Research suggests that there is a dramatic reduction in CO and particulate matter (PM) emissions when butanol is blended with biodiesel derived from rapeseed oil (RME), but a small increase in THC emissions. The addition of hydrogen as a combustion enhancer can be used to counteract the increase in THC emissions seen with the butanol fuel blends and further reduce CO and PM emissions. The emission benefits with hydrogen addition were shown to be further improved for RME-butanol fuel blends. The penalty for using hydrogen is an increase in NO emissions due to the increase in NO formation during combustion, but this is expected to have significant benefits in the function of aftertreatment systems. In this study, it is shown that the increase in engine-out NO emissions can be effectively controlled through exhaust gas recirculation (EGR) without an excessive PM penalty thanks to the low PM concentration in the EGR (with an impeding PM recirculation penalty).