CONSTANTINE, Mich. (WOOD) — A new plant coming to Constantine will use a dairy byproduct to make ethanol.

Canadian company Dairy Distillery will expand in Constantine in partnership with the Michigan Milk Producers Association. The plant would be located on the same property as MMPA’s Constantine facility, located on Depot Street near Water Street

The plant will use milk permeate, a byproduct that is essentially sugar water taken from skim milk during dairy processing, explained Omid McDonald, the founder of Dairy Distillery. The milk permeate is fermented, turned into ethanol and put through the distillation process.

Dairy Distillery started using milk permeate to make vodka, called Vodkow, in 2018, after partnering with the University of Ottawa to figure out how to ferment the byproduct. During the pandemic, it started making hand sanitizer for its local hospitals and community, McDonald explained.

Then it started looking for other uses for milk permeate.

“Very early on, we realized that this problem with this excess milk permeate is a problem for the dairy industry as a whole,” McDonald said. “So there’s only so much vodka people can drink and there’s so much of this stuff out there, we said, ‘Well what other high-volume uses are out there?’ and that’s when we started looking at biofuel.”

The company met with the MMPA about two and a half years ago. Its Constantine location was creating a lot of milk permeate and sending it to pigs. It was looking for a better way to reduce its carbon footprint.

“Lot of people are down on dairy for its environmental aspects, and we want to be part of … the story to show that with innovation and with technology, we can eliminate that impact and so people can enjoy the dairy products that they love knowing that the environmental impact is minimized,” McDonald explained.

The milk permeate will be piped from the dairy production facility to the ethanol plant. The ethanol will then be used in fuel.

“When this ethanol is blended with transportation fuel, what it does is it displaces oil,” McDonald said. “So it keeps oil in the ground and replaces it with ethanol that was essentially reclaimed carbon. And that creates what’s called a ‘carbon offset,’ and this ethanol will displace about 14,000 (metric) tons of carbon a year.”

That’s about 5% of the facility’s carbon footprint, he said.

The company chose Michigan over Indiana for the project. On Tuesday, the Michigan Economic Development Corporation approved a request for incentives that include a $2 million performance-based grant and a 15-year State Essential Services Assessment exemption, worth around $682,500. Constantine is expected to approve a property tax abatement.

McDonald said the Inflation Reduction Act is also incentivizing.

“The new Inflation Reduction Act has support for green projects that are just … a magnitude larger than what’s available here in Canada,” he said.

Dairy Distillery currently has a distillery in Almonte, Ontario. The Constantine site will be its first location in the United States.

The project is expected to bring 12 jobs to the area and a capital investment of $41.1 million. Production will start in 2025.