Mainboard-listed Transcu says joint venture partner Nanomizer Inc. (corrected) is co-developing of a new type of bio-fuel using crude palm with Nedo (New Energy and Industrial Technology Development Organization) of Japan.

If the project is successful and goes into commercialisation, Transcu’s subsidiary, Transcu Green Fuel will have the exclusive rights to promote, market, distribute and sell this system and its related products around the world.

As announced previously, Transcu also has an option to purchase up to 10% of the shares in Nanomizer.

By using Nanomizer’s core micronisation technology, the project aims to process crude palm oil for direct use in internal combustion engines by first degumming it, i.e. removing its impurities, in particular phosphorous, in a low-cost and effective manner and then subsequently emulsifying the oil using water to produce degummed and emulsified palm oil.

Bio-diesel from palm oil produced by the conventional esterification process requires the use of expensive methanol and the removal of glycerin, which results in a loss in calorific value of the processed palm oil. On the other hand, degummed and emulsified palm oil using Nanomizer’s technology requires less energy and other materials for processing and it maintains the calorific value.

It is comparatively much faster and simpler than the esterification process. Moreover the use of Nanomizer’s technology allows processing to be carried out on-site where it can be used directly, thereby further reducing logistics costs, as compared to the esterification process where processing needs to be carried out in a specialized processing plant.

Under the agreement, Nedo will fund the research and development expenses of up to about 50 million yen (0.8 million) over a period of one year ending in the third quarter of 2011.