This report was prepared by Gerhard Zieroth. The use of coconut oil as a substitute for diesel fuel is attracting increasing interest. This MSc thesis enhances the understanding of this technology and points out directions for its future application in the Republic of the Marshall Islands (RMI) as well as other Pacific Island Countries. The research work was undertaken by the PIEPSAP project in cooperation with RWTH University in Aachen and it is based on a literature review and field data obtained in RMI and Fiji. The use of straight vegetable oil in standard diesel engines leads to certain adverse technical and consequently financial effects.