Biodiesel, created from processed oil seeds and recycled used cooking oil, could account for 3.5 per cent of the total diesel fuel transport market by 2007, with fleets leading the demand, according to a report from international consultants Frost & Sullivan.
This year's Budget unveiled a new duty rate for biodiesel from 2002 of 20p per litre below the rate for ultra-low sulphur diesel, and the European Commission sees biodiesel as a significant part of the future fuel requirements of the European Union.
The EC wants to set specific targets for increasing the level of biodiesel used by member states by 2005, because the renewable fuel produces lower levels of emissions than 'traditional' mineral-based diesel.
The report said: 'The biggest growth area in the short-term will be captive fleets, which are very concerned about fuel prices and will be targeted by biodiesel producers due to the large volumes of fuel they consume.'
'Other sources of oil will need to be explored more fully in the future, such as the use of animal tallow or even McDonald's spent chip oil.'
The British Association of Bio Fuels and Oils claims biodiesel has more environmental advantages than petroleum based gases, including liquefied petroleum gas, and has called for increased subsidies to encourage its use in this country.
For copies of the Frost & Sullivan Report, called The European Biodiesel Market, log on to www.frost.com