The subject of bio diesel continues to confuse me. Rudolf Diesel made his engine to run on bio diesel: (from Wikipedia)

Biodiesel is biodegradable and non-toxic, and typically produces about 60% less net carbon dioxide emissions than petroleum-based diesel,[2] as it is itself produced from atmospheric carbon dioxide via photosynthesis in plants.

Can someone please explain me why we are still using fossil based diesel that is worse for the engine and pollutes more?

Some vehicle manufacturers are positive about the use of biodiesel, citing lower engine wear as one of the fuel's benefits. Biodiesel is a better solvent than standard diesel, as it 'cleans' the engine, removing deposits in the fuel lines.

Bio diesel came up in the Italian news last year when the gas prices sky rocketed. As expected the gas companies where quick to explain that bio diesel were bad, very bad, but what surprised me was that some consumer organizations also stated that consumers should not use bio diesel. If it really is so bad, how do you explain the success of Lovecraft?

Lovecraft Biofuels  has converted over 1400 vehicles to run on vegetable oil in the last five years. We specialize in a single tank system that allows you to mix new or waste vegetable oil, diesel and/or bio-diesel in any combination using the original fuel tank. We have Conversion Centers in Los Angeles, California and Portland, Oregon and have customers from around the world successfully running on our conversions.

I can't help it, I want it. Let me know if you know of any companies in southern Europe that does bio diesel conversions.

via Wired [082 July 2007] (PDF)

It's not so cool as it could seem at a first sight. You have to evalute a few more aspects:
For producing biodiesel you need very big areas that have to be converted from food production to biodiesel, this means that this option will raise the costs of food (and this is very bad for poor areas in the world).
Producing Biodiesel costs more than using Diesel (otherwise we'd already use it) now it often costs less or equal than normal diesel only because of a cut of taxes on the former.
As a result if BioDiesel would become the "only" diesel available it will costs more and your food will costs more with a general regresssion in our economy, so the question is always the same: Are you ready to reduce your habits? This means having less money and using less your car even if using a cheaper (and dirty) alternative you could do this?

You raise some very good points (as usual:-).
Let's get the philosophical question out of the way first: yes, I am willing to pay more/suffer in order to pollute less. I will never be able to prove it, but I am convinced that the pollution in the Milano area is causing the allergies I have started getting the last few years [http://www.egilh.com/blog/archive/2006/05/05/2670.aspx]

The cost of food is a problem but I am not sure how big it would be. One of the cool things about bio fuel is that you can use filtered waste oil (that would otherwise be thrown away). Oil used for frying fries works grand, but it smells... Estimating the cost and impact on poor countries is difficult. I doubt they buy much food so I guess we are more impacted by food prices than they are.

You are right about the cost of the oil. Pumping it out of the ground is cheaper than "making" it. Or it has been so far. Wired has a series of article on the issue that covers the break even point for the various oil alternatives: http://www.wired.com/wired/archive/13.12/energy.html

Pollution aside; the -main- point is that we have to start moving to renewable energy sources. The earths oil supplies are limited and they will run out in a hurry when countries like China start motorizing the population.

But the perfectly honest, what really bugs me is that renewable energy sources are completely ignored in Italy. At least for all practical purposes. In theory you get government support for installing solar panels house but there are no official documentation so you have to rely on private "support groups" http://www.jacopofo.com/pannelli-solari