A biodiesel company is urging the Government to clear the way for a "waste" by-product to be used as an alternative fuel.

Rainbow Fuels owners Simon Lee and Colin Newman are in the process of setting up one of the county's first biodiesel production companies, after getting permission from Castle Point Council last month to operate from a site on the Charfleets Industrial Estate, Canvey.

But they fear their business is under threat before they even start, because they claim Government rules are standing in their way of recycling.

Producing the eco-friendly fuel creates a by-product, glycerol, which cannot be recycled as fuel without a £25,000 licence, because it is classed as waste by the Department for Environment, Food and Rural Affairs.

As a result, the company may have to pay at least £42 per tonne to have it collected and disposed of. The firm would produce about one tonne of glycerol for every 5,000 litres of biodiesel.

The pair are now campaigning for the Government to change its stance on the classification of glycerol, which is used as fuel in other European countries such as Germany.

Mr Lee said: "The Government says glycerol is a waste fuel because it has impurities in it, but in Europe it is not deemed a waste fuel.

"It could be used as an alternative fuel for factories or for heating homes. It is carbon-neutral and it can be used in oil burners.

"The only way we can get rid of it at the moment is to give it to Cleanaway. The Government say they want to be green and environmentally friendly, yet they are saying glycerol is waste.

"They've got to start thinking like the rest of Europe."

A spokesperson for Defra said the Government was not considering a change in policy at this stage.

He said: "Glycerol, if it is of good quality, is a marketable commodity. If it is of bad quality, they would have to get rid of it as waste.

"If they are proposing to burn glycerol, of course they would need a licence."

Rainbow Fuels cannot begin production of biodiesel until they receive a prevention of pollution control permit from the Environment Agency, which they recently applied for.