Elon Musk, $1.9 Trillion Spending Bill, and Post-Tax Season Burdens

Tax Policy:

April 21: IRS pledges to overcome challenges from overburdened tax season

Through April 8, the IRS processed more than 99 million individual federal tax returns and issued more than 70 million refunds totaling more than $222 billion.“While the filing season has presented no major disruptions or surprises, we know we have a great deal of work to do in many other areas of the IRS,” said Rettig. "The IRS continues to focus on working to reduce paper correspondence inventory and process paper tax returns from 2021 as well as improve our response to an unprecedented level of phone demand - situations that have been compounded by the pandemic and related issues." 

He noted that in the fiscal year 2021, the IRS received more than 15 million individual paper returns and had a significantly higher error rate on individual returns mainly due to challenges associated with reconciling funds received through stimulus programs like Economic Impact Payments.

The IRS received far more than 10 million returns where taxpayers didn't properly reconcile the two EIPs received in 2020 against the amount of the Recovery Rebate Credit stated on the tax return they filed in 2021.

"Congress, at a minimum, must resource the IRS appropriately - and then hold IRS leadership accountable for making sure those resources are properly deployed to provide the American people the level of service they deserve from this vitally important agency," said Rep. Gerald Connolly, D-Virginia, who chaired the hearing.

"In the 2021 filing season, the IRS received 199 million calls, more than four times more calls than the agency received in 2019, two years ago," Rep. Eleanor Holmes-Norton, D-District of Columbia said.

"At the end of the 2021 tax-filing season, the IRS had 5.9 million pieces of unanswered correspondence, nearly three times more than the 2 million pieces in 2019. And as Mike described, GAO also found that the 'Where's My Refund tool does not help explain why a refund is delayed." Rettig pledged to help taxpayers who were experiencing such delays and he offered to give his cell phone number to lawmakers to contact him on behalf of their constituents.

Build Back Better Act/Spending Bill: 

April 21: If Biden’s Plan Is Like a ‘New Deal,’ Why Don’t Voters Care?

The $1.9 trillion pandemic-relief law unleashed a massive wave of spending on local construction projects and programs. Democratic candidates aren’t getting much credit. Unlike the New Deal, however, this $1.9 trillion federal investment in American communities has barely registered with voters. Rather than a trophy for Mr. Biden and his party, the program has become a case study of how easily voters can overlook even a lavishly funded government initiative delivering benefits close to home.

Rescue plan money will also fund more than $30 million on affordable housing initiatives and smaller amounts on public safety and health.

The American Rescue Plan, which also funded direct relief payments to voters and health programs like vaccine distribution, has been criticized by Republicans and some economists for pumping too much money into the economy and probably contributing to inflation.

As government revenues began returning, the Treasury Department issued guidance encouraging cities and counties to treat rescue funding as a flexible resource that could be deployed for purposes faintly related to Covid-19. If municipalities could make the case that a social problem worsened because of the pandemic, then they could probably use rescue plan funding.

Ms. Wu, who campaigned on eliminating fares for mass transit, is using about $8 million of rescue plan money - from more than half a billion allotted to her city - to make three bus lines free for two years.

A historically Republican suburb that is wealthier and whiter than Virginia's capital city, Chesterfield County has already received more than $34 million through the American Rescue Plan.

The rescue plan funding allowed the county to accelerate some projects, local officials said, but they would likely have undertaken many of them without federal help.

Economic News/Policy: 

April 26: U.S. Stocks Fall After Gloomy Earnings Forecasts: Markets Wrap

U.S. equities declined at the start of a busy week for corporate earnings as investors are closely watching results for insights into the effect of inflation and consumer spending as the Federal Reserve steps up policy tightening.

The prospect of slower economic expansion alongside persistent inflation is leading to a febrile mood in markets.

Angst builds in the options market as stock losses mount, "There's no question that economic growth is in trouble, and that the runway for central banks to manage a soft landing is getting smaller as wages and inflation move higher," said Lauren Goodwin, economist and portfolio strategist at New York Life Investments.

