A Canadian company that got its start distilling a milk byproduct into spirits, along with a large cooperative owned by Great Lakes dairy farmers, broke ground on a new Michigan plant that will unite their businesses to make ethanol.

Ontario-based Dairy Distillery and the Michigan Milk Producers Association are building a new facility near Constantine, Michigan, which will repurpose milk permeate, a byproduct of dairy goods production.

The $41 million plant will go online in 2025 and take 14,000 tons of the dairy byproduct, using it to produce 2.2 million gallons of ethanol.

“Utilizing milk permeate to produce low-carbon ethanol is an innovative solution to reduce our carbon footprint and provide dairy farmers with more value for their milk,” said Omid McDonald, Dairy Distillery CEO.

“This marks a significant step forward in sustainability,” added MMPA President and CEO Joe Diglio.