For a comprehensive and critical perspective on the reality of Biodiesel, we recommend to visit Biodiesel Reality Check
Energy Justice Network: Heating and Transportation Fuels
Biodiesel is one of several liquid fuels posed as an alternative to using oil or natural gas to meet transportation and heating needs.
Other false solutions being promoted to satisfy our heating and transportation needs include ethanol, cellulosic ethanol, other biomass or waste-based fuels and coal-based liquid fuels. All of these have significant environmental, social and economic costs, especially to the communities that would host the production facilities of these alternative fuels.
Truly clean solutions focus on conservation and efficiency first, then meet energy needs with passive solar, solar hot water, ground-source (geothermal) and air-source heat pumps and clean electricity (from wind and solar). See our platform and our energy hierarchies chart for more on clean alternatives.
What is Biodiesel?
Biodiesel is fuel derived from animal or vegetable fats. Biodiesel fuel is processed and refined from raw materials with high oil content. Biodiesel can be mixed with petroleum diesel at any concentration in most modern diesel engines, although engine performance may decrease. Biomass fuel (such as used vegetable oil), is unrefined fuel which cannot be used in a typical engine. Biodiesel has recently been heavily promoted as the ideal fuel for transportation needs. The environmental costs of biodiesel have been overlooked in this process. The production of the raw materials used to make biodiesel requires a large input of energy and land resources. The refining process produces pollution through air emissions and solid waste products.
The Problems with Biodiesel
Producing Raw Materials (Soybeans)
Biodiesel commercially produced in the United States currently comes, almost exclusively, from soybeans. While it may be true soybeans are renewable in the sense that can be grown again, they are by no means a source of renewable energy. Worldwide production of vegetable oil and animal fat is no where sufficient enough to replace liquid fossil fuel use.
Biotech crops have also been soundly criticized for numerous other reasons including; potential for allergies and health problems,  undermining organic agriculture through contamination of non-biotech varieties, and even farmers being sued by Monsanto for “stealing” their “property” when Monsanto’s biotech crop genes end up contaminating the crops of farmers who haven’t planted them.
Elsewhere in the world, biodiesel production is linked to massive destruction of rainforests, peatlands, savannas, and grasslands as thousands of acres worldwide are cleared to plant palm oil and soybean plantations.  Growing these crops requires extracting and transporting water and causing issues with soil depletion, air and water pollution, genetic pollution from biotech crops, hunger, and net energy loss.
Current Petroleum Diesel Used for Transportation 60 billion gallons  Current Gasoline Used for Transportation 120 billion gallons  Biodiesel needed to Replace US Transportation Needs 140.8 billion gallons  Approximate Biodiesel Usage 500 gallons per year per car  Trucks & Cars in the United States 243 million  Biodiesel Yield from Soybeans 50 gallons per acre  Farmland in Soybeans 72 million acres  Total Cropland (Includes Pasture) 434 million acres 
Other Issues in Biodiesel Production
While soybeans are among the least productive source of fat for the production biodiesel, soybean production is the only crop now grown in a quantity that could produce enough biodiesel to be used in a commercial market. 90% of biodiesel is currently produced from soy. Only 10% is from recycled cooking oil. 
Biodiesel Refineries (needs updating...)
Supplying a 5-million-gallon biodiesel refinery requires about 100,000 acres of crops.  Vegetable Fats: Animal Fats: Air Emissions:
All of the following can be used in the production of biodiesel:
Vegetable Fats:virgin oil feedstock, rapeseed and soybean oils, mustard, palm oil, hemp, and algae, waste vegetable oil
Animal Fats:tallow, lard, yellow grease, Omega-3 fatty acids from fish oil
The oil and grease skimmed off the wastewater is landfilled; the remaining wastewater is sent to
the municipal sewer system.
Existing Biodiesel Refineries
Map and list of all existing and proposed biodiesel production facilities as of June 2008. [PDF]
Emissions from Biodiesel
Since biodiesel burns hotter than diesel, nitrogen oxide (NOx) emissions are actually higher and up to nearly 3 1/2 times that of gasoline.  While biodiesel is cleaner than conventional diesel in many other ways, it’s still dirtier (more air polluting) than gasoline. Biofuels in general “result in more atmospheric CO2 pollutants than burning an energy equivalent amount of oil" when considering the entire production and consumption cycle ("well-to-wheel"). If the motivation for biofuels is to combat global warming, the title of a New Scientist article in August 2007 summed up the latest studies well: “Forget biofuels - burn oil and plant forests instead.” 
Largely because of this net energy problem, the cost of biodiesel is actually significantly higher than diesel or gasoline, though this may not be reflected at the pump due to subsidies. U.S. tax payers will contribute up to $11 billion dollars to subsidize biodiesel between 2006 and 2012 averaging $2/gallon of biodiesel consumed, and $2.20/gallon of conventional diesel equivalent.  In addition, biodiesel input crops themselves are also heavily subsidized. Soy is currently the 4th most subsidized crop in the U.S., receiving $5.75 million in 2007 alone.  Typically with subsidies, most are disproportionately paid to large-scale farms often growing genetically modified crops.  There are also other hidden costs in soy production like land reclamation costs and subsidies to the oil and natural gas industries which soy production depends on (in the form of cash handouts, lax standards and enforcement, and military invasions).
Promoting Heating and Transportation Fuel
Alternatives on a Small Scale
Although no current viable options exist for replacing transportation and heating fuel needs, on a small scale you can significantly reduce the amount of these fuels that you use. Here are some suggestions:
Diesel engines which have been converted can run on 100% recycled vegetable oil leftover from use in restaurants and food processing. Recent increases in gas prices has motivated many people to switch their diesel running vehicle over to 100% vegetable oil operated. Greasecar is a company that sells the expensive, but relative simple conversion technology. Users with Greasecar's conversion get a supply of oil from Chinese restaurants or fast food restaurants, filter the oil and fill their car up with it. Waste vegetable oil could never be used at a large scale, because restaurants in the US produce about 2.5 billion pounds (300 million gallons) of waste cooking oil annually. 
Hydrogen and Hydrogen Fuel Cells
Various forms of Hydrogen are promoted as an alternative to fossil based fuels. Click the above link for further information.
"European Environment Agency Scientific Committee Calls for Suspension of Europe’s 10% Biofuels Target” April 10, 2008 by Green Car Congress
"New Studies Identify Change in Land Use Associated with Biofuel Production as Major Contributor of Greenhouse Gases, Far Offsetting Benefits of Most Current Biofuels” Feb. 8, 2008 by Green Car Congress