Kirsten Flynn"s post at treehugger: www.treehugger.com/files/2006/07/ethanol_vs_biod.php

While walking and biking will always beat driving for sustainability, if you have to own a non-electric vehicle then there's no doubt that a diesel vehicle fueled with biodiesel is the least damaging choice. I base this opinion on the data within articles like this one: (http://www.mda.state.mn.us/ethanol/balance.html) which states Summary - Energy Balance/Energy Life Cycle Inventory
Fuel * Energy yield Net Energy (loss) or gain
Gasoline 0.805 (19.5 percent)
Diesel 0.843 (15.7 percent)
Ethanol 1.34 34 percent
Biodiesel 3.20 220 percent

and

(http://www1.umn.edu/umnnews/Feature_Stories/Ethanol_fuel_presents_a_corn...)
Emissions from the production and use of corn grain ethanol were 12 percent lower than the net emissions from gasoline; the reduction was 41 percent for biodiesel from soybeans.

At this point, however, depending on where you live, you will probably have to make your own biodiesel as I do from the open source instructions on (http://biodieselcommunity.org). I make 30 gallons at a time from used vegetable oil from a restaurant.

On a commercial level, a great deal of work is going into developing algae as a crop, as there are certain varieties that are 50% oil. The trick to algae production is exposing lower layers of algae to light, as the top layer on a typical pond limits production to the first couple of inches of the algae surface. Field trials to date on algae production include a system of spiraling tubes that rotate the algae crop to expose the lower layers to the sun, grain silos repurposed with tubes and fiber optic light sources to grow a vertical crop, and algae crops utilized to feed on CO2 from smokestack scrubbers on coal-fired power plants.

Biodiesel is not favored by the same interest or level of subsidies that currently support work in hydrogen fuel cells (an absolute boondoggle) and ethanol (a distant second to biodiesel IMHO.) I'd like to see effort brought to bear to gain more attention and funding to this renewable fuel.

If individual automotive transportation is to remain an option in the U.S., at this point in alt-fuel technology the most sustainable option would be diesel-electric hybrids running on biodiesel. In the US, locomotives are already diesel-electric hybrids (although I believe they generally running on petro diesel.) However, in Europe diesel-electric hybrid test vehicles that can get hundreds of miles to the gallon have already been developed.

The technology is already available. We simply lack the will to implement it on a broad scale.