Biodiesel

Biodiesel has been imported since 2004 and sold as a B5 or B10 fuel blend. Biodiesel can be blended with fossil diesel oil and as such utilises the current infrastructure. Biodiesel is produced using animal waste or energy crops. It is possible to produce biodiesel locally from waste fat from food production or energy crops.

Using current technology in biofuels, it is difficult or even impossible to substitute the entire fossil fuel use in Iceland with biofuels produced locally. However, it is quite possible to substitute some of the fossil fuel use with locally produced biofuels from waste. Such production would not only reduce CO₂ emissions, but also lessen Iceland's dependece on imported fossil fuels.

A demonstration project is underway in Akureyri in north Iceland, utilising waste vegetable oil and animal fat as feedstock for biodiesel production. Mannvit Engineering runs the biodiesel production plant. The biodiesel is blended with diesel and used to power Akureyri's public transport system.