The bio-diesel will be produced mainly from recycled cooking oil. The move is expected to save a total of 38.5 million liters of regular fuel each year and reduce carbon dioxide emissions by 126,000 tons per year, Director-General of the Energy Bureau Yeh Huey-ching said at a press conference.

Since 2004, more than 940 trucks collecting garbage in 17 cities and counties across Taiwan have been using diesel that contains between 10 and 100 percent bio-diesel. Starting January 2007, 428 buses in Kaohsiung City and 79 buses in Chiayi County have also been using fuel that contains bio-diesel, according to the Bureau.

From July 15, fuel for vehicles sold at all gas stations in Taiwan will contain one percent bio-diesel, said Yeh, adding that the relevant modifications at gas stations will be completed in three months.

"Gas companies will absorb the higher costs, and the price of fuel will not change for consumers," said Yeh, indicating that with the change to one percent bio-diesel, the cost of the new fuel formula would increase by NT$0.1 per liter.