The municipal government plans to have 1,000 public buses next year running on a blended fuel composed of up to 10 percent biodiesel made from kitchen waste oil, local media reported Tuesday.

The pilot program aims to make use of the city's steady supply of waste oil and prevent it from being processed into recycled cooking oil, the unsanitary and dangerous substance known as gutter oil, according to Yan Zuqiang, director of the Shanghai Food Safety Commission Office, which is spearheading the project.

The city started requiring some restaurants and food companies to install grease traps in 2011 so their waste oil could be collected more easily. About 70 tons of waste oil is collected each day, according to the Shanghai Food Safety Commission Office.

The oil is then sent to Shanghai Zhongqi Environment Technology Co to be processed into biodiesel. Zhongqi Environment Technology is one of two companies in Shanghai with government approval to process kitchen waste oil. The other company, Shanghai Lüming, had to temporarily shut down its operations after authorities discovered it had been selling unprocessed gutter oil outside of Shanghai, which is against the law.

The companies are new to vehicle fuel. In the past, they have primarily produced biodiesel for industrial boilers.

Nonetheless, Zhongqi Environment Technology's biodiesel can be used in motor vehicles, said Yang Jianbin, the company's chief technology officer. "We have been using blended biodiesel fuel in company vehicles since last year," Yang told the Global Times in a phone interview. "There have barely been any problems. All of our biodiesel products exceed national standards for vehicles."

Neither Zhongqi Environment Technology nor Lüming has a spotless quality record. Both companies failed quality tests in November 2011.

Zhongqi Environment Technology's biodiesel has not yet met the government quality standards to be used in vehicles, said Gu Zhenhua, vice director of the Shanghai Food Safety Commission Office.

The company will be able to improve the quality of its product due to several cooperation agreements it has made with six government departments and research institutions, Gu told the Global Times. Earlier this month, it signed an agreement with the School of Automotive Studies at Tongji University and a research institute under Huayi Group.

"We will provide 2,100 tons of biodiesel, which is enough to run the buses for six months," Yang said.