Abstract Life-cycle greenhouse gas (GHG) emissions and net energy ratio (NER) have been evaluated for the production of palm biodiesel from palm fatty acid distillate (PFAD) which is a by-product in the refining process. For the case that PFAD is regarded as a processing residue, GHG emissions associated with biodiesel production in the considered process is 86.5% less than that of fossil diesel, which surpasses even the threshold of year 2018 of the Renewable Energy Directive (RED) of the European Union (EU). In the present study, it is also shown that the value of the NER is 3.23, which means that the energy yield from palm methyl ester (PME) production from PFAD is around three times larger than the input of fossil energy in the production. In conclusion, the palm biodiesel from PFAD can be one of various alternatives to the ‘conventional’ palm biodiesel which is made of refined palm oil, and sustainability issues and ethical problems can be considerably minimized with the strategic utilization of palm biodiesel produced from PFAD.