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President Bush Stresses Clean-Energy Plan in State of the Union Address

O2Diesel Corporation (AMEX: OTD) has developed a proprietary, ethanol/diesel fuel blend that substantially reduces emissions. The Company recognizes the prospects from the State of the Union Address by President George Bush on January 31, 2006.

"America is addicted to oil, which is often imported from unstable parts of the world," President Bush stated. "The best way to break this addiction is through technology," further commented Mr. Bush. Thus, President Bush has set a goal of replacing 75 percent of the nation's Middle East oil imports by 2025 with ethanol and other energy sources. The tactics he presented are currently under way as he noted that since he was elected to the Nations highest post the federal government had spent "nearly $10 billion to develop cleaner, cheaper, more reliable alternative energy sources." Additionally, the President has signed legislation in 2005 that requires 7.5 billion gallons of ethanol, the corn-based additive, to be mixed into the nation's fuel supply by 2015. This is double the current utilization.

Alan Rae, CEO of O2Diesel Corporation, commented, "Mr. Bush's comments regarding a proposed 22 percent increase in financing for clean energy research validates the growing acceptance and need for cleaner burning alternative fuels sources in the US. We believe O2Diesel(TM) is well positioned to capture the movement toward embracing alternatives. Our business plan is to grow O2Diesel(TM) into the preferred nationally recognized brand of choice, with global appeal. As a market leader, O2Diesel's advanced technology and forward thinking is in line with President Bush's efforts to restrict America's addiction to foreign oil dependence. We have already successfully launched our US CityHome program in Iowa, Kansas, Illinois and Nebraska. In addition, O2Diesel has experienced heightened awareness and acceptance of our product in Latin America and Europe."

More about O2Diesel and Its Fuel Technology:

O2Diesel Corporation (AMEX: OTD) is a pioneer in the commercial development of a cleaner-burning diesel fuel that provides excellent performance and environmental benefits for centrally fueled fleets and off-road equipment of all kinds. Engineered and designed for universal application, O2Diesel(TM) is an ethanol-diesel blend treated with the company's proprietary natural oil-derived stabilizing additive 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 .

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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