"The big question for asset allocation is not whether inflation will be high. That's a given. Instead, it's whether growth can keep up." U.S. corporate earnings are providing some solace for equity bulls - close to 80% of firms have beaten profit expectations including GE, United Parcel Service Inc., and Pepsico Inc. However, disappointing forecasts, including those from JetBlue Airways Corp., are weighing on shares.

Results from Microsoft Corp., Google parent Alphabet Inc., and Visa Inc. are still to come.

"This should provide investors an opportunity to shift their focus from the macro headwinds like inflation, the Fed, China lockdowns, and the war in Ukraine, and allow them to disseminate corporate results to ascertain if appropriate valuations have been ascribed in the wake of the markets' April drawdown." China Boost Stocks in Europe followed those in the U.S. lower, erasing gains earlier in the session from positive corporate results and a sentiment boost from China's pledge to support its Covid-hit economy.

April 25: The prospect of lockdowns in Beijing fuels more concerns about supply chain disruptions.

China's capital city is not as central to global production networks as Shanghai, but the costs for global companies will still mount if lockdowns spread. April 25, 2022. The prospect of further lockdowns in China prompted a fresh wave of economic anxiety on Monday as investors and companies whose supply chains run through China contemplated the impact of 70 new virus cases that the Beijing government said it had detected over the weekend.

The lockdowns present yet another challenge for global supply chains that have been stressed by pandemic shutdowns and the war in Ukraine, leading to greater competition for goods and higher prices that are fueling inflation worldwide.

While the Chinese authorities have sought to keep factories and especially ports operating by keeping workers on the premises in so-called closed-loop systems, the lockdowns have interrupted shipments and lengthened delivery times for many of the global companies that depend on Chinese factories.

Phil Levy, the chief economist at Flexport, a freight forwarder, said in an email that while Beijing is an important city, "It is not at the heart of factory production or supply chain operations." He said lockdowns there would have a more limited impact than previous restrictions in Shanghai and Guangdong, where ports continued to mostly operate.

Rea Huang, a senior director at Overhaul, which monitors company supply chains, said with lockdowns not expected to ease until early or mid-May, the ripple effects for industries like auto and consumer electronics would extend into June or July. In Shanghai, the local authorities on Friday selected some companies in the automotive, semiconductor, and other key industries to restart production, but the vast majority of enterprises remain shuttered.

According to data from Project44, a logistics platform, the number of vessels that were berthing at the Shanghai port last week had dropped by about half since the lockdown began, while the number of vessels seeking to call at the nearby port of Ningbo jumped as shipping companies tried to get around restrictions.

Elisabeth Waelbroeck-Rocha, the chief international economist at S&P Global Market Intelligence, said that, in addition to disrupting global supply chains and fueling inflation, coronavirus outbreaks and accompanying lockdowns had undermined Chinese economic growth in March and April, making China unlikely to reach its target of 5.5 percent growth in the gross domestic product in 2022. The epicenter of the outbreak shifted from Jilin Province in the northeast to Shanghai, a manufacturing base for high-end auto components, but smaller-scale outbreaks in other regions have largely been brought under control, she wrote in a note.

April 24: Economy Week Ahead: Economic Growth, Inflation in Focus

TUESDAY: U.S. factories have been caught between strong demand and stretched supply chains during the Covid-19 recovery. March data on durable goods—products designed to last at least three years—are expected to reflect a rebound in new orders after a weak February.

THURSDAY: The Bank of Japan is expected to leave its ultralow interest-rate targets unchanged. Japan’s economy remains smaller than its pre-pandemic level, while “cost-push” inflation is hurting corporate profits as Japanese companies struggle to pass on the higher cost to consumers.

