The question to biodiesel or not biodiesel, and what is ethical and sustainable is complex. The TDI is well suited to burn biodiesel, and it offers several advantages (as noted in other posts). We've been burning biodiesel for about 1.5 years, and found no significant power loss (usually run at lower speeds), in fact it seems we've had more power; fuel economy seemed the same, and the exhaust much less smelly. It all sounds good. However, we've discovered from a mechanic who works on diesels that he has had to replace several diesel engines running on the local biodiesel, and that the local stuff is junky, and burns out engines. It seems the process they're using around here doesn't leave it clean enough; although it's OK for older engines (and old farm equipment) it's not clean enough for modern engines (may work for a few years OK, then caput). And so I'd check with other users in your area to ensure the quality of the biodiesel. In making biodiesel a producer will use lye; and later have to remove moisture that may be left in the fuel. Small producers may not do it well enough. The original diesel engine was designed to burn peanut oil. The modern Jetta TDI will burn straight soybean oil, as an article in Cocto magazine described about a year ago. This may be a cleaner way if you can't get quality biodiesel locally.
Now, regarding sustainability -- is biodiesel a true green, renewable, sustainable fuel? In certain account yes; in many accounts NO. Yes for recycled oil, and by-product oils. Newer technologies (algae) are not commercialized yet, so there is NO true commercial sustainable methods yet. Of course posters defending soybean oil will object to my comments here, but I would recommend you view the film "The Future of Food" that lays it out plain and clear how Monsato is devastating farm land everywhere, like South America with it's soybean fields (making locals very sick with their excessive use of Roundup pesticide). This is not healthy or sustainable. Modern farming methods as used to grow soybeans deplete soil. Malaysia has converted nearly all it's native forests to oil palms, completely wiping out it's normal ecology, making the urangutan on the endangered species list. You could never produce enough biodiesel from all the farm land and forest land in the world to satisfy the world consumption if all engines were diesel. Hence it's not a true green solution, nor modern practises sustainable.
Having said that, in many cases it is better to burn biodiesel as to support advancement in green technologies. The demand for biodiesel promotes research in oil generation, such as a bacteria that digests garbage into sugar, and another that digests the sugar into oil. Eventually some of these technologies will yield a true commercial sustainable fuel. In the meantime I propose you investigate the source of the oil in your local biodiesel and place preference on the more acceptable sources (ie. yes to recycle or by-product oils, no to Malaysia palm oil, no to South America soybean oil).
This post isn't meant to upset anyone who supports all sources of biodiesel. I just want to clarify it for those who are very conscious of the sources of their consumption.
