Renewable diesel expansions are generally quiet in the energy space; however, Valero’s ongoing expansions to its Diamond Green Diesel (DGD) joint venture with Darling Ingredients are beginning to garner greater attention. While it would appear to be a typical scaling of low-carbon fuels at the surface level, there is a larger-scale transition taking place regarding how Valero is positioning itself in the rapidly evolving renewable fuels marketplace.
An expansion that may seem normal until one sees the scope of DGD’s rapid growth
Valero refers to renewable diesel as a key component of its overall low-carbon portfolio, and Diamond Green Diesel (a 50/50 joint venture with Darling Ingredients) is playing an increasing role in this strategy. Currently, DGD is the largest renewable diesel producer in North America and the second-largest globally, with a total production capacity of 1.2 billion gallons annually.
The joint venture operates large-scale renewable diesel processing plants adjacent to Valero refineries in Norco, LA, and Port Arthur, TX. At these facilities, used cooking oil, inedible animal fats, and inedible corn oil are processed to produce renewable diesel capable of reducing life-cycle greenhouse gas emissions by up to 80% compared to conventional diesel.
DGD’s new Port Arthur renewable diesel facility (online in late 2022) increased renewable diesel production capacity by 470 million gallons per year, dramatically accelerating DGD’s production capabilities. With the addition of this plant, Valero’s position was established to achieve record levels of renewable diesel sales in future periods, further demonstrating the increase in demand for low-carbon fuels in California, Canada, Europe, and other areas.
Valero’s expansion represents the company’s entry into the next generation of renewable fuels
While Valero’s renewable diesel strategy involves increasing volume, the company is also entering into the sustainable aviation fuel (SAF) market. The SAF market is rapidly developing as a result of airline commitments to reduce their carbon footprint.
At the end of 2024, the joint venture completed a major SAF expansion project at the Port Arthur renewable diesel plant. This project included upgrades allowing the facility to produce neat SAF utilizing HEFA technology up to 50% of the 470 million-gallon annual capacity of the plant. This project will allow for the production of 235 million gallons of neat SAF per year, positioning DGD among the world’s largest SAF producers.
The project was much more than a technical upgrade.
It was completed on time and under budget and demonstrated the operational expertise of both partners in the joint venture. In 2024, the first marine shipment of neat SAF from the Port Arthur plant was delivered to the United States, confirming the Port Arthur facility can provide significant quantities of SAF to major U.S. aviation hubs.
How Valero’s renewable diesel expansion is indicative of the company’s long-term strategy
Valero’s renewable diesel operations have been increasingly integrated into the company’s business model. Darling Ingredients provides feedstock sourcing support to DGD as they collect 10% of the world’s inedible animal by-products and are the largest collectors of used cooking oil in North America. The combination of Darling Ingredients’ vertical integration, coupled with Valero’s refining and marketing capabilities, has provided DGD with a competitive advantage in scaling low-carbon fuels.
As more jurisdictions implement low-carbon fuel standards and aviation decarbonization targets begin to gain momentum, DGD’s expanding renewable diesel and SAF output demonstrates how Valero is preparing for long-term changes in global fuel demand and positioning itself at the forefront of the renewable fuels industry.
Valero’s continued expansion of its Diamond Green Diesel joint venture represents much more than routine capacity expansion – it represents a strategic pivot toward producing low-carbon fuels on a commercial scale. As DGD continues to accelerate its renewable diesel and SAF output, the company is becoming increasingly well-positioned to influence the next phase of North America’s renewable fuels industry.
