KL announced the start-up of a small-scale wood-waste cellulosic ethanol plant in the US in August 2007.

In the last 12 months we have seen well publicized government initiatives to dramatically increase the percentage of biofuels from second generation processes. In Europe, the focus is on new CO₂ reduction directives and regulations, which we believe will lead to far tighter scrutiny of all biofuel origins and production methods.

We believe KL has developed a commercially ready and environmentally friendly process and has a business model that can be easily replicated, which will provide the opportunity for rapid, wide-scale distribution of affordable fuel grade ethanol on a carbon positive basis. Additionally, the KL process provides the potential for multiple natural waste feedstocks, which supports global efforts to move renewable fuel production away from traditional agricultural feedstocks.

—Alan Rae, CEO of O2Diesel Corporation

O2Diesel says that it intends to develop multiple strategically placed cellulosic ethanol production plants through joint ventures. The company has already had early stage discussions in several key markets.

KL has developed proprietary technologies and newly developed enzymes to extract fuel grade ethanol from cellulosic materials such as wood waste and other non-food feedstocks and waste materials. Through these processes, KL is able to release fermentable sugars hidden within the wood without the use of acids. KL projects that its cellulosic technology, coupled with new applied design concepts, will allow the plants to be built to match the amount and type of feed stock available near large cities, further lessening the fuel's carbon foot print and eliminating ethanol transportation issues.

KL’s biofuels plants will also produce excess steam heat and/or electricity that can provide additional power sources for local municipalities or complement biofuel plants and manufacturing facilities.