Diesel-like liquid obtained from materials of biological origin is called biodiesel. Biodiesel can be obtained (i) either from lipids accumulated plants and algae or (ii) from hydrocarbons (compounds containing only carbon and hydrogen) produced by some plants and algae. Lipids as a source of biodiesel Lipids are accumulated in seeds of many plant species like sunflower, rapeseed, linseed, soybean, peanut, olive etc. and by some algae. The lipids have high energy value and can be burnt to heat boilers or used as diesel engine fuel. However, the oils are not easily injectable into the engine combustion chamber due to their high viscosity. This problem is overcome by producing esters of the lipid fatty acids. The esterified lipid fatty acids constitute 'biodiesel' and can be used in unblended form in normal diesel engine with little or no modification in the engine. Use of such a biodiesel is the limiting factor. Even so, there is a growing interest in oilseed based biodiesel production and production capacities are being expanded in some European countries and U.S.A. In developing countries, on the other hand, vegetable oils command a much higher price than diesel; this is particularly true for edible oils. In addition, there is generally a shortage of lipids. Thus it is highly unlikely that vegetable lipid-derived biodiesel would be used on any scale in the developing countries. Biodiesel from hydrocarbons Several plant species and some algae accumulate hydrocarbons which can be used as fuel. The plant species producing hydrocarbons usually accumulate them in the form of latex. Such plants are mainly of three types: (i) members of the family Euphorbiaceae, e.g. certain species of Euphorbia (E. lathyris), (ii) milk weeds (Asclepias spp.) and (iii) a leguminous tropical called Copaifera multijuga. The euphorbeans and milkweeds can be grown in relatively dry environments on lands not suited for crop production; this makes them highly attractive sources of biofuels. The Euphorbians are relatives of plants used to produce rubber; they produce a latex which about 30% hydrocarbons emulsified in water. Removal of water yields a liquid having hydrocarbons having lower molecular weight than of those present in petrol. For example, Euphorbia lathyris latex has reduced terpenoids (5% of plant dry weight) and hexoses (20% of plant dry weight). The terpenoids can be converted into a gasoline-like product, while the sugars can be converted into ethanol. According to an estimate E. lathyris can yield about 25 tons biomass ha/yr; this would give an energy equivalent of 26 MJ in the form of reduced terpenoids and 22 MJ as ethanol. It would be quite rewarding to enhance the hydrocarbons yields of such plants using agronomic, plant breeding and recombinant-DNA approaches. Milkweeds, e.g. Asclepias speciosa also produce a latex having about 30% hydrocarbons. The present status of biodiesel project is generally on an experimental scale. But the lipid-based biodiesel production is being scaled up and may become a commercial feasibility in future.