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 investment in 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 plunge into 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 out the 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 CAPS with 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.

Fool contributor Toby Shute doesn't have a position in any company mentioned. Check out his CAPS profile or follow his articles using Twitter or RSS. The Motley Fool has a disclosure policy.