The UK Green Investment Bank (GIB) is financing energy efficiency improvements at the Royal Brackla Distillery, run by John Dewar & Sons, in Nairn, Scotland.
The funds will be utilized, among others, for the installation of a biomass boiler that will replace the existing heavy fuel oil boilers.
The biomass boiler will produce steam that is required for several parts of the whisky production process, and will reduce energy costs and greenhouse gas emissions at the distillery.
The boiler is expected to be 50% more energy efficient than the current oil-fired boilers.
John Dewar & Sons Royal Brackla distillery operations director Iain Lochhead said: "The installation of the biomass boiler will mark a significant change in the environmental performance of the distillery as we are expecting an annual target reduction of some 5,000 tonnes of CO2 emissions.
"This goes hand-in-hand with our Company's larger "Good Spirited" goal to reduce greenhouse gas emissions globally by 50% by 2017.
"By a happy coincidence it also marks the return of Royal Brackla as a single malt with a range of expressions being released early next year. So all in all, 2015 promises to be an exciting year for the Royal Brackla distillery."
Earlier this year, GIB allocated 5m to fund energy efficiency projects at Scottish distilleries, through its fund manager Equitix.
Secretary of State for Scotland Alistair Carmichael, said: "Growing the Scottish and UK economy is a priority for this government and doing it in an environmentally responsible way is crucial to tackling climate change. The UK GIB is a key partner in helping us achieve our priorities.
