STOCKTON, CA - California officials approved $8 million of tax-exempt bonds Tuesday to help underwrite construction of a biodiesel production plant at the Port of Stockton, according to www.recordnet.com.

That plant, already under construction, is expected to be a small step toward reducing greenhouse gas emissions and dependence on foreign crude oil by making motor fuel out of domestic resources such as vegetable oils or animal fats. The top executive of Community Fuels, the Encinitas company building the Stockton facility, said the state tax-free bonds will help ease the interest and financial burden. It was going to fund the project with internal equity and a bank construction loan.

"It's very exciting, and we're thrilled to see the state is supporting that," Lisa Mortenson said Tuesday while visiting the construction site.

The bond issue, which will underwrite the bulk of the development costs, was approved Tuesday by the California Industrial Development Financing Advisory Commission.

Mortenson said she expects to have about 21 permanent employees at the plant early next year as production begins. With future expansions, the company could employ as many as 35 people in Stockton.

Community Fuels expects initially to produce about 7.5 million gallons of biodiesel per year. That could expand to 10 million gallons per year, or roughly the amount of diesel fuel consumed each day in California.

It has leased a 2-acre site and 40,000 square feet of warehouse space from the port and is installing storage tanks, a cooling tower, a distillation column and an energy generator on the site.

The project has drawn a good deal of attention, port Director Richard Aschieris noted.

U.S. Commerce Secretary Carlos Gutierrez visited the site last August, about a month after the port lease was approved. Mortenson spoke at an economic summit last week in Stockton hosted by Rep. Jerry McNerney, D-Pleasanton.

"I've been real happy with their progress," Aschieris said. "They've been doing a really great job on getting this together."

He noted that Pacific Ethanol also is constructing an ethanol plant on port property. Port officials are negotiating with two other biodiesel firms about possible leases.

"We're making important inroads in the area of providing alternative fuels," Aschieris said.

When Community Fuels unveiled its plans last summer, officials hoped the plant would be up and running early this year.

Mortenson said it simply took longer than expected to apply for and obtain the necessary land-use and building permits. It is the first time most agencies involved had to review a biodiesel production plant.

Given that, she said, a one-year delay isn't bad. Community fuels will sell the biodiesel to regional distributors, including Van De Pol Enterprises in Stockton, as well as Royal Petroleum, San Francisco Petroleum, Biodiesel Oasis and Peoples Fuels. End users will include farmers, construction firms, and commercial and public-sector fleet operators.

Community Fuels also will produce glycerin, a byproduct of the biodiesel process, which will be sold for industrial uses.