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The residue and waste streams of existing industry offer feasible and sustainable raw materials for biofuel production. All kind of biomass contains carbon and hydrogen which can be turned into liquid form with suitable processes. Using hydrotreatment or Biomass-to-Liquid technologies (BTL) the liquid oil can be further converted into transportation biofuels. Hydrotreatment technology can be used to convert bio-oils and fats in to high quality diesel fuels that have superior fuel properties (e.g. low aromatic content and high cetane number) compared to regular diesel fuel and first generation ester-type diesel fuel. UPM has developed a new innovative technology based on hydrotreatment that can be used to convert Crude Tall Oil (CTO) into high quality renewable diesel fuel. This study concentrated on determining the functionality and possible effects of CTO based renewable diesel as a blending component on engine emissions and engine performance.