O2 Diesel

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O2Diesel™: An Emerging Clean Fuel Option “Greening Garbage Trucks in the San Joaquin Valley” James Peeples O2Diesel, Inc. April 1 & 2, 2004

Introduction : 

Introduction O2DIESEL, INC. (formerly AAE TECHNOLOGIES, INC.) Established in 1997, Company developed and holds numerous worldwide patents for fuel additive technologies O2Diesel™ efforts in U.S. underway since 1998: Company focused on cost-effective, commercially viable product Investigating broad market applications to solve air quality and other diesel emissions-related problems July, 2003: Company changed name, went public (OTCBB: “OTOD”) with new multinational investment; broadening effort into global markets – commercial, long-haul focus

What is O2Diesel™?: 

What is O2Diesel™? A cleaner-burning diesel fuel composed of: 7.7vol% ethanol (ASTM D 4806); Up to 1.0vol% O2Diesel, Inc. proprietary additive; and Cetane improver (2-EHN) Used in any diesel fuel (ULSD, F-T Diesel, No.1 or No.2) Suitable for Use in Centrally-Fueled Fleets & All Engine Types

Representative Test Results: 

Colorado School of Mines, Southwest Research Institute & Environment Canada: Nov. 1999 - Sept. 2003 CO 20-28% NOx PM 2-6% 34-46% BHP -1/+2% EPA 13-mode Transient Cycle Engine Tests (1991 DDC Series 60; 2003 International DTC-466 + DOC; others) EPA/CARB No.2 Diesel vs. No.2 O2Diesel™ (7.7vol% ethanol) Representative Test Results Emissions Benefits

Product Verification Testing (partial): 1999 - 2003: 

Colorado School of Mines – Initial Validation SwRI - Tier 1 Health Effects (2003) SwRI - CARB Alt. Diesel Verification (Sept., 2003) SwRI - John Deere E-diesel Project (2003 – ongoing) CE-CERT - University of California-Riverside Environment Canada Environmental Tech. Centre (ETC) – Ottawa, Ontario (2003) Product Verification Testing (partial): 1999 - 2003 Emissions Benefits

Performance Benefits: 

Reduces visible smoke by up to 70% (opacity) Premium fuel lubricity performance (SLBOCLE, HFRR tests) Excellent cold temperature behavior (LTFT, CFPP tests) Good fuel stability (water tolerance & thermal) Excellent fuel conductivity (emerging safety issue) Performance Benefits

Summary: Fleet Testing: 

Summary: Fleet Testing Easy logistics, distribution, and handling “Drop-in” clean fuel solution Little or no infrastructure or engine changes Excellent cold weather operability Visible and measurable emission benefits Good engine performance and driveability Fuel is fully fungible with regular diesel No reported mileage/efficiency demerits Economics better than alternative technologies No capital investment required

Technical Agenda (2004): 

Technical Agenda (2004) Managing flashpoint & flammability Engineering low-cost solutions for safe fleet fuel management Determining materials compatibility & durability Establishing industry storage & handling requirements Developing ASTM/CGSB fuel standards (“Fill & Go” proposals on table) Completing EPA health effects testing, if required John Deere cooperative test program (>$2 million + 2 years) E diesel™ Consortium (est. 2001): addressing all technical issues

Industry Safety Agenda: 

Industry Safety Agenda Flashpoint & flammability - Only significant technical issue Flashpoint (~55oF) makes e-diesel a Class 1 fuel - requires gasoline-type handling and safety procedures Flashpoint/flammability range for e-diesel is lower than diesel, higher than gasoline, CNG, propane, etc. The right combination of ignition source (spark, fire, static discharge etc.), temperature & air/fuel ratio can create an environment for fire. All three elements required! These elements can be managed by fleets using O2Diesel™

Industry Safety Agenda (cont.): 

NREL-funded and O2Diesel, Inc.-supported testing at SwRI investigating fuel tank modifications, flame arrestors, etc. All demonstration equipment using O2Diesel™ is equipped with flame arrestors, a simple, low-cost add-on technology “Dry-Lock” refueling system minimizes risk of spark ingress O2Diesel, Inc. fleet safety & personnel training program works Program has been proven successful and SAFE Industry Safety Agenda (cont.)

The “Bottom Line”: 

The “Bottom Line” O2Diesel™ incremental cost: $0.10 to $0.15 per gallon O2Diesel™ requires flame arrestors: up to $80 per unit O2Diesel™ in storage tanks requires desiccant filters: ~$300 per tank O2Diesel™ fleet management & staff training provided by Company O2Diesel™ requires full system inspection, tank cleaning as necessary O2Diesel™ initially may require more frequent fuel filter replacement O2Diesel™ is permitted under Class 1 flammable fuel regulations O2Diesel™ will work effectively with new exhaust aftertreatment

Conclusions: 

Conclusions O2Diesel™ is a fuel that can be used safely by centrally-fueled fleets O2Diesel™ is used today in thousands of diesel engines in U.S. O2Diesel™ reduces emissions at low cost for urban fleets O2Diesel™ is a proven, easy-to-use “drop-in” clean fuel solution O2Diesel™ still faces technical & regulatory challenges E diesel Consortium is now in place to address all such issues O2Diesel™ is “ready for prime time” now

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O2Diesel, Inc. 100 Commerce Drive; Suite 301 Newark, Delaware 19713 USA (302) 266-6000 (main office) (302) 266-7076 (fax) North American offices: California, Delaware, New York, Texas, Colorado, Virginia, Ontario, Quebec www.o2diesel.com