pioneer in the development of a cost-effective, cleaner burning diesel fuel for centrally fueled fleets of all types, today responded to national media coverage of President Bush's call on Monday for the expanded use of renewable biofuels, such as ethanol, as part of his new energy policy.

"The far-reaching benefits of biofuels including ethanol-diesel warrant the attention they're currently receiving in the public discussion of alternative fuels, which we see as a major step in the right direction," said Alan Rae, President and CEO of O2Diesel Corp.

"Corn-based ethanol has long been a component of the U.S. gasoline market, but has only recently been able to be blended with diesel fuel," Rae added. "O2Diesel has invested more than seven years and $20 million to develop a proprietary technology that makes ethanol-diesel fuels a commercial reality today. This new fuel, marketed as O2Diesel™, not only burns much cleaner, but has a renewable component, and is currently available at competitive prices."

Currently, O2Diesel's fuel is being used in city buses operated by several municipal transit authorities across the Midwest, as well as by several centrally fueled fleets in California and Texas. Applications include heavy-duty container moving equipment, trash hauling and other trucking and transport operations.

"Large, commercial users of diesel fuel can make the decision to convert their fleets to O2Diesel™ today with little or no engine modifications or capital expense," Rae said. "The payoff comes not only in addressing long-term renewable energy concerns for the country as a whole, but also in reducing harmful diesel emissions that can deliver a near-term air quality and health benefits."

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 and failure to capitalize upon access to new markets. 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.

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