NOVELTY - An apparatus comprises a porous membrane for separating a reaction mixture from a permeate. The reaction mixture comprises an oil-in-alcohol emulsion and a catalyst for converting oil in the oil-in-alcohol emulsion to fuel or fuel additive. The fuel or fuel additive is substantially miscible in the alcohol. The porous membrane is substantially impermeable to oil droplets in the emulsion, and substantially permeable at least to fuel or fuel additive, and optionally to alcohol.    USE - Used for generating fuel or fuel additive such as fatty acid alkyl esters from lipid feedstock (e.g. virgin vegetable oils, vegetable oils, animal fats, palm oil, non-edible oils or waste frying oils), useful in diesel engine (claimed).    ADVANTAGE - The apparatus causes transesterification of triglyceride sources, thus reduces the saponification. The soap aggregates formed are filtered by porous membrane, thus soap aggregates in the permeate is substantially reduced. The apparatus uses lipid feedstock such as virgin vegetable oils, vegetable oils, animal fats, palm oil, non-edible oils or waste frying oils which requires less pretreatment, and these oils have lower content of free fatty acids which avoids aggregate and soap formation, making the operation easy. The apparatus uses basic catalyst making the production process more coast effective and faster. The reaction condition makes the process less corrosive. Shearing action from the feed pump, break up the droplets of oil feedstock in the oil-alcohol emulsion and thus increases the surface area of oil available for the transesterification reaction. The retention of potentially stable emulsions formed as a result of byproduct soap formation and the removal of aggregate formation from the fatty acid alkyl ester permeate regardless of catalyst selection and the triglyceride source greatly improves the processability of a wide range of feedstock. Continuous removal of product from the reaction side of the membrane serves to improve yield, especially for equilibrium limited reactions. The reaction is carried out at increased temperature relative to ambient temperature in the apparatus, which improves the speed of reaction as well as flowability of reactants and products. The immiscibility of oil and alcohol improves the production of fatty acid alkyl esters as the fuel or fuel additive.    DETAILED DESCRIPTION - An INDEPENDENT CLAIM is included for generating fuel or fuel additive involving placing the reaction mixture on the reaction mixture side of the porous membrane, for converting oil in the oil-in-alcohol emulsion to produce fuel or fuel additive that is substantially miscible in the alcohol; and causing the fuel or fuel additive to permeate the porous membrane to form permeate on permeate side of the porous membrane opposite to the reaction mixture side.