Biodiesel is great fuel, but it’s too expensive to make and it takes way too much land to make a little fuel. Per gallon, biodiesel is a lot more subsidized than ethanol. Blenders get a one dollar tax credit for every gallon of biodiesel that they blend with regular diesel compared to the fifty one cents blenders get for every gallon of ethanol they blend with gasoline. Most all biodiesel sold in this country is made from soybeans, a subsidized crop just like corn. (With current high corn prices very little corn subsidies are being paid by the way.) Biodiesel needs the bigger tax credit because it’s so expensive to make. It’s so expensive to make because it takes a whole lot more land to produce a gallon of biodiesel from soybeans than it does to produce a gallon of ethanol from corn. This makes feedstock prices are really high for biodiesel. You only get something like 50 gallons of soy oil per acre of beans on average, if that, and you don’t get a full 50 gallons of biodiesel from 50 gallons of vegetable oil. No biofuel concoctions we make for our cars are going to do much to reduce our dependence on foreign oil until we can figure out how to make one cheap enough to compete with petroleum based fuels on a cost basis and be able to make enough of that fuel from every acre we devote to it to supply several drivers. Maybe something like biodiesel from algae or cellulosic ethanol will pan out, maybe not.
I think the real problem is we are trying to figure out how to fuel machines that have been designed around petroleum fuel.
The trick is finding an abundant fuel and designing fuel around them.
Creating a replacement for gasoline and diesel will be very dificult. They have great fuel properties including high heat value, reasonably long shelf life and still reasonable price. They also work perfectly in the engines designed to burn them.
Luckily, in the next few years, there are products coming which will allow creation of engines that are much less picky about the fuel they will consume.