A key measure of U.S. economic growth is expected to have slowed sharply in the opening months of 2022. Gross domestic product is forecast to advance at less than a 1% pace in the first quarter, down from 6.9% quarterly growth at the end of last year. The headline figure, which is adjusted for inflation, will likely reflect surging prices, a growing trade imbalance, and slower inventory growth, masking relative strength in consumer spending, business investment, and real estate.

FRIDAY: Figures to be released by the European Union’s statistics agency are expected to signal a darkening outlook for the eurozone economy following Russia’s invasion of Ukraine, with growth weakening again in the first quarter, and the annual rate of inflation remaining high in April. Economists expect the inflation rate to hit a record of 7.5%, up from 7.4% in March.

U.S. consumer spending slowed sharply in February as households saw wage gains eroded by rising inflation. Economists forecast a pickup in outlays for March as Covid-19 continued to recede and consumers spent more on services like air travel and dining out. The Federal Reserve’s preferred measure of inflation, due out alongside consumer spending figures, could show underlying price pressures while easing, are still near a four-decade high.

The U.S. employment-cost index—a measure of wages and benefits paid by employers—for the first quarter is expected to show another stretch of strong wage gains, providing the Fed with more evidence that a tight labor market is contributing to the 40-year high for inflation.

April 21: Powell: Half-percent rate hike ‘on the table’ for May

Federal Reserve Chair Jerome Powell said Thursday the central bank could raise interest rates by twice its typical pace at its May policy meeting as it seeks to curb high inflation. Powell said Thursday there is broad support among Fed officials to raise the bank's baseline interest rate range by 0.5 percentage points and expedite a planned series of rate hikes.

The Fed has typically raised interest rates in 0.25 percentage point increments but is facing growing pressure to hike quicker as inflation runs at four-decade highs.nThe Fed's primary tool for keeping prices stable and the labor market strong is adjusting the federal funds rate, its baseline interest rate range on overnight loans to banks.

Several members of the Federal Open Market Committee, the Fed panel that sets interest rates, have expressed support for a 0.5 percentage point hike at the upcoming May 3-4 meeting in Washington, D.C. Financial markets also expect the Fed to hike by 0.5 percentage points over its next three meetings.

The Fed in March raised its baseline interest rate by 25 basis points to a range of 0.25 to 0.5 percent, the first hike since zeroing rates out in March 2020 amid the onset of the pandemic. The Fed had been hesitant to hike interest rates in 2021 as inflation steamed ahead, hoping that improving pandemic conditions and a growing workforce would ease supply and labor shortages behind rising prices.

April 21: Fed Chair Powell Calls a Faster Pace of Rate Increases Appropriate

Jerome H. Powell, the chair of the Federal Reserve, signaled on Thursday that the central bank was prepared to raise interest rates rapidly starting in May as it tries to cool down the economy and prevent fast inflation from becoming a lasting feature. A larger-than-usual increase of half a percentage point "Will be on the table for the May meeting," Mr. Powell said on Thursday, after explaining that at a moment of high inflation "It is appropriate, in my view, to be moving a little more quickly" to raise borrowing costs to cool down demand and the broader economy.

As of Thursday morning, investors expected Fed officials to raise interest rates by half a percentage point at their upcoming meeting, and by at least that much at their two subsequent meetings, so that interest rates would rise from less than 0.5 percent now to above 2 percent in July. Mr. Powell said on Thursday that "There's something in the idea of front-end loading whatever accommodation one thinks is appropriate," meaning that the central bank could raise interest rates more aggressively at the outset as it tries to catch up to the inflation situation.

The U.S. central bank's withdrawal of policy support comes as rapid wage gains, quickly climbing housing costs and increasing price pressures in service industries combine with global supply disruptions to paint a dicey picture for the inflation outlook.

A key question is whether the Fed will be able to cool down the economy and control inflation without tipping the American economy into a recession, one that pushes unemployment higher and erases some of the gains won in the wake of pandemic lockdowns.

April 21: Treasury Secretary Janet Yellen calls for a reshaping of global supply chains that are ‘not secure.’

