Aircraft makers Boeing and Commercial Aircraft Corp of China have launched a joint pilot project to turn used cooking oil into jet fuel.

Their plant, based in the southeastern Chinese city of Hangzhou, will be able to convert just under 240,000 liters a year of used cooking oil into fuel, Boeing said in a statement.

The project will allow the two aircraft makers to test the viability of producing biofuel using the cheap and widely available form of cooking waste, referred to in China as "gutter oil".

Boeing and its Chinese state-owned partner estimate that 1.8 billion liters of fuel could be produced in China a year using gutter oil.

In February, the Civil Aviation Administration of China granted a subsidiary of state-owned behemoth Sinopec Corp a license to produce jet fuel from used cooking oil.

Gutter oil has long been a public health concern in China due to its widespread use in restaurants. Used cooking oil can contain toxic compounds and is often considered insanitary.

Chinese media reported in 2010 that crime rings were collecting used cooking oil from sewers and drains, rebottling it and selling it as new.

Over the past two years, dozens of people have been given lengthy prison sentences for the scam, which has made many Chinese in major cities sick. Last year one man was sentenced to life in prison for making and trafficking gutter oil.