The Queenstown Lakes Biodiesel Consortium is the first of its kind in New Zealand and provides access to a supply of B20 blended biodiesel for commercial vehicles.
The fuel is 20% biodiesel and 80% standard diesel.
The consortium, which comprises 35 businesses so far, was set up by the Otago Polytechnic's Centre for Sustainable Practice, with funding from the Energy Efficiency and Conservation Authority's biodiesel grant scheme.
The 12-month pilot will supply the blended fuel for use in commercial business vehicles to test summer and winter blends and to check the commercial viability.
Consortium project leader and manager of the Centre for Sustainable Practice, Steve Henry, said he was delighted to see the project come to fruition.
"This isn't about tree-hugging.
"It's about fuel security and being serious about our triple bottom line: to widen our thinking to evaluate our economic, environmental and social performance," he said.
The long-term aim was to introduce the commercial use of biodiesel in Otago and Southland.
The centre brought potential biodiesel users together to broker a commercial supply contract with Allied Petroleum Ltd, which sources Biogold biodiesel from Biodiesel New Zealand Ltd.
Biodiesel has 90% fewer carbon emissions than mineral diesel.
Domestically grown rapeseed oil and about 2 million litres of used cooking oil, collected from the food businesses, including Queenstown ones, provide the basis for the biodiesel.
It was hoped that pure biodiesel, or B100, could be introduced to the region at a later date.
"Our B20 is being supplied at a price similar to the standard pump price and the more users we have, the more the price will decrease," Mr Henry said.
Biodiesel is subsidised by the Government at 42.5c a litre.
The consortium levies 3c a litre for running costs.
The Queenstown Lakes District Council has provided land and seed funding for the refuelling facility.