Treasury Secretary Janet L. Yellen said on Thursday that global supply chains had proved to be unstable amid the pandemic and Russia's war in Ukraine and called for a reshaping of trade relationships oriented around "Trusted partners," even if it meant higher costs for businesses and consumers. Ms. Yellen spoke at a news conference during the spring meetings of the World Bank and International Monetary Fund, where policymakers around the world have been discussing how to revive economic growth and combat inflation while keeping pressure on Russia.

"Our supply chains are not secure, and they're not resilient," Ms. Yellen said at the Treasury Department. Ms. Yellen added that trusted trading blocs would need to be big enough to avoid amplifying inflation while ensuring that supply chains were secure.

Global policymakers at the meetings this week have been grappling with how to address supply chain disruptions that have led food prices to surge around the world.

"There's a very real risk that soaring global market prices for food and fertilizer will result in more people going hungry, further exacerbating inflation and harmful fiscal and external positions," Ms. Yellen said. At the news conference, Ms. Yellen said rebuilding Ukraine would be costly and suggested that Russia should have to bear some of that expense.

April 20: Gasoline prices inch upwards

The price of gasoline has inched upwards over the past few days, following a significant drop from where it was about a month ago. According to AAA, the average U.S. gasoline price on Wednesday stood at around $4.11 per gallon. That's up from about $4.08 a week ago, but still below prices a month ago that averaged $4.26.

Many Americans are still seeing prices below $4, as the median price in the U.S. was $3.96 per gallon, according to data from the Oil Price Information Service.

Gasoline prices soared following Russia's February invasion of Ukraine and have remained high in the aftermath. Gasoline prices are typically controlled by the price of crude oil which is used to make it. On Wednesday, U.S. crude cost about $103 per barrel.

That's lower than the $108 per barrel where prices stood on Monday, but up from earlier in the month when prices were below $100. Asked about the recent rise, Tom Kloza, global head of energy analysis at the Oil Price Information Service, noted that on May 15, many global traders plan to reduce purchases of oil from Russia's state-owned oil companies because of the European Union sanctions.

April 19: Corporate profits rise amid inflation as some Democrats cry foul

As consumers feel the pinch of inflation, corporate profits are hitting all-time highs, adding impetus to Democratic arguments that big business is gouging consumers and making inflation worse. Overall, corporate profits after tax, as reported by the U.S. Bureau of Economic Analysis and compiled by the Federal Reserve Bank of St. Louis, hit $2.7 trillion in the fourth quarter of last year, just off the all-time high of $2.72 trillion in the previous quarter.

That's a 40 percent increase in profits from the pre-pandemic level of $1.96 trillion for the fourth quarter of 2019 and nearly an 80 percent increase from the pandemic low point of $1.5 trillion." What we're seeing is even more than a business cycle. In recent years, we had a large tax cut with the Tax Cuts and Jobs Act, the largest component of which was the reduction in the corporate tax rate from 35 percent to 21 percent, and that certainly boosted after-tax profits," he said. The record number of inflation citations, paired with skyrocketing profits, has led Democratic senators like Warren to cry foul.

"As we emerge from two years of the coronavirus pandemic, American efforts to return to normal are being stymied by inflation, driven in part by corporate profiteering and price-gouging," she wrote in a letter to the FTC. Her sentiments echo those of Sen. Bernie Sanders, who wrote on Twitter in February: "Take a look around the economy. McDonald's: profits up 59 percent. They're raising prices. Starbucks: record profits. They're raising prices. Amazon: record profits. The shock of shocks! They're raising prices!". While wages have been rising, they are not rising enough to keep up with either inflation or corporate profits.

