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Agriculture Fuels America's Clean Air in Des Moines, Iowa Through CityHome(TM) Program

O2Diesel Corp. (AMEX: OTD), a pioneer in the development of a cost-effective, cleaner-burning diesel fuel for centrally fueled fleets, announced today that Lincoln Way Energy of Nevada, Iowa has signed up as a co-sponsor to the CityHome(TM) program in Des Moines, Iowa, set to commence in September 2005. The announcement coincides with the Iowa State Fair Parade where the first Des Moines Metropolitan Transit Authority (MTA) CityHome wrapped bus, sponsored by Lincoln Way Energy, will be unveiled.

Iowa is a leading state in ethanol production and its rise to the top has been propelled by farmers working together to create added value for their corn crops. Lincoln Way Energy, which has a state-of the-art ethanol manufacturing plant under construction in Nevada, Iowa, is a prime example of this forward-thinking, value-added success story.

"Our company was named after Lincoln Highway, the first U.S. thoroughfare opened from coast to coast. Constructed through the heartland, the historic Lincoln Highway was traveled by many American settlers who discovered central Iowa to be a most hospitable place for crop production. Our Lincoln Way Energy vision is to create an ethanol production facility that will continue to demonstrate that America's heartland will provide for the country -- plentiful food products and now energy and better air quality," said Lincoln Way Energy, LLC, President Bill Couser.

"We see CityHome as a significant asset in the push to improve urban air quality in our communities," said Rick Brehm, General Manager Lincoln Way Energy. "It demonstrates the role ethanol can play in improving air quality as well as creating new markets to sustain the growth of the ethanol industry. Use of O2Diesel(TM) demonstrates that ethanol, which contains 35% oxygen by weight, remains one of the best solutions to reduce tailpipe emissions from diesel-powered vehicles, including particulate emissions, which have been linked to respiratory disease."

"CityHome represents a tremendous opportunity to help transit authorities improve the air quality in the communities that they serve," commented Alan Rae CEO of O2Diesel Corporation. "Des Moines is the fourth city on a growing list of cities joining the CityHome program and we are extremely pleased that Lincoln Way Energy has the vision to become a co-sponsor of the CityHome(TM) program in Iowa."

More About O2Diesel: The Company and Its Fuel Technology

O2Diesel Corporation (AMEX: OTD) and its subsidiaries are pioneers in the commercial development of a cleaner-burning diesel fuel alternative that provides exceptional performance and environmental qualities for centrally fueled fleets and off-road equipment of all kinds. Engineered and designed for universal application, O2Diesel(TM) is an ethanol-diesel blend that substantially reduces harmful emissions without sacrificing power and performance. Extensive independent and government-recognized laboratory and in-use field tests have demonstrated the effectiveness of O2Diesel(TM) -- the introduction of this cost-effective, cleaner-burning diesel fuel is now underway in the United States and other global markets. For more information please refer to www.o2diesel.com.

Forward-Looking Statements

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Statements in this press release regarding O2Diesel Corporation's business which are not historical facts are "forward-looking statements" that involve risks and uncertainties. Forward-looking statements are subject to a variety of risks and uncertainties which could cause actual events or results to differ from those reflected in the forward-looking statements, including, without limitation, the failure to obtain adequate financing on a timely basis and other risks and uncertainties. Actual results could differ materially from those projected in the forward-looking statements, as a result of either the matters set forth or incorporated in this report generally or certain economic and business factors, some of which may be beyond the control of O2Diesel. These factors include adverse economic conditions, entry of new and stronger competitors, inadequate capital, unexpected costs, failure to gain product approval in the United States or foreign countries for the commercialization and distribution of our products and failure to capitalize upon access to new markets. O2Diesel disclaims any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events. "O2Diesel" and "CityHome" are trademarks of O2Diesel Corporation.

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