The northern state is the first in the United States to pass a law to promote biodiesel, fuel made from agricultural oils and fats, said Ralph Groschen, senior marketing specialist at the Minnesota Department of Agriculture.

The new mandate comes as the cost of oil hovers around 65 dollars a barrel. Car fuel prices have hit three dollars a gallon at times in the United States - having risen more than 80 percent in the past three years - while two hurricanes have disrupted fuel production in the Gulf of Mexico.

President George W. Bush recently signed a new energy bill which included tax breaks for biodiesel. The requirement was originally passed in 2002, but its implementation delayed until biodiesel production was sufficient.

Minnesota is the biggest US producer of the soybean-based alternative fuel already sold at more than 200 service stations in the state.

Two plants are rolling out their first batches of biodiesel, with plans to ship most of the production out of state. One plant is in Alberta Lea, south of Minneapolis, and another is in Brewster, in southwestern Minnesota.

Groschen said Minnesota, a huge producer of soybeans and corn, can learn from the lesson set by Europe's acceptance of alternative fuels.

"They're out ahead of us, and we're just trying to make it happen here," Groschen said. "They've blazed some of the trails."

He cited higher taxes on petroleum in Europe as one catalyst for the acceptance of alternatives to fossil fuels.

As US taxes are lower "perhaps the pain hasn't been quite as severe here as it has been over there," Groschen said.

"Ours is still fairly cheap. That decision perhaps moved them forward on this quicker than it did in the United States, but now with these oil prices we're moving to catch up and to develop our renewable fuels."

In Albert Lea, lush soybean fields surround the new SoyMor biodiesel plant, which uses the latest technology to avoid emitting pollution. Farmers who had joined together in a cooperative, took a gamble on investing in the venture, as did two other farmer cooperatives.

The plant is one of three in which more than 3,000 Minnesota farmers have invested millions of dollars, Groschen said.

"Minnesota is coming on very strong with biodiesel and has led the way in many respects for biodiesel development in the United States," said Jenna Higgins, spokeswoman for the National Biodiesel Board.

The two big plants, along with the smaller Farmers Union Marketing and Processing Association, plan to produce 63 million gallons of biodiesel per year, officials said.

Meanwhile, multinational companies such as Cargill, based in Minnetonka, Minn., and Archer Daniels Midland of Decatur, Ill., are planning US biodiesel refineries, as they have done in Europe.

Last year, about 35 plants made about 30 million gallons of biodiesel in the United States. The US Agriculture Department predicts that volume will grow to 124 million gallons or more this year.

Demand is growing because of Minnesota's mandate and a tax break in Illinois for blends above 10 percent biodiesel, Higgins said.

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