Ethanol fuel is an alternative to gasoline. It can be combined with gasoline in any concentration up to pure ethanol (E100) to reduce consumption of petroleum fuels and reduce air pollution.

Ethanol can be mass-produced by fermentation of sugar or by hydration of ethylene from petroleum and other sources. More than 90 percent of the ethanol produced in the U.S. comes from corn.

Ethanol capabilities vary widely and current ethanol engines are mildly modified gasoline engines with a few adjustments required to overcome the corrosive effect of the alcohol content of the ethanol fuel.

In 1990, Congress required that gasoline contain a 10 percent additive to control smog. All current (2006) production spark ignition vehicles in the U.S. are designed to be compatible with up to 10 percent ethanol. To change a pure-gasoline-fueled car into a pure-ethanol-fueled car, larger carburetor jets or fuel injectors are needed.

In 2004, around 42 billion liters of ethanol were produced in the world. Around 12.4 billion liters were produced as fuel to ethanol-powered vehicles in domestic market. Top domestic research fields are already producing 11,500 gallons of ethanol per acre.

E85
E85 is a blend of ethanol and gasoline (85 percent ethanol). Flexible Fuel Vehicles (FFVs) are specifically designed to run on E85 are becoming more common and are available with little or no incremental cost. The FFVs can operate on gasoline as well as E85.

Benefits
Ethanol is most commonly used to increase octane and improve the emissions quality of gasoline but there are other benefits.

• Ethanol equipment is only slightly different and similar in cost to the petroleum fuel equipment that in some cases can be converted.
• Ethanol emits less carbon monoxide
• Ethanol is a particulate-free burning fuel source that combusts cleanly with oxygen to form carbon dioxide and water

Efficiency
A comparison of petroleum diesel and petroleum gasoline found that petroleum diesel has a 0.843 energy yield, petroleum gasoline has a 0.805 energy yield, while bioethanol has a yield of 1.34.

Ethanol consumption in an engine is approximately 34 percent higher than that of gasoline (the BTUs per gallon are 34 percent lower), but higher compression ratios in an ethanol-only engine allow for increased power output.

Controversy
Much of the research in the U.S. regarding ethanol involves the use of corn. This poses a number of questions having to do with sustainability, availability and price. At best, corn could satisfy about half of demand – and that ignores the general impact on food and feedstock prices. As of 2006, global ethanol production is primarily from sugar cane, maize (corn) and sugar beets.

Some economists have argued that using ethanol as a petroleum substitute is economically infeasible (and environmentally inappropriate) because the energy required to grow and process the corn used as fuel is greater than the amount ultimately produced.

They argue that government programs that mandate the use of bioalcohol are agricultural subsidies. The U. S. Department of Energy, however, finds that for every unit of energy put towards ethanol production, 1.3 units are returned. Another study found that corn-grain ethanol produced 1.25 units of energy per unit.

Cellulosic ethanol—a technique for making ethanol out of agricultural residues, wood waste and non-food corps such as switchgrass, instead of from the starches of corn, wheat and similar grains. This process doesn't impact food supply or prices, requires less energy to produce and doesn’t involve controversial subsidies. Still in research phase, with development being tested and production considered a few years off.

Grants/tax incentives/funding

Federal – Energy Policy Act of 2005 provides a tax credit to buyers of new alternative fuel vehicles placed in service as an alternative fuel vehicle after January 1, 2006.

State - The Alternative Fuel Transportation Grant Program authorizes $900,000 for the purchase and installation of alternative fuel refueling and blending facilities, and for the purchase and use of alternative fuel by businesses, nonprofit organizations, public school systems, and local governments.