Biodiesel refers to a diesel-equivalent processed fuel derived from biological sources (such as vegetable oils) which can be used in unmodified diesel-engine vehicles. It is thus distinguished from the straight vegetable oils (SVO) or waste vegetable oils (WVO) used as fuels in some diesel vehicles.

In this article's context, biodiesel refers to alkyl esters made from the transesterification of vegetable oils or animal fats.

On August 31, 1937, G. Chavanne of the University of Brussels (Belgium) was granted a patent for a 'Procedure for the transformation of vegetable oils for their uses as fuels' (fr. 'Procédé de Transformation d’Huiles Végétales en Vue de Leur Utilisation comme Carburants') Belgian Patent 422,877. This patent described the alcoholysis (often referred to as transesterification) of vegetable oils using ethanol (and mentions methanol) in order to separate the fatty acids from the glycerol by replacing the glycerol with short linear alcohols. This appears to be the first account of the production of what is known as 'biodiesel' today.^[1]

Biodiesel is biodegradable and non-toxic, and typically produces about 60% less net lifecycle carbon dioxide emissions, as it is itself produced from atmospheric carbon dioxide via photosynthesis in plants. However, the smog forming hydrocarbon emissions are 35% greater, and the Nitrogen Oxide emissions are also greater, than from petroleum-based diesel,^[2][3] . Though this figure can actually differ widely between fuels depending upon production and processing methods employed in their creation. Pure biodiesel is available at many gas stations in Germany.^[4]

Some vehicle manufacturers are positive about the use of biodiesel, citing lower engine wear as one of the fuel's benefits. Biodiesel is a better solvent than standard diesel, as it 'cleans' the engine, removing deposits in the fuel lines. However, this may cause blockages in the fuel injectors if an engine has been previously run on petroleum diesel for years. For this reason, car manufacturers recommend that the fuel filter be changed a few months after switching to biodiesel (the fuel filter, as part of a routine maintenance plan, is generally replaced anyway). Most manufacturers release lists of the cars that will run on 100% biodiesel.^[5]

Other vehicle manufacturers remain cautious over use of biodiesel. In the UK many only maintain their engine warranties for use with maximum 5% biodiesel — blended in with 95% conventional diesel — although this position is generally considered to be overly cautious.^[6] Scania^[7] and Volkswagen^[8] are exceptions, allowing most of their engines to operate on 100% biodiesel. Peugeot and Citroën are also exceptions in that they have both recently announced that their PSA HDi engine can run on 30% biodiesel. The Ford Focus has recently been converted to run on Biodiesel.

The British business man RIchard Branson's Virgin Voyager train, number 220007 Thames Voyager ^{[citation needed]} was converted to run on Biodiesel, although an adverse effect occurred when it was proven to reduce reliability and to raise costs of maintenance significantly.

Biodiesel can also be used as a heating fuel in domestic and commercial boilers. Existing oil boilers may contain rubber parts and may require conversion to run on biodiesel, but the conversion process is usually relatively simple-- involving the exchanging of rubber parts for synthetic ones due to biodiesel being a strong solvent. One should not burn B100 in an existing home heater without breaking it in, as biodiesel will disolve coagulated heating oil, which can break off in chunks and cause problems. It is suggested to start by using biodiesel as an additive, and then work your way up to burning biodiesel/petrodiesel mixes of stronger amounts. However, thanks to its strong solvent power, burning biodiesel will incrase the efficiency of your home heater.

Biodiesel can be distributed using today's infrastructure, and its use and production are increasing rapidly. Fuel stations are beginning to make biodiesel available to consumers, and a growing number of transport fleets use it as an additive in their fuel. Biodiesel is generally more expensive to purchase than petroleum diesel but this differential may diminish due to economies of scale, the rising cost of petroleum and government tax subsidies. In Germany, biodiesel is generally cheaper than normal diesel at gas stations that sell both products.