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Oxonica addressed skepticism among buyers by convincing Perth, U.K.-based Stagecoach Group, operator of 7,000 buses, to give Envirox a try. In 2003 and 2004, Stagecoach and Oxonica tested the additive in 1,000 buses in the U.K., and tracked another 500 as controls. Stagecoach reports that, overall, the test buses used 5 percent less fuel and that the fuel savings more than paid for the additive. By the end of 2004, Stagecoach implemented Envirox across the U.K., and last summer it bought shares when Oxonica went public.

Oxonica would like to see its additive in U.S. bus fleets as well, but the EPA is concerned that cerium oxide nanoparticles coming out the tailpipe could pose a health threat. While registering a new gas additive with EPA is usually a six-month process, Oxonica has already waited a year; Matthews says he accepts that the company may still have as much as two years to go.

While the toxicity of cerium oxide in bulk form is comparable to table salt, in nanoparticle form it could carry much greater risk–especially when inhaled. Whereas larger particles are cleared by the lungs, studies have shown that some types of nanoparticles less than 100 nanometers in diameter can infiltrate the tissues lining the lung. Nanoparticles can end up in the blood stream, inside cells, and even, in some cases, inside the nuclei of cells where chromosomes reside. The EPA is concerned that while vehicles burning Envirox-treated diesel might produce less soot, they may also produce a new set of particles dangerous to humans.

Matthews says Oxonica’s research shows that combustion of Envirox-treated diesel does not alter the size distribution of particulate pollution, meaning that the proportion of smaller particles remains unchanged. And he says the company’s toxicity studies on so-called synthetic lungs turned up no signs of trouble.

Anderson says the problem for Oxonica may be the devil that we don’t know. For one thing, says Anderson, nanoparticles in exhaust tend to be hard to measure with conventional optical detection techniques. “They are so small they don’t scatter light effectively,” says Anderson. Also, scientific understanding of the health effects of nanoparticles is at a nascent stage and EPA is still trying to figure out how to regulate them. “They’re just getting to the point of starting to worry about small micron-sized particles,” says Anderson. “I don’t think they have any clue about how they’re going to regulate much smaller particles.”

The EPA has held meetings to discuss how to deal with nanoparticles and last December issued a white paper on the topic, which has subsequently undergone peer review. But a planned voluntary reporting program to encourage closer examination of nanoscale products has yet to materialize. The EPA may develop policy pragmatically, as it considers new nanotech applications. In fact, Julia Moore, deputy director of the Project on Emerging Nanotechnologies at the Woodrow Wilson International Center for Scholars (a Washington, DC, think tank) says Oxonica’s Envirox may prove a crucial “test case” of how the EPA will handle nanotech.

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