It’s modern-day alchemy: take raw material destined for a landfill and convert it into a sustainable fuel that’s powering vehicles and equipment around the globe. This almost magical transformation is enacted daily by Diamond Green Diesel, the largest North American producer of renewable diesel made primarily from restaurant and meat industry waste.
Formed in 2011, DGD is a joint venture of two industry powerhouses: Darling Ingredients, which repurposes animal-based and other natural materials in its 200 processing plants operating on five continents, and Valero Energy, a Fortune 500 manufacturer and marketer of petroleum-based and low-carbon liquid fuels and petrochemical products.
“DGD draws on the expertise and talent of two world-class companies, each doing what we do best: one collecting a feedstock, the other refining and making a renewable fuel,” said Sandy Dudley, EVP—Renewables and U.S. Specialty Operations of renewables and strategy at Darling Ingredients. “We’re both industry innovators, and together have established a sustainable energy joint venture that reduces waste while meeting growing demand for low-carbon emission fuel.”
The synergies between the companies are clear and the product is exceptional: the renewable diesel can be used in any diesel fuel tank with no special modifications, equipment or distribution infrastructure needed. It simply replaces petroleum diesel in the fuel mix, reducing greenhouse gas emissions by up to 80%.
DGD’s first processing facility opened in Norco, Louisiana, in 2013 and quickly expanded from an initial 137-million gallon capacity to its 290-million-gallon production in 2021. With demand expected to grow, the company initiated construction of a second, 400-million-gallon facility nearby, with additional plans for an even larger, 470-million-gallon plant in Texas. Mid-way through construction of the second facility, the well-capitalized company turned to CoBank for additional liquidity, with a $400 million revolving line of credit funded by a 13-member Farm Credit syndication.
“As DGD grew and we continued to invest large amounts into two new facilities simultaneously, we decided additional liquidity was necessary to manage the business,” said Martijn Van Steenpaal, SVP and treasurer with Darling.
The strength and commitment of the DGD joint venture is underscored by its response to Hurricane Ida, which struck Louisiana, impeding construction on DGD’s second facility. The joint venture forged ahead to meet its commitment to stockholders: construction finished ahead of schedule and on budget. Renewable diesel is now flowing out of DGD 2, with DGD 3 expected to add its production in first quarter 2023.
“CoBank was first in line to support DGD, providing liquidity that is critical to manage cash flow volatility of the business and our ongoing expansion,” said John Locke, VP and treasurer with Valero.