Center for Environmental & Sustainable Development

Bourbon, Waste, Sustainability & Renewable Energy

The Commonwealth of Kentucky loves its bourbon, and since the beginning of that love affair it has faced a growing need for environmental management of distillery wastes. Typically referred to as wet stillage, or "slop," these wastes are legally classified as an industrial pollutant. Economically, they are sometimes treated as an agricultural commodity and most often treated as waste in need of disposal. Often times, "managers" will assess "tipping fees" that cover the logistical cost of this management and their service to the distillery. There are millions of gallons of this material that need managing each year. In fact, no Kentucky distillery is able to run year-round due to the need for that management. 

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However, our current policy proposal works to tackle this issue at the source. Our solution proposes a tiered tax credit incentive model for management of this stillage waste that will place motivation behind otherwise conventional regulations that are difficult to enforce. In addition to promoting sustainable management practices, this proposal will also support growth of the biodigestion/renewable biogas industry by providing credit and allowing for improved "tipping fee" exchanges. And from an environmental perspective, biodigestion processes as well as improved management techniques will reduce higher rates of GHG emissions.  Funding methods for this policy are centered around restructuring ethanol tax credits while still retaining benefits to corn farmers and crediting vegetative residues used in renewable energy production (biodigestion) or fuel production. Policies were developed with consideration of publications of the American Biogas Council, local industry sources and EPA data, The Kentucky Distillers Association reports, and included internal capital finance analysis. 

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This proposal has resulted in the sponsorship of HB 627 in the 2022 Kentucky General Assembly legislative session.

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Further reading:

• To learn more about CPC Fellow experience in Federal energy subsidy legislation which led to this work, see the linked article from the Louisville Political  Review: Time for a Brown New Deal - Louisville Political Review (loupoliticalreview.com) 

• To read the full white paper in the Commonwealth Policy Papers, click here: Support New Business To Solve Old Problems with Kentucky's Keystone Waste from Bourbon and Brewing - Commonwealth Policy Papers

• To read example legislation that would apply the research published in the white paper, click here: Draft Legislation: A Novel Policy System of Income and Refundable Property Tax Credits for Sustainable Use of "Keystone" Stillage and Spent Grain Wastes to Stop Pollution and Surge Business Growth