The usage of sustainable energy sources is in accordance to the global strategy of sustainable development. The usage of biofuels in transport increases the safety of supply and reduces the dependence of the traffic sector on oil, reduction of greenhouse gas emission from the road transport, and support of the sustainable development of rural areas. The main feedstock for biodiesel manufacturing in Croatia is rapeseed oil. The used edible oil is also a possible source for the production of biodiesel so it is necessary to improve its collecting. Biofuel advantages (biodiesel and bioethanol) in relation to other alternative fuels can be seen in the usage of the existing vehicles with no or relatively slight modifications of existing vehicles, which depends on the concentration of biofuels in blend with fossil fuel. When Croatia enters to the EU will be applicable the provisions of the Directive 2003/30/EC on the promotion of the use of the biofuels or other renewable fuels for transport, which are already prescribed by the Regulation of the quality of biofuels (NN1 no. 178/2004). According to that provisions, 5,75% of the fossil fuels have to be substitute till end of year 2010 with renewable fuels. This fuels Croatia can produce or import. Using the temporarily set-aside land, respecting the crop rotation, it is possible to meet the Croatian needs for rapeseed oil in the next few years. The built plants and those which are in preparation will be sufficient for that. For additional increasing of biofuels share there are big quantities of unused biomass on disposal. Production cost of domestic made biodiesel in plant with capacity of 30.000 t/year, in the moment of finalisation of this analisys was 4,26 kn/l, and price of fossil diesel fuel was 7,2 kn/l. If we take to consideration costs of storage, mixing and distribution, result is that biodiesel from domestic production must be released from excise and road fees payment to be competitive to the price of fossil diesel. The Government incentives directed towards the production and usage of biodiesel in the Republic of Croatia have to be well-thought-of due to the advantages they bring (reduction of oil import, increase of fertilizer production, reduction of greenhouse gas emission, increase of employment, increase of the quantity of quality cattle feed, cultivation of the set-aside land, and the development of apiculture). Since the land which is temporarily used for the production of food would not be used for the production of oil rape intended for the production of biodiesel, it would be necessary to include the control of purpose usage of agricultural land. Only if this condition is met the production of biodiesel will be a factor of sustainable development.