Biodiesel is an environmentally friendly fuel as compared to petroleum-derived diesel. This work aims to evaluate how much we are compromising with environment, society and investment returns by biodiesel production. Biodiesel is a long-chain alkyl ester, produced by the Chemical reaction of oil/fat with alcohol. The industrial production of biodiesel has various roots. The current study proposes to perform Life Cycle Assessment (LCA) on base-catalysed production method. The study has three steps 1) performing LCA on base catalysed production system. The LCA is performed using three pillars of sustainability: economic, social, and environmental prospects 2) analyze the results of LCA and assess the most sensitive components in the production 3) resource optimization: In this step, those critical components would be optimized to get the best utilization of resources. Concerning the economical LCA, this would be the best and attainable ways to lower the biodiesel production cost, concerning the social aspects, it would be the ways through which human health could be made less effective while producing biodiesel and concerning the environment, it would be the ways through which environmental impacts of biodiesel production could be minimized. The resource optimization study on those susceptible components would also yield how much possibly cost could be minimized, adverse social and environmental impacts could be reduced. These three steps would also be studied for petroleum-derived diesel and the results comparison would yield which fuel is really an environmentally friendly fuel, based on life cycle study rather than merely its combustion properties.