Ukraine Crisis/Russia’s Economic Impact: 

April 22: EU urges citizens to work from home, drive slower to reduce reliance on Russia

The European Union is encouraging its citizens to work from home, use public transportation and turn off heaters to reduce the bloc's reliance on Russian fuel. If EU residents adopt a prescribed list of energy-saving steps, they can together "Save enough oil to fill 120 supertankers and enough natural gas to heat almost 20 million homes," according to an outline published by the European Commission and the International Energy Agency on Thursday.

The outline, called "Playing my Part," aims to slash the bloc's reliance on Russian energy while also reducing greenhouse gas emissions, a news release accompanying the plan explained.

"The Russian war in Ukraine is a human tragedy and a humanitarian disaster, and we're all looking at what can we do ourselves - what can we do professionally and what can we do personally," European Commission Director-General for Energy Ditte Juul Jørgensen said at a virtual summit on Thursday.

"The one thing that everyone can do - each of us can do, individually at home and work - is to save energy," Jørgensen added.

Turning down the thermostat by just 1 degree Celsius would save around 7 percent of the energy used for heating, while setting an air conditioner 1 degree C warmer could decrease the amount of electricity used by up to 10 percent, according to the plan. With a typical one-way car commute in the EU amounting to about 15 kilometers, working remotely for three days a week could cut monthly household fuel bills by about 35 euros - even when accounting for increased energy usage at home, the outline explained.

April 22: Five actions Biden has taken in response to high gas prices

Gas prices are both a top concern for American consumers and a consistent drag on President Biden's approval rating, prompting the administration to take several measures to counter pain at the pump.

An ABC News/Ipsos poll in March indicated widespread approval for the president’s decision to ban oil imports from Russia over its invasion of Ukraine, which Biden has warned could exacerbate energy costs. However, the same poll indicated that 70 percent of respondents disapprove of Biden's handling of gas prices.

Biden initially announced a release of 50 million barrels of oil from the Strategic Petroleum Reserve in November in response to rising gas prices. Biden told reporters in late March that the price of gas "Could come down fairly significantly" as a result of the move.

Biden administration officials projected at the time that the availability of E15 could save a family about 10 cents per gallon on average.

Republicans have vocally blamed the Biden administration's energy policies, in particular an executive order freezing new oil and gas leasing on public lands, for gas prices and insufficient supply.

Amid concrete steps to bring down consumer prices, the Biden administration has emphasized the necessity for increased support and infrastructure for renewable fuels, saying the current market illustrates the need for less volatile resources.

April 20: Russian bank, network hit with new US sanctions

The Biden administration said Wednesday that it is imposing sanctions on a bank and a network of individuals and entities the U.S. says are helping Russia evade sanctions imposed in a response to its invasion of Ukraine. The Treasury Department said that it is sanctioning a private Russian commercial bank, Transkapitalbank, as well as a network led by Russian oligarch Konstantin Malofeyev, alleging involvement in attempts to evade sanctions on Russia.

The department announced that it is sanctioning Russian firm Bitriver and 10 of its Russian-based subsidiaries as part of an effort to target Russia's cryptocurrency mining industry, which the agency said helps monetize Russian exports. White House national security adviser Jake Sullivan noted in a public appearance last week that the Biden administration was preparing sanctions to crack down on Russian sanctions evasion.

The U.S. has imposed a raft of sanctions on Russia since Russian President Vladimir Putin ordered the Ukraine invasion in late February. They include sanctions on Russian banks, oligarchs, officials, and their families.

Malofeyev, who had been sanctioned dating back to 2014 after Russia invaded Ukraine's Crimean Peninsula, was recently charged by the Justice Department with conspiring to violate and violate U.S. sanctions.

Environmental Policy/ News:

April 22: Legislative setbacks plague Biden’s climate goals

A year after President Biden announced the goal of significantly cutting planet-warming emissions by the end of the decade, experts are warning the nation is not on track to meet them. The biggest hurdle, they say, is Congress's failure to pass Biden's climate and social spending agenda, as the provisions approved in the House version of the bill would likely have put the country on target.

