OTD O2Diesel Corp.

CUSIP No. 671106 S100 SCHEDULE 13D (Amendment No. 1)

 SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549

 SCHEDULE 13D
 UNDER THE SECURITIES EXCHANGE ACT OF 1934
 (Amendment No. 1)

 O2Diesel Corporation
 --------------------
 (Name of Issuer)

 Common Stock, Par Value $.0001 per share
 ----------------------------------------
 (Title of Class of Securities)

 671106 S100
 -----------
 (CUSIP Number)

 David H. Shipman
 100 Commerce Drive, Suite 301
 Newark, DE 19713
 (302) 266-6000
 --------------
 (Name, Address and Telephone Number of Person
 Authorized to Receive Notices and Communications)

 February 29, 2008
 -----------------
 (Date of Event which Requires Filing of this Statement)

If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box
|_|

NOTE: Schedules filed in paper format shall include the signed original and five
copies of the Schedule, including all exhibits. See Rule 13d-7 for other parties
to whom copies are to be sent.

*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).

CUSIP No. 671106 S100 SCHEDULE 13D (Amendment No. 1)

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1. Names of Reporting Persons
 I.R.S. Identification Nos. of above persons (entities only)

 Alan Robert Rae
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2. Check the appropriate box if a Member of a Group (See Instructions)
 (a) |_|
 (b) |_|
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3. SEC Use Only


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4. Source of Funds (See Instructions)

 N/A
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5. Check if Disclosure of Legal Proceedings is Required Pursuant to Item 2(d)
 or 2(e). |_|

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6. Citizenship or Place of Organization

 United Kingdom
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Number of 7. Sole Voting Power
Shares Bene-
ficially Owned 1,508,501(1)
by Each --------------------------------------------------------------
Reporting 8. Shared Voting Power
Person With
 599,235(2)
 --------------------------------------------------------------
 9. Sole Dispositive Power

 1,508,501(1)
 --------------------------------------------------------------
 10. Shared Dispositive Power

 599,235(2)
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11. Aggregate Amount Beneficially Owned by Each Reporting Person

 2,107,736(1,2)
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12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See
 instructions) |_|

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13. Percent of Class Represented by Amount in Row (11)

 2.41%(3)
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14. Type of Reporting Person (See Instructions)

 IN
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(1) Includes 1,500,000 shares subject to stock options exercisable within 60
days of February 29, 2008.
(2) The reporting person disclaims beneficial ownership of 599,235 shares of
these securities, and this report shall not be deemed an admission that the
reporting person is the beneficial owner of the securities for purposes of
Sections 13 or 16 or for any other purpose.
(3) This number represents the percentage obtained by dividing the total number
of shares of the Issuer's common stock being reported in this Statement
(2,107,736) by the number of shares of the Issuer's common stock outstanding on
March 5, 2008 (87,298,674).

CUSIP No. 671106 S100 SCHEDULE 13D (Amendment No. 1)

 This is Amendment No. 1 (this "Amendment") to the Schedule 13D filed by
Alan Rae on July 25, 2003, relates to the shares of common stock, par value
$0.0001 per share ("Common Stock"), of O2Diesel Corporation, a Delaware
Corporation (the "Issuer"). The Schedule 13D is hereby amended as set forth
below. Except as specifically provided herein, this Amendment No. 1 to Schedule
13D does not modify any of the information previously reported in the Schedule
13D, and should be read in conjunction with, and is qualified in its entirety by
reference to, the Schedule 13D.

ITEM 1. SECURITY AND ISSUER.

 The principal executive office of the Issuer is located at 100 Commerce
Drive, Suite 301, Newark, DE 19713.

ITEM 2. IDENTITY AND BACKGROUND.

 This schedule is being filed on behalf of Alan Robert Rae (the "Reporting
Person").

 The business address of the Reporting Person is 100 Commerce Drive, Suite
301, Newark, DE 19713.

 The Reporting Person is the President and Chief Executive Officer of the
Issuer, O2Diesel Corporation, 100 Commerce Drive, Suite 301, Newark, DE 19713.

