My approach: steel melts at 1500°C at least (and there are better steel that melt at higher temperatures). It is pretty high compared with diamond combustion temperature that is just 800°C and once you get to that point combustion will generate enough energy to burn diamond itself. So you can burn it in a steel piston.

Ok, I admit 800°C is pretty high compared with paper and wood (233–400°C) but it is a clean combustion (you obtain only CO₂, assuming a constant oxygen input). From this point of view hydrogen is the only competitor but it rise to 500°C, that is not little.

So, what is the practical limitation in the use of diamonds as fossil fuel?

edit:

Some commenters argued that diamond isn't actually rare, and the prices are artificially inflated. Maybe, but even then it doesn't make any sense. Every year, 26 tons of diamond are mined. Even if there's a conspiracy, and mining companies actually ten times more at 260 tons per year, this amount is absolutely dwarfed by the 7 billion tons of coal produced annually. Even if you're burning every single diamond produced, this will be absolutely negligible compared to the amount of coal (and other fossil fuels) currently used as fuels.

Don't forget about grade. Coal seams are close to pure carbon. Let's take for example 85% combustible material in a rock. Then you're getting 850 kg of carbon in one ton of rock. Diamond grade is much lower. If you're extremely lucky, you can get about 70 grams of diamond in one ton of rock. Most often you're getting less than 1 gram per ton of diamond. So unlike coal which can be burnt as mined, diamond has to be separated from its host rock. This adds yet another time consuming and costly process in order to produce diamond raw material which is less suitable for combustion relative to its chemically identical coal.