The Bruichladdich distillery, which is about to be submitted for planning, is aiming to be completely carbon free thanks to energy generated by bio-gas.
A spokesman for the distillery said: 'We will actually be going back to a similar method that was originally used when the distillery first opened in the mid 19th century.
'We need a lot of steam to distil the whisky, and so we will require a great deal of energy, 10 times more than usual oil burning methods, so we have opted for bio-gas, which can then be recycled.'
The project is expected to fly though the planning procedure and should start on site later this year, with completion hoped by winter 2008.
Scottish deputy first minister Nicol Stephen also unveiled a new combined heat-and-power district scheme which will deliver heat to more than 1,000 homes in Aberdeen, cutting fuel bills by 60 per cent and saving 3,800 tonnes of CO2 each year.
The projects will cost the Scottish government £11.5 million.