Roberto Serralles didn’t set out to green up. He just needed to get rid of a stench. The Serralles Rum Distillery in Ponce, Puerto Rico, which has been owned by his family for 147 years, produces DonQ, Palo Viejo, and Caliche rums. As its VP of business development, the 46-year-old knew the challenges of disposing of millions of gallons of wastewater. While its competitor in Puerto Rico, Bacardi, dumps in the sea, the Serralles distillery has long routed its by-product to nearby fields. Which was fine, until the rainy season swept in.

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During that May-to-November stretch, the fields would often get saturated, causing the waste to run off. Fearful of rousing the EPA, the distillery shut down when flooding began–costing it $200,000 per day and jeopardizing its ability to fulfill orders. Realizing an upgrade was needed, Serralles, who has a PhD in environmental studies from the University of Oregon, has spent 10 years and $16 million on a new filtration system. In the process, he has turned his $75 million distillery into one of the cleanest in the world.

When making spirits, only about 8% to 10% of the base ingredient–in the case of Serralles rum, it’s molasses–winds up as alcohol. The rest is a soup of organic matter that gets treated. It’s common for dark-liquor distilleries to expose waste to anaerobic digestion, during which microorganisms break down the by-product. That cleans much of the filth and produces methane-rich biogas, so there’s payback in the form of fuel. “We use it to run our boilers,” says Serralles. “It has saved us as much as nearly 50% of annual fuel use.” That translates to almost $2 million.

What remains after digestion is a dark solution holding about 30% of the original matter. When discharged into the Caribbean Sea, the toxic muck can damage the underwater ecosystem. In the Serralles distillery’s case, the consistency of the waste was thick enough to gum up the dumping fields and exacerbate the flooding.

“We needed to eliminate the remaining organics,” explains Serralles, “though our options weren’t attractive, because to implement them meant negating the costsaving benefits [of the biogas].” Nevertheless, Serralles extended the purification chain with a solids separation process that removes heavier sludge from the waste, an aerobic digestion step that exposes the solution to oxygen to spur decomposition, and a microfiltration system that uses membranes to comb out remnants. Though the overhaul took a swig from the bottom line, being able to operate in the rain will quickly get Serralles back in the black. Plus, beyond the biogas savings, the distillery has been selling the sludge as mulch to golf courses and resorts, and uses the microfiltrated water to irrigate local crops and nearby properties.