 The Reporting Person has not, during the five years prior to the filing of
this Schedule 13D, been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors).

 The Reporting Person has not, during the five years prior to the filing of
this Schedule 13D, been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such proceeding
was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to, federal or
state securities laws or finding any violation with respect to such laws.

 The Reporting Person is a citizen of the United Kingdom.

ITEM 4. PURPOSE OF TRANSACTION.

 In 2003, Mr. Rae financed the purchase of 699,235 shares of the Issuer's
common stock with a loan. In 2006, this loan was refinanced and 819,787 shares
(the "Shares") were pledged as collateral for the loan. On February 29, 2008,
the lender notified Mr. Rae that the loan was in default due to the reduction in
the value of the underlying collateral. In addition, since the loan defaulted,
the Shares were forfeited and would be transferred to the lender to satisfy the
loan, without any further instruction by Mr. Rae.

 The Reporting Person reserves the right to purchase additional shares of
Common Stock or dispose of Common Stock from time to time as conditions appear
advantageous for doing so. The Reporting Person is also eligible to participate
in current and future plans and arrangements pursuant to which the Issuer's
officers may acquire options.

CUSIP No. 671106 S100 SCHEDULE 13D (Amendment No. 1)

 Except for such actions as may be taken in his capacity as President and
Chief Executive of the Company, the Reporting Person does not have any plans or
proposals that relate to or would result in:

 (a) The acquisition by any person of additional securities of the Issuer,
or the disposition of securities of the Issuer;

 (b) An extraordinary corporate transaction involving the Issuer or any of
its subsidiaries;

 (c) A sale or transfer of a material amount of assets of the Issuer or any
of its subsidiaries;

 (d) Any change in the present board of directors or management of the
Issuer, including any plans or proposals to change the number or term of
directors or to fill any existing vacancies on the board;

 (e) Any material change in the present capitalization or dividend policy
of the Issuer;

 (f) Any other material change in the Issuer's business or corporate
structure, including but not limited to, if the Issuer is a registered
closed-end investment company, any plans or proposals to make any changes in its
investment policy for which a vote is required by section 13 of the Investment
Company Act of 1940;

 (g) Changes in the Issuer's charter, bylaws or instruments corresponding
thereto or other actions which may impede the acquisition of control of the
Issuer by any person;

 (h) Causing a class of securities of the Issuer to be delisted from a
national securities exchange or to cease to be authorized to be quoted in an
inter-dealer quotation system of a registered national securities association;

 (i) A class of equity securities of the Issuer becoming eligible for
termination of registration pursuant to Section 12(g)(4) of the Act; or

 (j) Any action similar to any of those actions enumerated above.

ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.

 (a) The Reporting Person beneficially owns 2,107,736 shares of Common
Stock, which represent approximately 2.41% of issued and outstanding shares of
Common Stock.

 (b) The Reporting Person has sole power to vote or to direct the vote of
1,508,501 shares of Common Stock and shared power to vote or direct the vote of
599,235 shares of the Common Stock. The Reporting Person has s sole power to
dispose or to direct the disposition of 1,508,501 shares of Common Stock and
shared power to dispose or to direct the disposition of 599,235 shares of Common
Stock.

CUSIP No. 671106 S100 SCHEDULE 13D (Amendment No. 1)

 (c) The reporting person has not effected any transactions in the Common
Stock during the sixty days prior to the filing of this Schedule 13D.

 (d) Victoria Rae, the Reporting Person's spouse, has the right to receive
and the power to direct the receipt of dividends from, or the proceeds from the
sale of, the 599,235 shares of Common Stock held in her name.

 (e) As a result of the transaction described herein, the Reporting Person
is now deemed the beneficial owner of less than 5% of the Common Stock of the
Issuer.

CUSIP No. 671106 S100 SCHEDULE 13D (Amendment No. 1)

 SIGNATURE

 After reasonable inquiry and to the best of my knowledge and belief,
I certify that the information set forth in this statement is true, complete and
correct.


 /s/ Alan R. Rae
 ----------------------------
 Alan Rae

 Dated: March 7, 2008