Marlborough-based bio-energy company Aquaflow Bionomic Corporation is dipping its toes further into international markets in a US-government funded demonstration project.

The United States Department of Energy has awarded $US1.5 million to technology and manufacturing company Honeywell (NYSE:HON) subsidiary UOP, for a demonstration biofuel project in Virginia.

Biodiesel producer, Ecodiesel, is raising another $4.5 million capital to complete its full-scale commercial plant in Onehunga.

A $4.7 million pilot plant is already operating, producing biodiesel from tallow (an animal by-product) it sources from the meat processing industry.

An Auckland tourism business has switched its marine fleet to biofuel, pioneering New Zealand's first commercial biofuel supply agreement.

Explore NZ has signed a $3 million deal with Environ Fuels Ltd which will supply B20 fuel (20% biodiesel blend with mineral diesel), blended especially for its 12-boat fleet. The mix was chosen after "extensive" testing.

The government threw a life-line for the ailing biodiesel industry by announcing a grant program totalling $36 million.

The grant, paid in three installments over the next three years, effectively brings biodiesel in parity with ethanol and encourage investment in the industry.

“By supporting biodiesel production in New Zealand, we can help a new industry up and running, which can provide jobs for New Zealand, at the same time as helping to reduce their greenhouse emissions,” Energy and Resources Minister Gerry Brownlee said.

Algae biofuel company Aquaflow Bionomic has joined forces with a division of US conglomerate Honeywell to work on converting algae into fuel products.

Processes developed by Honeywell refining company UOP will be used to convert algae into fuel products that meet international standards.

Aquaflow has already succeeded in producing its first batch of green crude oil.