The process for turning the whisky by-products into fuel is relatively simple. "Draff" -- what's left of the malt after brewing -- and pot ale -- a residue left behind after distillation -- are mixed and fermented to create what Celtic Renewables describe as a 'broth'.
Gases – including hydrogen – are produced during this fermentation process, and the broth is distilled to produce three main products: acetone, butanol and ethanol.
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It is the butanol created from this process that is generating the greatest excitement. "Biobutanol is on a par with petrol, it's energy equivalent virtually to petrol," Mark Simmers, CEO of Celtic Renewables, told CNBC.com in a phone interview. "A liter of butanol would take you pretty much… the same distance as a liter of petrol," Simmers added.
According to Celtic Renewables, Biobutanol can also be used in unmodified engines and blended with both diesel and biodiesel. "One of the other advantages for butanol is it's a potentially really good source for jet fuel, so it might not be going in to cars," Simmers said.
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Simmers described the process used by Celtic Renewables as, "an adaptation of a 100 year old, proven, fermentation process." This process, according to Simmers, is not restricted to whisky and can be used to create biofuel from other raw materials.
"The future potential for us is hundreds of millions of liters of biofuel, because not only does the process apply to whisky residues, but it works for residues of spirits industries, the beer industry, and a range of agricultural wastes," he said.
It is hoped Celtic Renewables' first commercial production plant in Scotland will be up and running by 2016. The business has received support from the Scottish Government, Scottish Enterprise and the U.K. Government's Department for Energy and Climate Change. "Yes we're a small SME from Edinburgh spun out from a university, but you can't do this on your own," he said.