Biden marked last year's Earth Day by announcing a national goal of cutting climate-warming emissions by 50 to 52 percent compared to where they were in 2005.

"Build Back Better would have been the major piece that would have helped us almost get to our at least 2030 targets," said Erin Mayfield, an engineering professor at Dartmouth who has worked on modeling the potential emissions cuts from the bill.

"As of right now, we are not on track," said Robbie Orvis, the senior director of energy policy design at Energy Innovation, an energy and climate policy think tank. "Some type of ambitious climate legislation is really important, if we don't get it, I don't think it's necessarily impossible to hit the target, but it becomes much, much more challenging to do it," he said.

Others point out that if the targets are not met, more emissions will be released.

April 21: Carbon emissions from flaring hit a 10-year low in 2021

Carbon emissions from the practice of flaring hit a 10-year low in 2021, but rates are likely to creep back up in the near term, according to research released Thursday by Rystad Energy. Rystad's estimate projected that in 2021 upstream flaring, the burning of gas during extraction, generated about 276 million metric tons of carbon dioxide, down from 283 million in 2020 and continuing a long downward trend.

Flaring is the source of about 30 percent of oil and gas industry carbon emissions, according to Rystad Energy analyst Dzenana Tiganj. American shale production was the source of 68 percent of North American upstream flaring in 2019, but only 38 percent in 2021. Carbon dioxide emissions from flaring offshore by African nations decreased 4 million metric tons between 2019 and 2021, largely due to increased production from less mature fields and abandonment of mature fields.

In Europe, the U.K. has been a major driver of reduced flaring emissions. Europe cut flaring emissions by nearly 40 percent from 2019 to 2021, according to Rystad. Despite the drop, Rystad also projected flaring would rebound over the year, citing a combination of sanctions on Russian energy and the continued relaxation and removal of COVID-19-related restrictions.

ICYMI: 

April 25: Musk gets Twitter for $44 billion, to cheers and fears of 'free speech' plan

Elon Musk clinched a deal to buy Twitter Inc for $44 billion cash on Monday in a transaction that will shift control of the social media platform populated by millions of users and global leaders to the world's richest person. Under pressure, Twitter started negotiating with Musk to buy the company at his proposed $54.20 per share price.

"Free speech is the bedrock of a functioning democracy, and Twitter is the digital town square where matters vital to the future of humanity are debated," Musk said in a statement.

Former Twitter CEO Jack Dorsey weighed in on the deal late on Monday with a series of tweets that thanked both Musk and current Twitter CEO Parag Agrawal for "Getting the company out of an impossible situation."

Musk's move continues a tradition of billionaires' buying control of influential media platforms, including Jeff Bezos' 2013 acquisition of the Washington Post. Twitter said Musk secured $25.5 billion of debt and margin loan financing and is providing a $21 billion equity commitment. After Twitter banned Trump over concerns around incitement of violence following the U.S. Capitol attack by his supporters, Musk tweeted: "A lot of people are going to be super unhappy with West Coast high tech as the de facto arbiter of free speech." Trump, whose company is building a rival to Twitter called Truth Social, said in a Fox News interview on Monday that he will not return to Twitter.

April 23: Why the French election matters so much in the US

The U.S. holds a key stake in France's presidential election on Sunday when voters in one of America's oldest allies will choose between incumbent President Emmanuel Macron and his far-right opponent Marine Le Pen. The vote is viewed as a referendum on the close ties Macron has established between France and the rest of Western Europe and the United States and Le Pen's populist push for a more independent France.

Analysts say Marcon is likely to earn another five-year term, but Le Pen's third attempt at the French presidency has surprised observers with its strength.

"It's a very important election for the U.S.," he added, saying that a Le Pen victory would swap out Macron's tested and respected leader on the European and world stage "For a leader that would be one of the least experienced, least respected and the least trusted."

