What is Biodiesel? Biodiesel fuel is a fuel made from the oil of certain oilseed crops such as soybean, canola, palm kernel and Jatropha. The oil is extracted by the use of a press. The oil is then mixed in specific proportions with other agents which causes a chemical reaction. The results of this reaction are two products, biodiesel and Glycerin (soap). An illustration of the process to convert Jatropha into oil, fuel, and byproducts below.