Over the past year or so, we've seen
Valero Energy (NYSE: VLO) make several moves
in the renewable fuels space. There was the refiner's
investmentin Solix Biofuels, which aims to craft an
algae-derived biofuel, as well as the funding of Terrabon, a
waste-to-gasoline start-up. And let's not forget Valero's
plungeinto ethanol, with a nearly half-billion-dollar bid
for seven plants formerly owned by the bankrupt Verasun
Energy.
Two weeks ago, Valero forged a joint fuel venture with
Darling International (NYSE: DAR), which Fool
analyst Todd Wenning introduced to Fools
back in June. Darling, a company that I've had my eye on
for years now, is the leading renderer of animal waste
byproducts (think fat, bones, and hides). The company also
has agreements with folks like
McDonald's (NYSE: MCD) and
Burger King to recycle their waste grease and
cooking oil.
Valero and Darling are seeking to convert some of these
waste products into "renewable diesel."
ConocoPhillips (NYSE: COP) pursued, and then
pulled the plug on, a similar project with
Tyson Foods (NYSE: TSN) when federal tax
credits were cut in half. It appears that the Valero/Darling
venture, which is looking at building a
135-million-gallon-per-year facility in Louisiana, also
hinges on the government's good graces. The pair have applied
for a loan guarantee from the Department of Energy, which is
really
dishing outthe taxpayer cash these days.
In more recent news,
Honeywell (NYSE: HON) subsidiary UOP -- a
refining process technology powerhouse that competes with the
likes of
Chevron (NYSE: CVX) -- has landed a contract
with the U.S. Navy and Air Force to supply 600,000 gallons of
renewable jet fuel. Feedstock suppliers include algae
start-up Solazyme, camelina specialist Sustainable Oils, and
agro-hulk Cargill. The latter firm will be supplying tallow,
an animal fat, for processing into fuel.
As unlikely as it may seem, animal fats seem to be gaining
momentum in the alternative fuel race. When investing in the
space, however, be sure to note the pile of carcasses of
failed companies in the corner of the room.
I tagged Darling in
Motley Fool CAPSwith an ill-timed outperform call last
September, but Fools rank the company a full five stars.
Check out their arguments, and make your own call on the
stock right
here.
This article was originally published as
Stick That in Your Fuel Tank and Burn Iton
Fool.com
Copyright © 2009 The Motley Fool, LLC. All rights
reserved.
|