A renewable fuel made from vegetable oil or animal fats, including soybeans, canola oil.

By + More

What is it?

A renewable fuel made from vegetable oil or animal fats, including soybeans, canola oil, and even used cooking oil. It's sometimes mixed with conventional, petroleum-based diesel to help cut down on tailpipe emissions.

What's good about it?

Biodiesel is renewable, from domestic sources, and can be used with any diesel engine. It also has more energy than gasoline, which raises mileage. Like ordinary diesel, it offers good torque characteristics in cars, which drivers notice as power and acceleration.

What's bad about it?

Mileage is higher than for gasoline but a bit lower than for conventional diesels. And while it may help reduce greenhouse-gas emissions, biodiesel may actually raise the levels of other pollutants. It can also cause fuel-system problems in cars, especially at low temperatures.

Where would it be most useful?

For now, biodiesel seems most useful as a blend used in conventional diesel-powered automobiles. Some enthusiasts retrofit their cars to run on pure biodiesel—although that can void the warranty and cause other problems.

How much will it cost?

Properly refined biodiesel tends to cost more than gasoline. But it varies. Some restaurants can be persuaded to give away used cooking oil, which will power certain cars. If production ramps up, costs should come down, but it's not clear that will happen.

When's it coming?

Refiners already produce about 250 million gallons of biodiesel per year—but that's barely 1 percent of all diesel consumed in the United States. And diesels themselves represent a small portion of the car market here. The industry could gather steam if there are tax breaks or other subsidies.

What's taking so long?

Demand for biodiesel isn't as strong as for other oil alternatives, partly because diesel engines represent a small portion of the American car market. Even in Europe, where diesel cars are far more popular, biodiesel fervor has faded because raising the right crops might cause deforestation.

Who's doing it?

The strongest support for biodiesel comes from agricultural interests, such as the soybean industry. Most of the big automakers haven't shown significant interest.

Could it be a silver bullet?

No. Even if production grew rapidly, it would still be limited to use in cars with diesel engines or unusual modifications, and the benefits aren't as promising as those of cellulosic ethanol or other alternatives. But biodiesel could still help reduce greenhouse gases and petroleum use.