NAGAHAMA, Shiga Pref. -- In an effort to generate business opportunities and improve the environment of this western Japan city, a group of small and medium-size businesses have launched a project to build equipment to refine used cooking oil for use in automobiles as an alternative fuel.

The plan is one of a series of new ideas and projects proposed by members of a council to create new and innovative businesses.

The 27-member council, consisting of small and medium-size firms belonging to the Nagahama Chamber of Commerce and Industry, has been active in realizing new ideas since its establishment in June 1999.

"As the council requires the management of each member company to attend a bimonthly meeting and make presentations about new business ideas, it takes a little time to turn ideas into actual projects," said Masaharu Furukawa, the council's secretary general.

"The wide variety of business sectors of our members, which range from manufacturers and restaurants to financial institutions, is another strength of ours."

The idea of refining cooking oil was proposed during an August meeting, and eight companies volunteered to form a team to undertake the project.

"By replacing light oil with refined cooking oil, an automobile would emit almost no black smoke or sulfur dioxide," Furukawa said. "It also contributes to reducing the amount of used cooking oil waste and lessens the dependency on imported oil for cars."

The team plans to create two types of equipment -- one to refine 100 liters of cooking oil and another to handle 200 liters -- by the end of the year and start marketing them around April, according to Takanobu Azuma, chief adviser to Takahashi Kinzoku Co., one of the project team members.

While several companies in the country produce such equipment, the team plans to improve the quality of the device and offer it at a lower cost.

Normally, such equipment costs about 15 million yen each, but the team plans to halve that price by simplifying the process, Azuma said.

The project is being conducted in collaboration with the prefecture's environmental cooperative, whose idea of using used cooking oil as an alternative fuel had already been put into practice in the prefecture's town of Aito and other places.

While the Aito Municipal Government had been separately collecting used cooking oil from households since 1981 and turning it into powdered soap, it started what is called the Nanohana (rape flower) Eco Project in October 1998, in which rape is planted and the oil from the seeds is converted into an alternative fuel after having been used as cooking oil.

While refined rapeseed oil is currently used as an alternative fuel on a limited basis, the town plans to expand production of refined rapeseed oil for sale next year.

It planted 2.7 hectares of rape flowers this year, compared with 0.3 hectares in the first year.

Some experts point out that the town's ecology project is successful because of its small population and the high environmental awareness of local residents. Both Azuma and Furukawa agree, saying the key to the project's success in Nagahama is how much used cooking oil can be collected from schools and households.

The project team plans to ask the municipal government as well as the prefectural government to establish a system of collecting used cooking oil.

The project's partner, the environment co-op, also plans to work on raising residents' awareness.

"In the future, we hope to build equipment that can handle 2,000 to 3,000 liters of used oil if such large amounts are collected," Azuma said.

Another concern the project team has is whether the refined rapeseed oil can be sold without being taxed.

At present, no municipal government imposes any tax on such oil due to its small amount.

"We can sell refined oil for about 35 yen per liter, which is cheaper than light oil, but if taxes are imposed, it might be difficult to compete with light oil," Azuma said.

The Shiga Prefectural Government currently imposes a tax of about 32 yen per liter on light oil, which is sold for about 70 yen per liter.

"We don't predict that this project will make a lot of profit," Furukawa said. "But we do it because we think it's necessary for our community and for the environment."