Biodiesel is a renewable, biodegradable fuel that can be manufactured domestically from vegetable oils, animal fats, or recycled restaurant grease.It is a cleaner-burning replacement for petroleum diesel fuel. Biodiesel is a liquid fuel often referred to as B100 or neat biodiesel in its pure, unblended form.iodiesel is a renewable, biodegradable fuel that can be manufactured domestically from vegetable oils, animal fats, or recycled restaurant grease.