The Tullibardine distillery in Perthshire says the contract is first of its kind in the world.
The distillery, in Blackford, near Auchterarder, has linked up with a spin-out company – Celtic Renewables – founded by boffins at Napier University, Edinburgh.
They plan to use bacteria to feed on by-products in the early stages of the whisky making process. This will produce butanol that can be used to fuel vehicles.
Tullibardine distillery spends £250,000 disposing of by-products every year.
Celtic Renewables said it eventually aimed to build a processing plant in Scotland, with the hope of creating an industry that could be worth £60m a year.