Darling Ingredients Inc. Announces Agreement to Bring Sustainable Aviation Fuel Supply to Chicago Midway Airport through Diamond Green Diesel Joint Venture

Rhea-AI Summary

Darling Ingredients Inc. (NYSE: DAR) announced that its joint venture Diamond Green Diesel (DGD) will supply sustainable aviation fuel (SAF) to Chicago Midway International Airport. The two-year agreement involves Valero Marketing and Supply Company and Southwest Airlines Co. (NYSE: LUV). Southwest will purchase a minimum of 3.6 million gallons of neat SAF, with an option to buy up to 25 million gallons.

The SAF, produced from waste-based feedstocks, is expected to reduce lifecycle greenhouse gas emissions by up to 80% compared to conventional jet fuel. It will be certified by a CORSIA-approved Sustainability Certification Scheme. The DGD Port Arthur plant will be able to upgrade about 50% of its 470 million gallon annual production capacity to SAF by Q4 2024, potentially making DGD one of the world's largest SAF manufacturers.

Positive

• Agreement to supply sustainable aviation fuel to Chicago Midway Airport
• Minimum purchase of 3.6 million gallons of neat SAF by Southwest Airlines
• Option for Southwest to purchase up to 25 million gallons of neat SAF
• SAF production expected to reduce greenhouse gas emissions by up to 80%
• DGD Port Arthur plant to upgrade 50% of production capacity to SAF by Q4 2024
• Potential to become one of the largest SAF manufacturers globally

Negative

• None.

Insights

Financial Analyst

This agreement marks a significant milestone for Darling Ingredients (DAR) and its joint venture Diamond Green Diesel (DGD). The deal to supply sustainable aviation fuel (SAF) to Chicago Midway Airport demonstrates DAR's growing presence in the renewable energy market. The minimum purchase of 3.6 million gallons of neat SAF, with potential for up to 25 million gallons, represents a substantial revenue opportunity. The ability to produce SAF with up to 80% reduction in lifecycle greenhouse gas emissions positions DAR favorably in the rapidly growing sustainable fuel market. The planned upgrade of 50% of DGD's Port Arthur plant capacity to SAF production by Q4 2024 further solidifies DAR's market position. This move aligns with increasing regulatory pressure and industry commitments to reduce aviation's carbon footprint, potentially driving long-term demand for DAR's products. Investors should note the potential for expanded contracts and increased market share in the SAF industry, which could positively impact DAR's future revenue streams and stock performance.

Environmental Policy Expert

The agreement between Diamond Green Diesel and Southwest Airlines represents a significant step towards reducing the aviation industry's carbon footprint. The use of waste-based feedstocks for SAF production aligns with circular economy principles and addresses the dual challenges of waste management and emissions reduction. The expected 80% lifecycle greenhouse gas emission reduction compared to conventional jet fuel is substantial and meets the growing demand for more sustainable aviation practices. The CORSIA-approved certification adds credibility and transparency to the SAF's environmental claims, which is important for stakeholder trust and regulatory compliance. This deal could set a precedent for other airports and airlines, potentially accelerating the adoption of SAF across the industry. The scale of production at DGD's Port Arthur plant, with 50% of its 470 million gallon annual capacity upgradable to SAF, positions it as a major player in the global SAF market. This development aligns with international climate goals and could influence policy decisions favoring increased SAF usage in aviation.

IRVING, Texas, Oct. 17, 2024 /PRNewswire/ -- Darling Ingredients Inc. (NYSE: DAR), the world's leading company turning food waste into sustainable products and producer of renewable energy, today announced that its 50/50 joint venture Diamond Green Diesel (DGD) will provide supply of neat sustainable aviation fuel (SAF), to be blended with conventional jet fuel, for delivery to Chicago Midway International Airport (MDW).

As part of the two-year supply agreement between Valero Marketing and Supply Company (Valero), a subsidiary of Valero Energy Corporation (NYSE: VLO) and Southwest Airlines Co. (NYSE: LUV) (Southwest), Southwest will purchase a minimum of 3.6 million gallons of neat SAF (about 12 million gallons blended) for use in its operations as early as fourth quarter 2024, with the option to purchase up to 25 million gallons of neat SAF (about 84 million gallons blended) over the agreement's term.

