SOY DIESEL Biodiesel is made from natural, renewable sources such as soybean oil. Soy-based biodiesel is made by a chemical process called transesterification, whereby the soybean oil triglycerides are reacting with, most commonly, methanol. This process makes biodiesel and a by-product, called glycerol. Biodiesel functions in the engine the same way as petroleum diesel. But, biodiesel helps reduce exhaust emissions. It delivers similar horsepower, torque and efficiency as petroleum diesel.