Biodiesel can be produced from a variety of fats and oils. Soybean oil is the primary feedstock in Iowa. In general, soybean oil is mixed with an alcohol (usually methanol) and a catalyst. The action of the alcohol and catalyst cause the oil (triacylglyceride) molecules to be broken down into methyl esters (biodiesel) and crude glycerol. Crude glycerol is the principal co-product of biodiesel production. For every gallon of biodiesel produced, 0.7 pounds of crude glycerol are co-generated.

Biodiesel sales in the United States have increased rapidly since 1999 and annual production capacity in the U.S. is nearly 1.4 billion gallons. Iowa has 11 operating plants with 3 additional plants expected to be operational by December 2007. Production capacity in Iowa for biodiesel is 318.5 million gallons. Approximately 110,000 tons of crude glycerol could be generated annually by the biodiesel plants within Iowa.