Can the world's fish processing industry find an economical way to turn its waste into fuel?

That's the hope of research organizations led by Finland-based VTT Technical Research Center. The consortium said Monday that it will spend € 5 million ($6.3 million) to build a biodiesel plant fed by Vietnamese fish processing waste.

The ENERFISH project, expected to be complete by 2011, will use as feedstock the 120,000 kilograms (264,555 pounds) of fish waste turned out daily by the Hiep Thanh Seafood JSC fish processing plant in Vietnam's Mekong River delta region.

VTT and its partners have sweetened the deal for the fish processor by offering to build it a new cooling and freezing system expected to save the fish processor 20 percent on its energy bills.

Right now that processing facility sells its fish waste to animal feed makers. Whether or not the market for biodiesel can offer a better price for that waste than competitors like animal feed makers is the essential question for this project – as well as others seeking to make fuel from animal processing leftovers.

Making fuel from animal waste is a popular idea, but history shows it has been tough to pull off. For one thing, even if you got all the animal scraps and turned it into food, it would only displace a tiny fraction of fossil fuels. Some academics have estimated that animal scraps in the United States would only amount to one or two billion gallons, far less than the 62 billion plus gallons of diesel consumed in the country annually.

Then there is the question of incentives, which have been key to getting renewable fuel projects off the ground. In the United States, Tyson Foods and ConocoPhilips have a project to take chicken and hog fat from slaughterhouses and turn it into biodiesel.

But that project might not be economically viable after Congress removed a tax credit for making biodiesel from animal byproducts from the energy bill it passed in September.

Then there's the venerable practice of turning leftover restaurant grease and other used oils into biodiesel, a favorite of garage processors and large-scale companies alike. Rendering company Darling International wants to spend from $7 million to $10 million to convert one of its plants in San Francisco to a facility capable of churning out 10 million gallons of biodiesel per year (see San Francisco Gets Greasy and Biofuel Roundup: Fuel From Algae, Biomass, Waste).

In Vietnam, other fish processors have tried out waste-to-biodiesel projects, with varying degrees of success. In 2006, processors Minh Tu Ltd. and Agifish started projects to make biodiesel from catfish fat, only to find that, at times, they could get a better price selling that fat to exporters than processing it into fuel.

Still, with the Mekong Delta region using about 5 million gallons of diesel every day, fish processors could see a growing demand for their biodiesel if Vietnam's government helps by clearing regulatory hurdles to using the fuel, a Minh Tu executive said in August.

Alaska has also experimented with fish-based biodiesel. Fish processor UniSea Inc. first tested fish oil-diesel blends in 2001 and has used more than 2 million gallons of a half-fish-oil, half-diesel blend for power production since 2002, according to the Alaska Energy Authority, a state-run corporation.