A New York City-based company that manufactures and distributes fuel made from vegetables has begun shipping to Europe.

Innovation Fuels, which has a refinery in New York Harbor, sent 2,000 metric tons of biodiesel to Rotterdam, the Netherlands, one of the first direct shipments of this kind to the European continent from an American producer.

Biodiesel is fuel derived from agricultural products such as vegetable oil, which gives off lower emissions of carbon dioxide than traditional gasoline. Unlike ethanol, another environmentally friendly fuel, biodiesel can be used in diesel engines.

In Europe, where a majority of vehicles run on diesel and governments have instituted strict carbon emissions standards, biodiesel is a $12.3 billion-a-year industry.

American sales are smaller, although as government mandates on emissions becomes more stringent, Innovation Fuels’s chief executive, John Fox, said he is expecting demand to surge.

“The initial shipping of biodiesel from the New York Harbor is wonderful validation for Innovation Fuels,” he said in a statement.

The majority of American biodiesel manufacturers are clustered in the Midwest, near crop supplies, and sell their biodiesel to third-party traders that then off-load the fuel abroad. This cuts into profits, because companies must split the sales income with the traders.

Mr. Fox is employing a different strategy: “Our focus is to locate biodiesel production in port locations. It’s important for us to have these locations in ports so we can serve domestic markets and international markets.”

Innovation Fuels, which recently received $15.5 million in financing from several investors, including the New York State Common Retirement Fund, produces 950,000 barrels of biodiesel a year.

Its shipment to Europe comes at a touchy time for American-European trade in biofuels, Mr. Fox said. Since June, European traders have been claiming that American companies have an unfair advantage when selling in Europe. While both American and European governments heavily subsidize the production of biofuels, the European Biodiesel Board charges that American companies receive double subsidies — from America and the European Union. Because of the extra money they save, American biodiesel companies are undercutting European producers, it claims.

To reduce what they see as the unfair advantage of American subsidies, the European Biodiesel Board is lobbying European officials to institute punitive tariffs against American producers.

The American trade group, the National Biodiesel Board, is fighting this move. In a statement, its vice president of federal affairs, Manning Feraci, called the charges leveled by European biodiesel companies “disingenuous” and “hypocritical,” claiming that rising crop prices and not American companies were to blame for European producers’ woes.

“European producers already benefit from tremendous subsidies. The pot shouldn’t call the kettle black,” a senior research fellow at the Heritage Foundation, Ariel Cohen, said. If the European Union wants to open trade talks with America, and both sides agree to drop biofuel subsidies, then both sides would benefit from fairer trade, Mr. Cohen said.