Its privately-held owner, Argent Energy, said the 15 million-pound ($28 millon) facility was already warming up.
"We've just started commissioning...there may be other plants in construction at the moment, but when this comes online -- which we hope will be mid-April or May -- it will be the largest in Britain," the firm's joint managing director Andy Hunter told Reuters on Tuesday.
"It will be larger than the total capacity of the rest of the UK for processing saturated fats into a quality diesel fuel and the largest of its kind in the world."
The London-based company said it is in talks with a number of transport companies interested in using the fuel.
The plant near Motherwell in Scotland is expected to be up and running a few months before green fuel start-up Biofuels Corp. brings its giant 250,000-tonne facility at Teesside in northeast England into use.
"When our plant comes online, we will effectively increase total UK capacity somewhere between four- and five-fold. Obviously, with Biofuels Corp. coming on, we should see another dramatic rise," Hunter said.
In 2004, Britain produced only 10,000 tonnes of biodiesel.
Biodiesel can be made from a range of vegetable oils including rapeseed, soy, sunflower and palm, but it can also be derived from animal fats, grease and tallow.
It is seen as an environmentally-friendly alternative or addition to regular diesel.
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Argent Energy said European Union targets on biofuel had helped help spur interest in the sector.
"If one looks at the moves both politically and economically throughout the whole of Europe, there's been a significant shift towards biofuels," the firm said.
As part of a range of measures drawn up in response to international agreements to reduce greenhouse gas emissions, the EU is keen to see biofuel account for two percent of all fuel sales in 2005, rising to 5.75 percent by 2010.
The reduction in the UK duty level on biodiesel by 20 pence per litre in April 2002 has also encouraged the firm and further expansion is on the cards.
"As soon as this Scottish plant is working and proven, we would look to build at least two more plants of similar size in the UK and we would expect those to come online over the next two-and-a-half to three years," Hunter said.
Earlier this month, UK renewable fuel maker Greenergy said it has submitted plans to build a 200,000-tonne per year biodiesel plant on England's east coast, with a view to bringing it onstream by mid-next year.
The Motherwell plant is expected to meet five percent of Scotland's diesel needs.
(US$1=0.5345 British Pounds)