Biodiesel (fatty acid alkyl esters) is a cleaner burning diesel replacement fuel made from natural, renewable sources such as new and used vegetable oils and animal fats. Just like petroleum diesel, biodiesel operates in compression-ignition engines. Blends of up to 20% biodiesel (mixed with petroleum diesel fuels) can be used in nearly all diesel equipment and are compatible with most storage and distribution equipment. These low-level blends (20% and less) generally do not require any engine modifications, however, users should consult their OEM and engine warranty statement. Biodiesel can provide the same payload capacity and as diesel. For more information on fuel blends of 20% biodiesel or less, please see our site on fuel blends.

Higher blends, even pure biodiesel (100% biodiesel, or B100), may be able to be used in some engines (built since 1994) with little or no modification. However, engine manufacturers are concerned about the impact of B100 on engine durability. Additionally, B100 is generally not suitable for use in low temperature conditions. Transportation and storage of B100, however, require special management.

Using biodiesel in a conventional diesel engine substantially reduces emissions of unburned hydrocarbons, carbon monoxide, sulfates, polycyclic aromatic hydrocarbons, nitrated polycyclic aromatic hydrocarbons, and particulate matter. These reductions increase as the amount of biodiesel blended into diesel fuel increases. The best emission reductions are seen with B100.

The use of biodiesel decreases the solid carbon fraction of particulate matter (since the oxygen in biodiesel enables more complete combustion to CO₂) and reduces the sulfate fraction (biodiesel contains less than 15 ppm sulfur), while the soluble, or hydrocarbon, fraction stays the same or increases. Therefore, biodiesel works well with emission control technologies such as diesel oxidation catalysts (which reduce the soluble fraction of diesel particulate but not the solid carbon fraction).

Emissions of nitrogen oxides increase with the concentration of biodiesel in the fuel and the increase is roughly 2% for B20. Some biodiesel produces more nitrogen oxides than others, and some additives have shown promise in reducing the increases. More R&D is needed to resolve this issue.

Biodiesel has physical properties very similar to conventional diesel.