SOURCE: O2Diesel Corporation

March 29, 2007 11:02 ET

O2Diesel's Cleaner Burning Ethanol-Diesel Blend to Power School Bus Fleet in Lead and Deadwood, SD

NEWARK, DE -- (MARKET WIRE) -- March 29, 2007 -- O2Diesel Corporation (AMEX: OTD), a pioneer in the development of cost-effective, cleaner-burning, diesel fuels for centrally fueled fleets of all types, today announced the historic communities of Lead and Deadwood, South Dakota will be the latest to experience a promising new age in environmentally friendly school transportation. All buses in the Lead-Deadwood School District will be powered by O2Diesel™, a cleaner-burning fuel blend of ethanol-diesel.

"The Lead-Deadwood School District and their partners should be commended for moving away from fossil fuels and transitioning to a homegrown fuel that will improve our air quality and strengthen our local economy," said Senator John Thune (R-SD), in a statement released by his office.

Studies have documented that long-term exposure to diesel exhaust can have a negative effect on individual health. The impact of particulate matter (PM) has been shown to impair the lungs and can aggravate diseases like emphysema and bronchitis. Approximately 20 million Americans suffer from asthma; nine million are under the age of 18. Children are more susceptible to the harmful effects of air pollution; they breathe faster and their lungs are less able to fight off these pollutants.

"The essence of why we are using O2Diesel is we believe it is a much cleaner fuel, and the health and safety benefits for our children is our number one priority," said Dr. Dan Leikvold, Superintendent, Lead-Deadwood School District. "In addition, the Lead-Deadwood School District wants to do its part to investigate and utilize alternative fuels."

Independent and government-recognized laboratory tests have demonstrated the effectiveness of O2Diesel in reducing harmful emissions. A 2005 study on a fleet of 75 transit buses in Johnson County, Kansas predicted emissions reductions of six tons per year by switching to O2Diesel. The O2Diesel Corporation has introduced cleaner burning renewable ethanol diesel fuel blends in transit and school bus fleets in North America and around the world.

The introduction of this cost-effective, revolutionary fuel blend in school buses is part of the CityHome Program™, a national air quality initiative that enables municipal transit systems and school bus operators to make the switch to O2Diesel at no additional cost. The costs of conversion are shared by the corporate sponsors.

"CityHome gives environmentally conscious corporations a platform for demonstrating their commitment to clean air and investment in local communities," said Jean-Paul Libert, the designer of the CityHome™ initiative.

In partnership with the National Arbor Day Foundation, a tree will be planted in the Black Hills National Forest for each child who rides these school buses. Additional sponsors include KL Process Design Group (www.klprocess.com), and the Ethanol Promotion and Information Council (EPIC) (www.drivingethanol.org).

"The emissions from school buses and their effect on our children's health has long been an area of concern for school bus operators, school districts and parents. We believe that the switch to O2Diesel fuel through the CityHome program is an excellent start to addressing these concerns. It is simple to introduce and CityHome makes it cost neutral for the School district as well as increases the use of renewable fuels which is a National priority," said Alan Rae, Chief Executive Officer of O2Diesel.

Southside Oil, of Lead, South Dakota will blend and store O2Diesel™ for the school district. The ethanol is being supplied by KL Process and Design Group headquartered in Rapid City, SD.

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

About CityHome™:

CityHome™ is a national clean-air initiative designed to help transit systems and school bus operators significantly reduce diesel fuel emissions and improve the quality of life in their communities without straining their budgets. The CityHome™ partnership involves O2Diesel Corp., local transit systems, school bus systems, environmentally conscious corporate sponsors and other stakeholders. For more information, visit www.cityhome.info.

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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    Mark McPartland
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