Global food prices have been spiking again over the past few months. One of the reasons that corn, canola and soy are all becoming more expensive is that these crops are also being used now to produce biofuel - green alternatives to diesel and gasoline - due both to increased demand and the rising prices of these fossil fuels, and to regulations mandating a transition to biofuel, particularly in Europe.

Israeli entrepreneur Doron Levi's business strategy seeks to get beyond the dilemma of fuel versus food - producing biofuel from a crop that is not intended for human consumption and does not grow on agricultural land. The plant he chose for the task is jatropha. In 2008, he founded an alternative energy company called Galten Biodiesel. Nowadays he holds 22% of the company's shares and serves as its board chairman.

Galton is listed on the Tel Aviv Stock Exchange's maintenance list, with a market cap of NIS 21 million. CEO Shlomi Jonas owns another 22% of the shares, while the public holds 31%. Levi considers Galten to still be in the conceptual stage, but it has an idea, knowledge, proven technology and even signs of demand for its product. What it lacks is financing, regulatory assistance and the market's willingness to change consumption habits.

"I imagine we'll be able to sell in Israel a barrel of plant oil for creating biodiesel for 10% less than the price of a barrel of oil, but we need the regulator's support. We need regulators to adopt the European standard based on the Kyoto Protocol, and to support a transition to green, renewable energy," he told TheMarker.

The United Nations adopted the Kyoto Protocol on climate change in 1999 with the goal of reducing carbon dioxide emissions, a suspect in global warming. In response, European nations set regulations limiting carbon dioxide emissions and stating that by 2020, biofuel - mainly biodiesel and biogasoline - would make up 20% of Europe's fuel consumption.

Currently, 60% of fuel used in Europe is diesel. This leads Levi to conclude that by 2020, Europe's biodiesel market will be worth $60 billion. To explain why he decided to manufacture a diesel alternative, Levi cites the history of the diesel engine: When Rudolf Diesel created it in the 19th century, it was powered by plant-based fuels. Only after Diesel died were fossil fuels first used to power his inventions. Now things are coming full circle - diesel pumps at European gas stations state the percentage of biodiesel in the fuel.

Biodiesel could be mixed with fossil fuel diesel at the oil refinery, notes Levi. Research has indicated that biodiesel emits 80% less carbon dioxide than regular diesel, and no sulfuric oxides or dangerous gasses. Another advantage of biodiesel is that consumers can switch over without changing their consumption habits - plant-based diesel is identical to oil-based diesel, and car engines do not need to be altered in any way to use biodiesel. The same cannot be said for biogasoline.

Levi began looking for biodiesel's next generation in 2006. He decided to focus on the jatropha tree - a species millions of years old that grows mainly in Africa, but needs a massive amount of land in order to produce commercial quantities of oil. There are about 100 jatropha varieties, and Levi partnered with a German university to choose one whose output suited his model.

Levi went to Africa to find places suited to commercially farming the jatropha, and his company has an option to do so on about 1 million dunams (1/4 million actes ) in Ghana. The lots, on tribal land, meet global sustainability standards. Galten currently has a lease on 4,000 dunams in Ghana, which it is using to prove its plan is profitable. That plot is worth $1 million, according to the company's books.

"There's lots of land in the world that isn't intended for food production," he says. "Leasing land for food crops is also very expensive. The jatropha is a wild plant that doesn't need special conditions. There are huge tracts of land in Ghana where you could raise jatropha without displacing food crops. The paradigm that green fuel is more expensive is not correct."

The refuse from producing biodiesel from jatropha is generally used as fertilizer nowadays, but research indicates that the poisons could be removed from it and it thus could be used for the food industry or combustion. Even airlines have started looking into using biodiesel to fuel their planes, says Levi. New Zealand Air and Lufthansa conducted successful flight trials involving green jet fuel in 2008 and 2009.

"I recommend that Israel adopt the European regulation regarding the Kyoto Protocol," says Levi. "Europe first declared intent and then got to know the field and created a standard for biodiesel. In Israel, currently there's no green fuel being created from green, natural components. We need regulation on everything that has to do with our fuels, which would create a market for biofuel and push private investors to enter the field.

"Some 2.5 million tons of diesel is consumed in Israel every year," he adds. "We believe that if we develop commercial production capacity, we can provide a reasonable proportion of that diesel in the form of biodiesel. Regulation can - and should - help us develop the biodiesel market. In order to reach commercial production in Africa, we need financing. The company was founded in 2008 and since then we've been investing only in proving commercial production capability. We've been contacted by several potential customers - including some from Italy, Poland and Scandinavia - who expressed interest in buying biodiesel. We have functioning operations, land, the capacity and interest from customers. We can meet this demand if we receive the appropriate financing."

In August, the company submitted a request to the Israel Securities Authority seeking permission to publish a shelf prospectus in order to raise money on the stock exchange.

Galton finished the first half of 2012 with a $440,000 loss. Its net loss for 2011 was $4.4 million. Its net cash flow of -$200,000 left it with only $40,000 in its coffers as of the last quarter, with share capital totaling $700,000. Its market cap on the Tel Aviv Stock Exchange is NIS 19 million. In late April, the company signed an agreement in principle with Neste Oil, which is controlled by the Finnish government, to supply it with 60,000 tons of plant oil to produce biodiesel. The deal would be worth NIS 225 million over five years, starting at the end of 2014. Yet it's not ready to sign an actual contract yet.

In late July the company launched initial negotiations with a Polish company to sell jatropha oil to produce biodiesel for the Polish market. The contract would be worth as much as NIS 48 million, with the Polish company looking to buy about 1,200 tons of jatropha oil a month.