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During my regular search for news I happed across this interesting blog post about Diamond Green Diesel (Darlings JV with Valero). It provides a rather good summation of the project, the Renewable Fuel Standard, the actual technology the facility will utilize, and financial viability.

This bit is important and one of the reasons I’m excited about DGD’s impact on Darlings bottom line:

Even if DGD can produce diesel as its management has indicated, the ultimate economic viability still relies on government incentives through RIN credits. A moving scale of RIN values, diesel fuel prices and processing costs will ultimately determine the economic viability of the project. The estimated cost of production and distribution is slightly over $4 per gallon. Assuming the machinery works as advertised, the one clear winner here is likely to be Darling International since it has increased the prospective market for its animal bi-products and used cooking oils by 10%. Therefore, if the customers who buy their protein and fat products are not offering a high enough value for their bi-products and used cooking oils, they can ship the products to Norco. Through the arbitrage of government incentive structures, they have created demand for their product which was not available previously and can use this demand to get preferred pricing in either the food or fuel market. That is one Darling of a deal!

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