This paper deals with the possibility of using coconut oil and coconut biodiesel in energy generation. The environmental, energetic and socio-economic aspects are discussed. The steps for obtaining biodiesel from coconut oil are presented as well as the characterisation of coconut oil and coconut biodiesel. Results for performance and emissions of using coconut oil and coconut biodiesel in a stationary engine are also shown. Coconut oil can be successfully applied in compression ignition engine blending with diesel up to 20% of coconut oil. Coconut oil can also be converted in biodiesel and applied in compression ignition engines neat or blended with diesel in any proportion. The possibility of using coconut oil in power generation leads to the concepts of sustainability and cleaner production, by the use of a raw material that contributes to CO2 absorption. [Received: August 16, 2012; Accepted: May 1, 2013]