This paper reports a life cycle energy balance analysis of biodiesel production from canola under typical Western Australian (WA) agricultural practices. The analysis considers all direct and indirect energy consumptions during rapeseed cultivation, rapeseed oil extraction and transesterification for biodiesel production. By-products, including agricultural residue (rapeseed straw), rapeseed meal and glycerol are also considered in different scenarios. Without considering energy in by-products, the energy ratio (R), which is defined as the ratio of the total energy output to the total fossil energy input required during biodiesel production, is ~0.9. This indicates that the net energy return for biodiesel production form canola in WA is negative. Only marginal energy return is achieved even when energy in by-products is considered. For example, the highest R is ~1.70 in the case that energy in all by-products is counted. The energy productivity (E) is also low, ranging from 19.79 GJ/ha/year (biodiesel only) to 29.86 GJ/ha/year (biodiesel + all by-products). To replace 15% of diesel consumption in WA by canola-based biodiesel, over 0.8 million hectares of agricultural land is required - double the current total land for oilseed production in WA. Therefore, biodiesel production from canola is not sustainable and its wide implementation can significantly compete with food production.