Biodiesel is derived from vegetable oils in an inexpensive process called transesterification, in which vegetable oil reacts with methanol or ethanol in the presence of a catalyst. The catalyst is used to speed up the reaction. The process yields about 96 percent biodiesel.

Many vegetable oils, both those used as foods and those unsuited for human consumption, can produce oil for biodiesel. The most economical choice depends on the oil yield per acre, product quality, the value of the wastes and by-products of the transesterification process, geography, and government policies.

Soybean oil is currently the main source of biodiesel, but considerable interest has been shown in rapeseed oil because of its high oil yield and the value of its byproducts as livestock feed.

Biodiesel has physical properties similar to diesel. Emissions properties, however, are better for biodiesel than for petroleum diesel. High crude oil prices and diminishing U.S. fossil-fuel resources could make manufacturing diesel from vegetable oils more attractive economically.

Figure 1 Biodiesel-fueled bus "Biodiesel" means diesel fuel made from plant or animal oils instead of petroleum.