The UK Government has awarded £25m funding to three firms including Celtic Renewables, Advanced Plasma Power and Nova Pangaea Technologies for the development of greener fuel technology.
Celtic Renewables has received £11m finance from the government to fund the development of new plant which can turn Scotch whisky by-products to biofuels.
The company will build three additional commercial plants in the future across Scotland.
About £11m has also been awarded to Advanced Plasma to help development of biofuels from ordinary household waste while Nova Pangaea secured £3m in funding to generate biofuels using forestry waste.
In addition to generating over 5,000 new jobs by 2030, the funding is expected to boost the renewable energy sector.
UK Transport Minister Andrew Jones said: "Advanced biofuels have the potential to save at least 60% of the greenhouse gas emissions from the equivalent fossil fuel."
Celtic Renewables founder Professor Martin Tangney said: "This funding from the Department for Transport is transformational for Celtic Renewables and will underpin the development of a brand new innovative industry in the UK.
"The construction of our demonstration facility will herald the reintroduction of ABE fermentation to the UK for the first time since the 1960s, but this time for advanced biofuel production using entirely sustainable raw materials."
The government expects the new technology to generate up to £100m of transport fuel from by-products of Scottish Whisky industry annually.
Image: UK plans to promote renewable energy sector. Photo: courtesy of Crown copyright.