Biodiesel is gaining more importance phase because of its renewable sources of production, biodegradable in nature and non-toxic to the environment with low emissions. Conventional methods of biodiesel require high energy as they operate at higher temperature and pressures and use of harsh chemcals. Lipases are known for hydrolysis, transesterification and methanolysis in the presence of alcohol and can be produced by various microorganisms. However low productivity, cost of fermentation media and subsequent recovery of lipase from fermentation broth is a drawback for the up-scaling and commercialization of the process. 

In the present investigations a novel strategy of bioreactor operation was proposed to produce bio-diesel in an expanded bed bioreactor (EBR) using a fungal strain Metarhizium anisopliae - MTCC 892. The culture was immobilized on an inert material and used for lipase production using molasses as a sole production media in an EBR. The EBR was operated in continuous mode and various operating conditions like aeration rate, viscosity of the medium, composition of the molasses medium affecting lipase production were studied. Without adopting a purification step for lipase recovery from EBR a strategic addition of ethanol and sunflower oil was done to produce ethyl esters. The rate and ratio of ethanol and sunflower oil addition did not affect the further operation of bioreactor in terms of microbial activity. This strategic operation was resulted in increased volumetric productivity of Biodiesel. The results from the present investigation are encouraging and further studies will result in the transfer of technology on cost efficient manner.