One of the questions we got asked several times at the sustainability summit at the Louisville conference this past year was how to achieve a “Carbon Neutral” distillery or how to mitigate or treat the production of greenhouse gasses in a manufacturing industry like ours. Sustainability and environmental responsibility are becoming two of the top buying factors within major spirits buying demographics so getting a head start on reducing your impact will give you a leg up on your competition.

Because of the nature of our business there is going to be a creation of greenhouse gasses (GHG). It comes from the transportation of your raw materials, the processing of your fermentables, the burning of natural gas or use of electricity to run your equipment, the distribution of your finished product and essentially almost every step of the distillation process and upstream and downstream transportation. The easiest and quickest way to remediate your impact will be to counter your greenhouse gas emissions will be to use offsets.

What’s an Offset?

An offset is a reduction in greenhouse gas production somewhere to mitigate the production of similar GHG production elsewhere. Basically, if you are producing 1,000 tons of CO2e by shipping your bottles from overseas, you would want to reduce CO2e by 1,000 tons through a different project. Projects can range in scale from very small (e.g., reducing a few hundred tons of CO2e per year) to very large (e.g., millions of tons reduced per year). A classic example of an offset project would be to plant enough trees to sequester the equivalent CO2 out of the air, but these projects can also range from forestry management projects to the production of new renewable energy plants, to the destruction of complex industrial gasses and even more complex projects.

In many cases, carbon offset projects produce social and environmental benefits beyond just GHG reductions. Depending on the project type, these “co-benefits” can include improvements to community employment opportunities; enhanced air or water quality; biodiversity and habitat conservation; improved energy access; and better access to community health and education services. Many offset credit buyers seek projects that yield a broad range of benefits. Carbon offsets can thus be part of a comprehensive strategy for corporate social responsibility, combining efforts to address climate change with contributions to other public goods.

To become fully Carbon Neutral, you need to calculate your current carbon output and then mitigate the same number of total GHGs. A good starting place is the Carbon Fund Calculator, a non-profit organization that can help you identify all your carbon output sources. If you are in a mandatory compliance market like the EU, you will need a more thorough carbon emissions inspection, but for voluntary markets like the US this is a great start.

What Offsetting Program to Use?

Next, you can identify an off-setting program to get into. There are hundreds of off-setting programs that are available, some that are more reputable than others. A good place to start looking is verified trading programs certified by the Verified Carbon Standard, The Gold Standard, Climate Action Reserve. You can choose the program that fits with your company and mission from a variety of sources and places.

It is great marketing to have carbon neutral spirits, and with more international markets switching to a mandatory reporting system you will be prepared for larger scale distribution if you already have a carbon footprint and remediation strategy in place.

Although offsetting is an effective way to mitigate carbon emissions, these projects can get expensive, and it can be somewhat difficult to market and explain to your distillery guests. A more direct way to work towards carbon neutrality is through direct reductions. With these you can identify the sources of greenhouse gases directly produced at your distillery, called scope 1 and 2 emissions as well as sources you might not think about in your up and downstream operations called scope 3 emissions.

Many of these methods of reducing scope 1 and 2 emissions you may already be addressing as other separate environmental issues. Reducing water waste and use is a huge way to reduce emissions. At our distillery we utilize a cold water recycling system for all of our cooling systems and have reduced our waste water by over half a million gallons a year. The Baltimore Spirits Company in Maryland built a state-of-the-art geothermal cooling system that use the ambient temperature of deep earth to cool their closed loop system and don’t have to rely on any electric cooling at all.

Another Way to Do It.

You can also directly or indirectly source renewable energy sources to power your operations. Acre distilling in Fort Worth Texas built a 320 panel solar array right on top of the distillery that powers 115% of the electricity needs of the operation. Even if you don’t have the capital to create your own array or turbines there are great companies that “source” renewable energy off the grid like Clean Choice Energy. With these programs you can make sure what you pay goes towards renewable projects in your area for some or all of your electric demands.

There are other downstream greenhouse gas emissions in the process that you might not even think about. We use our spent grains for animal feed, mostly for cows, a very popular way to dispose of spent mash. Research has shown that with the cow production of methane as a byproduct of digestion we have created something that has a larger impact on global warming than if we just left it out to decompose. Strictly from a climate perspective animal feed isn’t the most efficient way to dispose of your byproducts of distillation.

There are two newer methods that larger distilleries in Scotland are doing to recapture the energy left in spent grain that are more CO2e friendly. Diagio has created a plant to burn the draff (spent grain) to produce steam that will generate electricity that will then be used at the Glenlossie distillery complex. They estimate that it will be a total net reduction of CO2 by 6,000 tons, or the equivalent of taking 1,600 cars off the road.

Obviously, the scale and initial investment to create a facility that creates energy from turbines is not feasible for most of us so let’s hop over to the Islay distillers that recapture CO2 in a scalable way. At the Bruichladdich distillery the draff and slurry is spread directly on the barley fields and are broken down into usable nutrients to sow back into the fertile ground. The pot ale is converted into biogas which can be used to power a small-scale generator that feeds back into the distillery. Small scale biogas digesters are relatively easy to use and available for distilleries of basically any size.

A Product Lifecycle View

It doesn’t just stop at waste products directly. Like a good biologist we want to look at your product lifecycle as an ecosystem and knowing what happens when your raw materials and finished products are not directly in your hands can be downright shocking. These are called Scope 3 emissions, that are indirect emissions that are caused by a different entity but are a result of your operations.

According to the International Energy Agency, transportation is responsible for about one fifth of our total CO2 emissions globally and almost one third in the US. The longer the distance travelled, regardless of the method of transportation, the more CO2 emissions there will be. So, the easiest direct reduction of Scope 3 emissions would be to work with suppliers and distributors/retailers that are close to you. Reducing travel distance, especially moving from international to domestic, has an immediate and dramatic impact on direct CO2e reductions.

Obviously, this solution can’t be universally applied. Sometimes your raw materials must be sourced from further away, either because of financial constrictions or natural habitat and growing conditions. Growing a brand also relies heavily on distribution so transportation in some way shape or form is necessary. So, what are the best ways to transport goods and how can you mitigate them?

In terms of efficiency there are a few options. You can rely on large format transportations that are much more efficient than trucking, like inland barges and freight rail (the two most fuel and CO2 efficient methods of transportation). You can also look at hybrid or electric delivery vehicles as well as biodiesel (which has similar CO2e to regular fuel but is more efficient on a lifecycle basis from the raw goods). You can also ship in bulk out, like Montanya distillery in Crested Butte, Colorado that ship their rum out in totes to farther away markets and have them packaged in market to reduce the CO2e impacts of shipping finished goods.

In a survey by George Washington University of 25–45-year-olds, 3 of the top 10 purchasing behaviors for craft spirits were related to environmental impact in some way. This age demographic is quickly becoming the largest target market for craft spirits and by successfully conveying your sustainability platform is going to be more and more important to stand out in a crowded market. Carbon emissions may seem complicated and intimidating, but every step in reducing the impact of your distillery will have huge social and environmental benefits for years to come.