Bio-fuel has come under consideration due to the effect of fossil oil crisis. Bio-fuels are acting as a renewable replacement of petroleum fuels due to some environmental and economic benefits. Bio-fuel can be produced from different kinds of raw materials. Researchers have seen that absolute utilization of bio-fuel is not appreciable as it will affect the food chain but the blend of bio-fuel with conventional fuel could precisely reduce its use and become beneficial to green house effect. It has been inferred that in the hot and cold environment bio-fuel is not fully convenient to replace fossil fuel. In the controlled environment with modified combustion equipment, biodiesel can be used as an alternate fuel. Research results reveal that bio-fuel has lower heating value in comparison to diesel fuel so it is consumed more in fuel-break mean effective power ratio and emits more NOx in comparison to the diesel fuel. Thus there remains a compromise between GHG emission and saving of fossil fuel energy by introducing bio-fuel either totally or as a blending component of engine fuel. Finally, bio-fuel could be considered as a replenishable energy source which might pave the future pathway management and planning of energy.