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Dubai-based Neutral Group will collect the 20,000 liters of vegetable oil McDonald's uses annually to cook french fries and other foods. The company will process the oil into biodiesel to power a logistics fleet covering 90 restaurants in the UAE.

Karl Feilder, chairman of Neutral Group, said that, “The venture involves the Gulf nation’s first plant licensed to make biodiesel. The facility will have an annual output capacity of 1 million liters (264,000 gallons).We are taking away the need to import diesel. Biodiesel from the factory in Dubai, the second-largest emirate in the U.A.E., will supply a limited number of companies at first and won’t be available for wider sale”.

The venture is being facilitated by Dubai's government, which is encouraging local businesses in the oil-rich nation to diversify into renewable energy.

Neutral Group became the first company to produce biodiesel in the region last year through its subsidiary, Neutral Fuels. It caters to other firms such as Lockheed Martin and Marks & Spencer.

Biodiesel is made from renewable resources such as vegetable oil, animal fat and algae. It contains no petroleum and may be used in a conventional diesel engine alone or mixed with traditional fuel.

Compared to diesel, fuel from vegetable oil and animal fat produce 67 percent fewer hydrocarbons, and 48 percent less carbon monoxide.

The announcement about McDonald's decision to use biodiesel comes less than a week after Dutch carrier KLM began powering some of its flights with biodiesel made from used cooking oil from factories and hotels.