@GadgetPlay: From the article:

"At £1.10 a litre, the bioethanol is only slightly cheaper than conventional petrol, but is estimated to produce 85 per cent less carbon dioxide.

The grapes used for Charles's fuel have already been fermented into wine on an English vineyard near Swindon, Wiltshire.

Its owners bottle all they can, but cannot produce more than their EU quota. Rather than destroy the excess, the vineyard now sells it to the Gloucestershire biofuels supplier Green Fuels, where it is distilled."

I understand economies of scale and cushions against problem patches to essentially require growing more than will be used, and there will always be some excess, often in the form of unsold wine (or destroyed wine to maintain product scarcity and higher prices.) Here, however, with the EU quotas you are essentially guaranteed that excess. How much excess will vary from year to year, but the waste problem (environmental and otherwise) is in the EU quota system not the re-purposing of the wine.