Genetic Modification or Genetic Engineering is a controversial topic mostly because it is venturing into the unknown. As far as biodiesel is concerned, GM could be used to produce oil seed crops with bigger yields of oil.

Will we create super weeds?
Is GM safe for human consumption?
Is it ethical?

From New Scientist:
By far the most common genetically modified (GM) organisms are crop plants. But the technology has now been applied to almost all forms of life, from pets that glow under UV light to bacteria which form HIV-blocking "living condoms" and from pigs bearing spinach genes to goats that produce spider silk.

GM tomatoes, as puree, first appeared on British supermarket shelves in 1996 (a different fresh GM tomato first appeared in the US in 1994), but the consumer furore that surrounded GM technology did not erupt until February 1999. This was because a controversial study suggested that a few strains of GM potatoes might be toxic to laboratory rats. Those experiments, subsequently criticized by other experts, were carried out in Scotland by biochemist Arpad Pustzai. This was because a controversial study suggested that a few strains of GM potatoes might be toxic to laboratory rats.

New Scientist - Has published many articles on GM

GM Contamination Register

Network of Concerned Farmers

Melbourne University- GM Canola could boost output