The approvals pave the way for O2Diesel to move forward into the next stage of its European market development strategy by commencing deliveries to a number of targeted fleets in France. This clearly defined strategy commenced in late 2005 when Abengoa Bioenergy R&D became the company's largest shareholder and entered into a five-year agreement to jointly develop the European market for O2Diesel's ethanol diesel fuel blend technology. Europe is a market which the company believes will be a substantial opportunity for its technology, especially as the 2003 EU directive to replace 5.75% of fossil energy with renewable fuels is implemented in member countries

Alan Rae, CEO of O2Diesel Corporation, said, "Europe represents a substantial growth opportunity for O2Diesel and France is at the forefront of this opportunity and the European move towards renewable fuels. Ethanol is not an established fuel component in Europe, so there have been a substantial number of regulatory hurdles to overcome. Our strategy for the last eighteen months has been to focus on removing these barriers to commercial expansion. We believe these approvals in France will be the first of several over the coming months as our efforts start to deliver results. We look forward to being able to announce our first fleet shortly."

France is the third largest consumer of petroleum in Europe (behind Germany and Russia) and tenth in the world. Diesel represents more than 70% of France's transportation fuel market at 29 billion litres per year. Independent of the EU directive for 5.75% fossil fuel displacement, France has its own imposed target to replace 10% of diesel fuel with renewable alternatives by 2015.

Rae continued, "If France is to meet its targets for the increased use of biofuels, it is our belief that fuels such as O2Diesel, which has an additional 8% renewable content, will play a critical role in achieving these goals. Additionally O2Diesel's proven ability to reduce Particulate Matter and NOx make it a perfect solution for newly elected president Nicolas Sarkosy's recent announcement that France will be the leader in the European community by improving emissions and global warming through the reduction of CO2."

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(TM) 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(TM). 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. This blended fuel significantly reduces emissions generated from a host of unmodified centrally fueled diesel-powered equipment; both on and off-road.

O2Diesel(TM) fuel is or can been made available in any fuel market utilizing the existing diesel fuel storage, supply, and distribution network. When used in standard diesel engines, the Company's patented, renewable additive technology produces a stable ethanol-diesel blended fuel which results in more complete combustion and fewer emissions of toxic and ozone-forming pollutants

Forward-Looking Statements

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Statements in this press release regarding O2Diesel Corp's business which are not historical facts are "forward-looking statements" that involve risks and uncertainties. For a discussion of such risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see "Risk Factors" in the Company's Annual Report or Form 10-K for the most recently ended fiscal year. "O2Diesel" is a trademark of O2Diesel Corp.

COMPANY CONTACT:
Alan Rae
CEO
O2Diesel, Inc.
302-266-6000
Email Contact

INVESTOR CONTACT:
Mark McPartland
Alliance Advisors, LLC
910-221-1827
Email Contact

SOURCE: O2Diesel Corporation

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