The neat SAF is expected to be produced from waste-based feedstocks, such as used cooking oil, animal tallow, and distiller's corn oil, with a lifecycle greenhouse gas emission reduction up to 80% compared to conventional jet fuel. Furthermore, the SAF is expected to be certified by a CORSIA-approved Sustainability Certification Scheme (SCS) at the batch level, providing Southwest with third-party verification that the SAF meets or exceeds all the requirements of Southwest's SAF policy.

"We continue to build momentum in SAF sales, solidifying our position as the producer of choice in the industry," said Randall C. Stuewe, Chairman and CEO. "With a strong track record and growing demand, we are confident our contracts will continue to expand, reinforcing our commitment to be the most cost-efficient, reliable SAF producer in the market."

With SAF expected to be on line during fourth quarter 2024, the DGD Port Arthur plant will have the capability to upgrade approximately 50 percent of its current 470 million gallon annual production capacity to SAF. With the completion of this project, DGD is expected to be one of the largest SAF manufacturers in the world.

About Darling Ingredients
A pioneer in circularity, Darling Ingredients Inc. (NYSE: DAR) takes material from the animal agriculture and food industries, and transforms them into valuable ingredients that nourish people, feed animals and crops, and fuel the world with renewable energy. The company operates over 260 facilities in more than 15 countries and processes about 15% of the world's animal agricultural by-products, produces about 30% of the world's collagen (both gelatin and hydrolyzed collagen), and is one of the largest producers of renewable energy. To learn more, visit darlingii.com. Follow us on LinkedIn.

Cautionary Statements Regarding Forward-Looking Information
This release may contain "forward-looking statements," which include information concerning the Company's plans, objectives, goals and strategies and other information that is not historical information. When used in this release, the words "expects" and "will" and variations of such words or similar expressions are intended to identify forward-looking statements. All forward-looking statements are based upon current expectations and beliefs and various assumptions. There can be no assurance that the Company will realize these expectations or that these beliefs will prove correct. There are a number of risks and uncertainties that could cause actual results to differ materially from the results expressed or implied by the forward-looking statements contained in this release. Any forward-looking statement speaks only as of the date on which it is made, and the Company undertakes no obligation to update any forward-looking statements to reflect events or circumstances after the date on which it is made or to reflect the occurrence of anticipated or unanticipated events or circumstances.

Darling Ingredients Contacts
Investors:	Suann Guthrie
	Senior VP, Investor Relations, Sustainability & Communications
	(469) 214-8202; suann.guthrie@darlingii.com
Media:	Jillian Fleming
	Director, Global Communications
	(972) 541-7115; jillian.fleming@darlingii.com

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SOURCE Darling Ingredients Inc.

FAQ

What is the agreement between Darling Ingredients (DAR) and Southwest Airlines for sustainable aviation fuel?

Darling Ingredients' joint venture Diamond Green Diesel will supply sustainable aviation fuel to Chicago Midway Airport for Southwest Airlines. The two-year agreement involves a minimum purchase of 3.6 million gallons of neat SAF, with an option to buy up to 25 million gallons.

How much can Darling Ingredients (DAR) reduce greenhouse gas emissions with its sustainable aviation fuel?

Darling Ingredients' sustainable aviation fuel, produced from waste-based feedstocks, is expected to reduce lifecycle greenhouse gas emissions by up to 80% compared to conventional jet fuel.

When will Darling Ingredients (DAR) start supplying sustainable aviation fuel to Chicago Midway Airport?

Darling Ingredients is expected to start supplying sustainable aviation fuel to Chicago Midway Airport as early as the fourth quarter of 2024.

What is the production capacity of Darling Ingredients' (DAR) DGD Port Arthur plant for sustainable aviation fuel?

By Q4 2024, the DGD Port Arthur plant will be able to upgrade approximately 50% of its 470 million gallon annual production capacity to sustainable aviation fuel.