Scottish company Celtic Renewables have signed an agreement with whiskey distillery Tullibardine to do just that.
The companies say that 90 per cent of what comes out of the distillery is not whiskey and have already won a government grant to move the project forward.
The plan calls for scientists to use the waste with a unique bacteria to create butanol which, in turn, can be used to fuel cars.
The attempt is the latest attempt to come up with an alternative fuel that will cut down on harmful emissions.