In this thesis the main focus is given on the alternative source of fuel as Palm Oil Methyl Ester (PME) was integrated to ethanol-biodiesel fuel in order to reduce the emissions. The percentage of ethanol is up to 20% in volume. Thus, the effects of ethanol on particulate matter (PM) components, soluble organic fraction (SOF) and dry soot (DS) utilizing variant of fuel blends were investigated. Utilizing a composite filter, the ester-ethanol-diesel characteristic such as mass concentration in term PM, SOF and DS were analyzed under different engine operating conditions utilizing four cylinder engine. The results show that incrementing ethanol in coalesced fuel will decrement the PM, SOF and DS at low and middle load. In additament, as the load is incremented, the PM component such as SOF and DS additionally increase. Thus, ethanol-biodiesel fuel can reduce the emissions for low and middle load condition. This research focuses withal on the utilization of biodiesel integration possibilities for engenderment of biodiesel and bioethanol utilizing a single source as a feedstock (oil palm) were explored through process simulation. The oil extracted from Fresh Fruit Bunches was considered as the feedstock for biodiesel engenderment. An extractive reaction process is proposed for transesterification reaction utilizing in situ engendered ethanol, which is obtained from two types of lignocelluloses residues of palm industry (Empty Fruit Bunches and Palm Press Fiber). Several ways of integration were analyzed. The integration of material flows between ethanol and biodiesel engenderment lines sanctioned a reduction in unit energy costs down to 3.4%, whereas the material and energy integration leaded to 39.8% decrease of those costs. The proposed integrated configuration is a paramount option when the technology for ethanol engenderment from biomass reaches such a degree of maturity that its engenderment costs be commensurable with those of grain or cane ethanol. Recently, second-generation bio-ethanol (SGB), which utilizes yarely available lignocelluloses biomass has received much interest as another potential source of liquid biofuel commensurable to biodiesel. Thus the aim of this paper is to determine the energy efficiency and to compare the efficacy of SGB and palm methyl ester (PME) processes. It was found that the engenderment of bio-ethanol is more thermodynamically sustainable than that of biodiesel as the net exergy value (NExV) of SGB is 10% higher than that of PME. Contrarily, the former has a net energy value (NEV) which is 9% lower than the latter.