Scottish Water is trialling a revolutionary new fuel system, using a blend of diesel and gas to slash both costs and the carbon emissions of its vans.

Clyde Valley Group Technologies (CVG), an alternative fuel company spun off from a touring car racing team, is offering to retro-fit the utility's fleet, claiming it would mean annual savings of £1.2 million from its £6.5m fuel bill, and that converting 500 out of its 1250 vehicles would cut emissions by about 16%.

However, the pace of the trial has frustrated the would-be contractor, and CVG has taken the unusual step of publicly accusing Scottish Water of "dragging its feet" unnecessarily. The quango has claimed that the installation "remained a possibility", but that only a lengthy trial can properly test the technology.

In June 2012, CVG retro-fitted a secondary fuelling systems to a Scottish Water Ford Transit van, allowing it to run on an alternative fuel blend of diesel and liquefied petroleum gas (LPG). CVG's system allows engines to run on a mix of diesel and gas and, potentially, the "green gas" biomethane. As the UK Government has fixed the price increase of gas until 2024, CVG claims the move would help Scottish Water offset increasing fuel costs.

Colin Neill, managing director of CVG, said: "Scotland's 16 anaerobic digestion plants are a fantastic way to produce renewable green gas from waste, so why Scottish Water continues to do nothing with these great opportunities is beyond me."

Neill ascribed the delay to the sudden death in October 2012 of former Scottish Water chief executive Richard Ackroyd, claiming that the trial had since been stuck in "bureaucratic limbo" within the 3400-employee organisation.

He said: "Sadly, Mr Ackroyd passed away and since then the ex-finance officer Douglas Millican was made chief executive and I'm not sure if he is aware of the trial vehicle and the savings that can be made, or that anyone above the level of fleet management at Scottish Water is aware of this trial and the savings that could be had."

A Scottish Water spokesman said: "We have been actively investigating opportunities to identify possible alternative fuels which could help us reduce emissions and keep costs lower for the benefit of customers.

"We are often approached by companies offering potential technological solutions and in these circumstances it is important to satisfy ourselves that the technology is both cost-effective and can achieve the desired results in the long term.

"We were approached by [CVG] about the trial fitting of a secondary fuelling system to a van in 2012. This installation went ahead and we are continuing to monitor the effectiveness of this system on the van concerned.

"As the typical life cycle of a Scottish Water van is around five years, it is important to confirm that this new system does not result in any increased maintenance or other costs which could offset any fuel savings made."

CVG has contrasted the two-and-a-half year process to date at Scottish Water with a trial of only 12 months by TNT Business Post prior to its converting 80 heavy trucks.

Dual-fuel systems are also capable of being fitted to heavy trucks, allowing them to run on a blend of diesel and natural gas in either liquid or compressed form, providing a yearly net fuel saving of around £10,000 for a truck averaging 100,000 miles. Promoters claim that emission savings of up to 50% are achievable when biomethane is used.