Shell will set up Singapore's first biodiesel pump within the next six months, in a trial that could in future give diesel vehicle owners the chance to do their bit for the environment.

The oil company is taking part in a trial to test the efficiency and usability of palm-derived biodiesel under various traffic conditions.

Biodiesel is fuel made from oil-rich plants such as palm and rapeseed. It contains practically no sulphur and produces far less fine soot than conventional diesel.

Besides Shell, participants include DaimlerChrysler and Volkswagen.

Volkswagen will supply 15 cars, including the Touran seven-seater, Touareg sports-utility vehicle and Passat sedan. The Touran and Touareg have yet to be launched here.

DaimlerChrysler will supply seven Mercedes-Benzes, including the S-class, M-class and E-class.

The test vehicles are expected to be given research status, which means they will not incur the taxes payable for private passenger diesel cars.

Ordinary diesel passenger cars attract an annual surcharge equivalent to four times their respective road tax.

The trial vehicles are not for sale and will be driven by selected individuals.

An agreement for the trial was signed last month and The Straits Times understands that the start of the project was delayed because some participants wanted the latest car models.

The trial will last two years. During that period, Shell will get palm-based biodiesel from German food and biofuel group Peter Cremer. To begin with, it will blend 5 per cent of this with its ultra-low sulphur diesel before trucking the mixture to its Jalan Jurong Kechil station.

The biodiesel at this station will not yet be available to the public.

Biodiesel is used most widely in countries whose governments mandate its use, such as Europe and the United States. Right now, Singapore has no plans to legislate it here.

The fuel costs 5 to 10 per cent more than conventional diesel, depending on the price of crude oil.

But biodiesel suppliers have said that as long as crude is US$40 (S$61) or above, their fuel will be commercially viable.

Transport giant ComfortDelGro, possibly the biggest user of automotive diesel here, said: "If biodiesel is made available at a lower cost and is found to be as effective as the current Euro IV diesel that we use, then we will definitely consider it."