Global liquor giant Diageo PLC, which owns the Guinness, Tanqueray and more brands, has opened its first climate-neutral distillery in North America.
The 72,000 square foot facility in Lebanon, Ky., Is used for part of the Bulleit Bourbon operations. The plant has the capacity to produce up to 10 million liters per year with electrode boilers that run on 100% renewable electricity. Renewable energies are used throughout the cooking, distillation and dry house process.
Diageo DEO, -0.80% DGE, +0.77% will use a mix of wind and solar energy to power the electrode boilers, on-site electric vehicles, internal and external lighting and equipment, making the facility one of the largest of its kind makes North America.
These technologies, along with advanced measurement, will enable Diageo Lebanon Distillery to avoid around 117,000 tons of CO2 emissions annually, it said. That corresponds to a year in which more than 25,000 cars are taken off the road.
Renewable energy-powered boilers in Diageo's new Bulleit plant.
The new facility complements the existing production at Bulleit Distilling Co. in Shelbyville, Ky. Bulleit also produces rye.
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The company has halved the CO2 emissions associated with its operations since 2008 and is now working to achieve net zero CO2 emissions by 2030 using 100% renewable energy in its direct operations.
According to a study by the Beverage Industry’s Environmental Roundtable on the carbon footprint of spirits, actual distillation accounts for between 36% and 40% of total emissions, while the glass bottle of a spirit contributes between 19% and 20%. The rest is accounted for by warehousing, raw materials, transport and more.
“Today more than ever, we believe that companies have a responsibility to our environment, our communities and our planet,” said Sophie Kelly, senior vice president of whiskeys, Diageo NA.
Diageo's electric vehicles on site at the Lebanon, Ky.
The CO2-neutrality of the Lebanon distillery includes Scope 1 or direct emissions from the production site and Scope 2, the indirect emissions with which a company is associated, for example from electricity generation. The location requires the purchase of residual amounts of carbon offsets, in part because Diageo will purchase backup power.
The commitment does not extend to Scope 3 emissions. This category applies to emissions from non-owned parts of a supply pipeline, such as the retailer who sells the liquor bottle.
Diageo hopes to achieve net zero carbon levels across the supply chain by 2050 or earlier, with a tentative milestone to achieve a 50% reduction by 2030.
Diageo acquired Bulleit, then a niche Kentucky bourbon, as part of its 2001 purchase of the Seagram Co. portfolio. The London-based company's U.S.-traded ADRs grew over 20% in 2021 and up more than 40% last year.
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Packaging waste is one of the main problem areas in the spirits industry. At the beginning of the year, the English manufacturer Silent Pool Distillers created what is supposedly the “world's first” spirit in a bottle made from recycled cardboard. Green Man Woodland Gin uses 77% less plastic than other plastic bottles and has a six times smaller carbon footprint than glass or PET plastic bottles.
Some manufacturers are using new innovations to achieve greener goals. A startup called Bespoken Spirits has been focusing on sustainable burning since it was founded three years ago. The Bespoken technique bypasses the typical long barrel aging of rye, bourbon and other offerings by creating accelerated aging in a controlled environment using wooden sticks. The aroma develops much faster and so the overall energy consumption is reduced.
Similar climate considerations contrast with Scotland's signature whiskey industry. Whiskey is the UK's most valuable net export, valued at nearly £ 5 billion in 2019, but its largest distilleries have relied on burning gas as well as remote heating oil for years.
Whiskey producers are aware that droughts and seasonal variations in climate change will affect the Scottish barley harvest and water supplies essential to whiskey production, while floods could affect both distillation and transportation, said Morag Garden, director of sustainability for the Scotch Whiskey Association , the Guardian.
The industry has set a net zero target date of 2040, 10 years earlier than the UK government's current target and five years faster than Scotland, according to the SWA.
Companies, including the spirits industry, increasingly believe that efforts to reduce carbon emissions are part of the cost of doing business. About 105 signatories, who collectively have annual worldwide sales of over $ 1.4 trillion and employ more than 5 million people in 25 industries in 16 countries, joined Amazon AMZN earlier this year with -2.48% in its Climate Pledge .
Many have tried to react to the climate-friendly attitudes of their consumers and to anticipate the tougher regulations; some are faced with pushback allegations that they rely too heavily on carbon offsets (e.g. promoting tree-planting programs) instead of aiming to reduce fossil fuel consumption.