That's true, but diesel engines are only really less polluting in terms of CO2 due to using a lower amount of fuel consumed. If your goal is to reduce that, then as you say biofuels are the right answer.

However any mass adoption to biofuels would require different engine (existing engines will work fine on a low blend of biofuels, but very few will work on 10P%). For cars, why would you stick with a biodiesel engine which is more complicated and has higher levels of other pollutants, than some sort of biogasoline engine?