A new study commissioned by the Low Carbon Vehicle Partnership and NorthEast Biofuels in England has concluded that switching from the ultra low sulfur diesel that's now being phased in the US to biodiesel could almost completely eliminate net carbon dioxide emissions. Don't forget, biodiesel is still a carbon based fuel, so producing and burning it puts carbon back into the atmosphere but growing the feedstock takes it out, creating an almost neutral cycle.
The study in question looked at the full cycle from UK-grown rapeseed (canola to Americans) all through fuel production distribution and use. It found that carbon dioxide emissions were reduced by ninety-four percent and energy use was down ninety-seven percent. Achieving those figures was based on a scenario where the canola meal that is produced during processing is used to fuel a power-station. This meal is more often used as livestock feed and in that case the energy numbers wouldn't be nearly as high. Alternatively if they used the rest of the canola for producing cellulosic biofuel the numbers would likely be even better.
[Source: Biofuel Review]