The biodiesel is 5 percent processed gutter oil and 95 percent diesel.
"Such biodiesel is now available in 21 pilot gas stations in Shanghai. More than 2,000 vehicles are now using this kind of biodiesel everyday," said Xu Kunlin, deputy mayor of Shanghai.
He said that there would be around 200 gas stations across the city providing biodiesel in 2018. A total of 30,000 tonnes of gutter oil, the annual volume of gutter oil that Shanghai produces, will all be recycled as biofuel.
Biodiesel tanks and fillers can be identified in gas stations, which also supply diesel and petrol.
The current price for the biodiesel is slightly cheaper than ordinary diesel. Sinopec Shanghai said the price for diesel in Shanghai was currently 6.49 yuan (1 U.S. dollars) per liter and biodiesel was 6.19 yuan per liter.
The city's quality supervision departments said that based on their sampling inspections, all samples had met national standards. Drivers have said there is no big difference between using biodiesel and diesel.