Cause: Butterscotch, buttery or toffee aromas are caused by a chemical compound called diacetyl. Given the opportunity, normal yeast will absorb and reduce the diacetyl to less noticeable compounds. Some yeast strains are more prone to diacetyl production than others. Wyeast Irish Ale (#1084) and The Yeast Culture Kit Company's A42 are well known as strong diacetyl producers.
Solution: Change yeast.
Cause: The yeast sedimented too quickly or filtered out of the beer too early.
Solution: Keep the yeast in contact with the beer and give them the opportunity to reduce the diacetyl.
Cause: You used too-short a lagering time at too-cold a temperature.
Solution: Either you can lager longer or you can use what is called a "diacetyl rest." A diacetyl rest is a method in which the temperature of the finished lager is raised from typical lager fermentation temperatures up into the range of 55 to 65° F (13 to 18° C) for two to ten days.
Cause: Your beer has a Pediococcus bacteria infection.
Solution: Review Sanitation Procedures.
Cause: Air was introduced during fermentation.
Solution: Minimize the introduction of air during fermentation. One of the reasons that Samuel Smith's beers have such high levels of diacetyl is because their yeast requires them to use a brewing system which results in a lot of air being introduced during fermentation.
Cause: Air was introduced after fermentation, e.g. during bottling.
Solution: Be careful to not introduce air after fermentation is complete.
Cause: Increased fermentation temperature increases diacetyl production, but it also increases diacetyl reduction.
Solution: Clearly the worst thing to do is to ferment warm and condition cold. For the absolute minimum diacetyl levels, ferment cool or cold and condition warm for at least a few days before cold conditioning (in the case of lagers).
Cause: Insufficient initial dissolved oxygen can increase diacetyl levels in the finished beer. This is highly strain-dependent. The Ringwood yeast strain is notorious for producing lots of diacetyl unless the wort is nearly saturated with oxygen.
Solution: Make sure you have sufficient initial dissolved oxygen (note that this is highly strain-dependent).
Cause: Insufficient yeast nutrition, specifically the amino acid valine, can increase diacetyl production. An all-malt wort should have sufficient valine, but if you've used a lot of adjuncts or refined sugars, you may have a deficiency. Increased percentages of corn grits in all-grain mashes (which would, in the case of yeast nutrition, be similar to increased levels of refined sugars in an extract beer) have been shown to result in beers with increased diacetyl levels.
Solution: Don't add too much refined sugar (more than 20% begins to have a profound effect).
Cause: Respiratory-deficient, "petite mutant" yeast has difficulty reducing diacytl. Yeast reuse increases the likelihood of problems from mutations.
Solution: While the brewer has little direct control over yeast mutations, you can limit the number of generations that you reuse the yeast and discard yeast from batches that begin to show a marked increase in diacetyl. Some strains of yeast can have a four-fold increase in diacetyl in as little as four generations.
Cause: Hallertauer and related hops as finishing or dry hops can give a buttery aroma. While not exactly like butterscotch, Hallertauer hop aroma can be mistaken for diacetyl even by experienced beer judges.
Solution: Don't overdo additions of Hallertauer and related varieties for finishing and/or dry hopping.