The Department for Transport has awarded three biofuel companies a share of its £25m fund.
All the successful projects will produce refuse-derived fuel for use in cars and lorries.
Edinburgh-based Celtic Renewables has been awarded £11m to fund a plant to make biofuels from Scotch whisky by-products, with plans to open three more commercial plants across the country.
Advanced Plasma Power in Swindon will also receive £11m to help develop biofuels from ordinary household waste, while Nova Pangaea Technologies, based in Tees Valley, will receive £3m to help make biofuels from forestry waste.
Transport minister Andrew Jones (left) said: “Biofuels have an important role to play in keeping Britain moving forward in a sustainable and environmentally friendly way.
“Advanced biofuels have the potential to save at least 60% of the greenhouse gas emissions from the equivalent fossil fuel. The three successful bids show how the Government is investing in transport and making better, clean journeys.”
Jones visited Celtic Renewables on 7 September to see first-hand how the financial support could generate up to £100m of transport fuel a year from its by-products.
The company’s founder, Professor Martin Tangney, said: “The construction of our demonstration facility will herald the reintroduction of acetone-butanol-ethanol (ABE) fermentation to the UK for the first time since the 1960s, but this time for advanced biofuel production using entirely sustainable raw materials.”
Deputy chief executive of the Scotch Whisky Association, Julie Hesketh-Laird, said: “The production of bio-butanol from draff and pot ale is another example of the industry putting its by-products to a good use to promote sustainability and jobs.”
Converting waste to transport fuel could be worth £130m gross value added to the UK by 2030 and up to £500m per year including exports, according to an independent feasibility study quoted by Jones in his written statement to Parliament.
The fund was introduced to overcome barriers to investment by offering matched funding to support the construction of pre-commercial scale demonstration plants in the UK.
The APP plant in Swindon will be the first of its kind in the world and take residual waste – the UK’s largest sustainable source of biomass – and convert it into compressed biomethane.
Construction of the plant will begin in 2016 and the consortium has already found local customers for the product and suppliers for the feedstock. The post-recycling residual waste will be provided by a local source, and the gas produced will be used by local haulage company, Howard Tenens, and consortium partner CNG Services.
APP chief executive Rolf Stein said: “Our state-of-the-art process can unlock the enormous value of residual waste as a resource, and provides a cost-effective means of converting such waste to fuels such as bio-methane.
“Our expectation is that this plant will lead the way to a new generation of ultimate recycling facilities both in the UK and around the world.”
The Renewable Energy Association chief executive, Dr Nina Skorupska said: “The transport sector has been falling badly behind in reducing carbon emissions and we hope that this competition will give a boost to the UK’s efforts to deliver home-produced cleaner and greener fuel.”