Biodiesel producers will be tapping into a new Government grant scheme this month.
Five companies are seeking to take part in the scheme, under which they can claim 42.5 cents for every litre of biodiesel they produce and sell.
It replaces a scheme produced by the previous Government which aimed to stimulate biofuel poduction by setting compulsory sales targets for oil companies.
The first to sign up, Ecodiesel in Auckland, makes the fuel from tallow, a by-product of animal processing.
Chairman? Lindsay Fergusson says Ecodiesel will make its first claim on the fund this month after selling some biodiesel produced at a demonstration plant in Onehunga.
He says the company has waited to prove that it can produce the fuel, before making an application.
Mr Fergusson says the company is constructing a commercial scale biodiesel plant which will increase its production capacity from about 200,000 to 20 million litres per year.
Other companies that have either signed up or been offered contracts for the grants scheme are: Biodiesel Oil in Tamaki, New Zealand Ester Fuels in South Auckland, Environ Fuels in Te Kuiti and a Solid Energy subsidiary, Biodiesel New Zealand in Christchurch.
