Enjoy this short animation that my son Matiah made illustrating the difference between biodiesel and fossil fuels in terms of global warming impact. What it boils down to is that fossil fuels are a one-way street in terms of carbon going from underground into the atmosphere, whereas biofuels are recycling carbon that's already in the atmosphere. Of course, this is simplistic, and doesn't take into account land use issues. If we're cutting down rainforest to produce biodiesel it's much worse for the environment and global warming. But if we're already using land to grow crops primarily for food and the oil is a byproduct (as it is with soy), then it makes more sense. Another good option is to grow plants such as mustard or camelina that can grow in poor soils where not much else will grow. The key thing in terms of getting fuel via the ag route is that we're not using land just to grow the fuel crop unless it's land where we can't grow food. Also, that we're not destroying what was there to do grow our fuel crop. Even better is to use a no-till method, because tilling the soil releases carbon into the atmosphere. (See this article showing that the managing of the cropland has a lot to do with sustainability of biofuels). Seeds of camelina can simply be sowed on top of the snow in the winter and will germinate beautifully in the spring (according to farmer's who spoke at the U Montana Oilseed & Biodiesel Conference in '08).
And of course even better is using waste vegetable oil that's already been used to cook our french fries! Unfortunately there's not enough waste oil to supply very much of our fuel needs.. (Estimates I've seen say we could supply only 3 - 4% of our diesel fuel needs if we used all available waste vegie oil for biodiesel).
See my previous post from May of '08 discussing the unfair maligning of biodiesel due to confusion with ethanol.