While recent polls have Macron ahead of Le Pen by as many as 10 percentage points in advance of Sunday's runoff election, her gains reflect what experts say is the politician's strategy of seeking to appeal to the mainstream - moderating some of her most extreme views and promoting herself as a single, working mother concerned about sky-high inflation.

"Marine Le Pen tried to go more mainstream and direct her message toward blue-collar French voters, and she tries to attract voters who may feel abandoned by the left," said Laure Pallez, a former adviser for the French government who is active among the French diaspora in the U.S. "Her strong showing in the elections shows there is some public support in her positions. We can't ignore it," Pallez added.

While Le Pen has garnered more popularity, her strong showing is also a reflection of domestic anger toward Macron, who was criticized for prioritizing the war in Ukraine over French concerns.

April 20: The Memo: Left and right accuse Biden of failing to meet the moment

President Biden's critics on both the left and the right are accusing him of going too small in response to the massive challenges facing the country. Progressives express dismay that Biden has not done more on prized priorities, including voting rights, the battle against climate change, and student loan forgiveness.

To the president's right, conservatives and many independent voters argue that Biden is failing to meet the mark to address two huge issues - inflation and immigration.

Warren, who competed against Biden for the Democratic Party's 2020 presidential nomination, warned: "To put it bluntly: if we fail to use the months remaining before the elections to deliver on more of our agenda, Democrats are headed toward big losses in the midterms." Warren was polite about Biden himself in her op-ed but among others on the left, there is less patience for what is increasingly perceived as a small-ball approach.

John Paul Mejia, the national spokesperson for the progressive and youth-oriented Sunrise Movement, expressed disappointment that the early promise of the Biden administration had given way to a "Botched legislative agenda" that has made the outlook appear "More dismal."

Almost 8 million jobs have been created during the Biden presidency.

For Fun: 

April 25: Whisky generates a lot of waste. It could soon help fuel your car

For every liter of whisky, there is a huge amount of waste: around 2.5 kilograms of solid by-products known as draff, 8 liters of liquid known as pot ale, and 10 liters of spent lees, a watery residue. Martin Tangney, the founder of Celtic Renewables, uses a fermentation process to transform whisky by-products into biochemicals that can replace some of the petrol and diesel used in cars, and can be used to make other oil-based products, too.

Alcohol made from cheese waste could help fix dairy Alcohol made from cheese waste could help fix dairy's whey problem He set up the UK's first biofuel research center at Napier University in Edinburgh, Scotland, in 2007, and explored "Everything from newspaper to seaweed" before settling on whisky by-products.

Tangney says his fermentation process isn't limited to whisky by-products and could use the waste from other food sectors such as dairy. 

Biofuels made from renewable organic materials such as corn, soya beans, or sugarcane, are often promoted as a low-carbon alternative to fossil fuels, but producing them often requires huge amounts of land, which can detract from the benefits of reduced greenhouse gas emissions, says Alison Smith, a senior research associate at the Environmental Change Institute at the University of Oxford.

As aviation and other industries look to biofuel as a quick solution to decarbonize, Smith warns that there are "huge trade-offs and impacts on biodiversity, carbon storage, and food security," depending on the raw material.

However, fuel made from "genuine waste" such as whisky by-products is "probably the best possible kind of biofuel" she says, as it avoids these problems. Tangney has commissioned an independent life cycle analysis of his product to evaluate its environmental benefits, to be published later this year.

Glenfiddich Distillery, operated by William Grant & Sons, uses biogas made on-site from the by-products of its own whisky to power some of its trucks, reducing the trucks' carbon emissions by 90%. Glenfiddich Distillery has been converting its whisky by-products into biogas since 2008.

Whisky waste can be used to create more than biofuels. The solvents from its fermentation can be used as an alternative to oil in plastics, cosmetics, pharmaceuticals, clothing, and electronics, says Tangney.

The company built Scotland's first biorefinery last year, with the capacity to convert 50,000 metric tons of whisky by-products into biochemicals. Tangney says the plant will be fully operational later this year once testing is complete.