SOURCE: O2Diesel Corporation

September 25, 2007 10:40 ET

Senate Committee Approves Continued DOD Funding for the O2Diesel Fuel Development and Demonstration Program at Nellis Air Force Base

NEWARK, DE--(Marketwire - September 25, 2007) - O2Diesel Corporation (AMEX: OTD), a pioneer in clean burning renewable ethanol diesel fuel blends, announced today that it has been included in the fiscal year 2008 Defense Appropriations bill to continue and expand existing O2Diesel™ O28 demonstration projects to develop clean, renewable alternative diesel fuels at Nellis AFB and Air National Guard Facilities in Nevada. The DOD Appropriations bill is pending consideration by the full Senate, and must then be reconciled with the House Defense Appropriations bill in conference.

"We are pleased with the continued support for the Nellis AF Air Quality Improvement Project to advance O2Diesel™ and Next Generation O28 biodiesel as a clean, renewable alternative diesel fuel," said O2Diesel CEO Alan Rae. "This is another important step toward reducing petroleum imports while improving urban air quality in Nevada. We believe that O2Diesel™ and O28 can play an important role in the emerging liquid bio-fuels markets. Continued funding through DOD to support demonstration and data verification using military non-tactical diesel powered vehicle fleets at Nellis AFB will help O2Diesel to complete all the regulatory requirements that any new fuel must meet," Mr. Rae said.

O2Diesel has been under contract to develop a new fuel for the Department of Defense that will be composed of at least 20% renewable sources including the company's patented and proprietary biomass-derived stabilizing additive, and renewable ethanol. This fuel, when finalized, will help DOD facilities meet local air quality compliance requirements and strengthen its commitment to reducing the USA's dependency on foreign oil imports. Rigorous testing of this new fuel is currently underway at the Southwest Research Institute in San Antonio, Texas, a nationally recognized research facility. The research will be followed by an expanded in-use fleet demonstration at Nellis Air Force Base in Las Vegas where the company's O2Diesel™ fuel has been running successfully for the past 38 months.

O2Diesel™, an extensively tested blend of 7.7vol% fuel grade ethanol treated with the company's patented and proprietary biomass-derived stabilizing additive with any available diesel fuel, significantly reduces smoke, PM, CO, NOx emissions from a host of centrally-fueled diesel-powered equipment, including urban buses, and with no engine modifications. O28 is a renewable based bio-diesel fuel consisting of O2Diesel™ and B20 Biofuel.

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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