In Galveston, each of the 4,932 traffic lights use energy-efficient light bulbs. The city hall's new air conditioning system will cut energy bills by more than $1 million.

Someday even the waves could be harnessed with underwater windmills being studied by the federal government.

So when executives and politicians gathered in a Galveston ballroom Tuesday an indoor ribbon the latest move toward Galveston's environmental innovation.

A new biodiesel plant was constructed on the island.

"Biodiesel has a higher energy content, it's a better fuel it lubricates the engine and provides better gas mileage for cars and trucks,” said John Berger of Standard Renewable Energy.

The new plant turns soybeans into biodiesel fuel. Already the City of Galveston has agreed to buy 50,000 gallons of it, to blend with regular diesel for city trucks.

Of the 20 million gallons of biodiesel that will be produced at the plant this year, only a small part of it will be used in this country. That's what's going to the city of Galveston fleet. The rest of it will be shipped overseas.

"We are still in the early days for biofuels in the United States and largely they are mandate driven,” said Rick Zalesky of Chevron Biofuels, a partner in the venture.

The problem with biodiesel in the U.S. is its emissions.

Compared to petroleum diesel, biodiesel cuts carbon monoxide emissions by 50 percent, but it sends between 10 and 25 percent more nitrogen oxide into the air, although the industry says it's getting better.

State regulators have temporarily banned high blends of biodiesel along the heavily polluted Gulf Coast.

But while the experts here study it -- Europe is buying it. And with gas prices high - the plant will turn a profit in just one year.