“Vodka from a Cow” to “Cows can Fly”
“Who knew taking a break from tech startups to start a craft distillery would lead to clean energy innovation.” – Omid McDonald, CEO DD Biofuel
DD Biofuel’s innovation story started out unconventionally, at the crossroads of the spirits and dairy industries. And quite by accident.
Startup entrepreneur Omid McDonald wanted to take a break from tech startups to pursue a passion for distilling he picked up visiting a craft distillery in Charleston, South Carolina. Looking for a creative opportunity, he discovered one when hearing his cousin’s story of milk being dumped. McDonald wondered if alcohol can be made from milk. Digging deeper, he discovered the Mongols fermented the sugar in mare’s milk (lactose) to make a drink called Kumis.
McDonald eventually learned milk is not often dumped, so he contacted local dairies looking for another source of lactose. He was fortunate to find one an hour away at a dairy in Winchester, Ontario that recently started making “permeate” – a lactose rich liquid leftover from cheese and yogurt manufacturing. Considered waste or a low value nuisance at best, McDonald saw an opportunity to upcycle permeate to make spirits. Together with forward-thinking dairy farmers, craft distillers and investors, McDonald founded Dairy Distillery.
Working out of a purpose-built facility in Almonte, Ontario (best known for dairy farming and the birthplace of the inventor of basketball), the multidisciplinary team perfected the process of turning permeate into vodka – aptly named Vodkow. This captured the imagination of the Canadian craft distilling and cocktail scene landing Vodkow a slot on the CBC’s Dragons’ Den reality TV series where entrepreneurs pitch their ideas to ruthless “Dragon” investors. The bidding war that ensued ended in the highest offer in the hit Canadian series’ history at that time. And another first: a cow in the CBC’s downtown Toronto studios.
To scale Vodkow production, Dairy Distillery hired David Geros in early 2019. Geros, a 20-year biofuel veteran, was part of the team that built the world’s first cellulosic ethanol plant in Brazil. Geros performed a carbon life-cycle analysis that showed permeate ethanol made using the Dairy Distillery process would have an ultra-low carbon intensity (CI) making it ideal to reduce the carbon footprint of transportation fuel.
In 2020, the Michigan Milk Producers Association (MMPA) reached out to Dairy Distillery looking for more value from their permeate being produced at their Constantine, MI dairy. After learning how permeate can be used to make low carbon ethanol, MMPA president Joe Diglio felt this use of permeate was a perfect match for his co-operative’s sustainability goals.
With support from the state of Michigan and the Inflation Reduction Act, construction started in July 2024 on a $41 million plant to transform 16,000 million tons of permeate piped from the Constantine dairy to the ethanol plant to make 2.3 million gallons of low carbon ethanol per year. Slated for production in 2025, ethanol produced at the Constantine plant will have a CI of 10-15 g CO2/MJ (final CI to be validated when the plant is operational).
In September 2023, the US Department of Energy announced the SAF Grand Challenge, with an ambitious domestic production target of 3 billion gallons of SAF per year by 2030. The main obstacle to scaling SAF production is a lack of low carbon feedstocks. Given the low CI of its ethanol and new technology that converts ethanol to jet fuel (ETJ) , Dairy Distillery started investigating how it could aggregate ethanol produced at dairies across the US and Canada to make SAF.
To pursue its SAF plans, Dairy Distillery has spun-out Dairy Distillery Biofuel (DD Biofuel) – with the goal of providing its dairy partners the most value for permeate while contributing to the much-needed SAF feedstock supply.