It is a good innovation, though the advantages are not about the emissions. Bio-diesel has almost the same kind of emissions as normal petroleum based diesel. The main purpose of switching to bio-diesel is to reduce dependency on petroleum diesel, which is a non-renewable, fossil fuel. This way, the naturally occurring petroleum reserves can last longer and can be diverted to other areas such as small scale industries etc.
Ethanol would not really be a good choice as it is not fit to be used in a diesel engine. It is better suited for more small scale applications.