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Ethanol is an alcohol with high octane but low cetane characteristics. An ethanol fueled compression ignition engine requires special injectors and ignition improvers to make the the ethanol ignite. Ethanol also lends itself well to blending with gasoline for use in spark-ignition engines. Ethanol is produced by the fermentation of plant sugars - in the United States typically from corn and other grain products, in Latin America mostly from sugarcane. For commercial or industrial use it is always denatured (i.e., small amounts of toxic substances are added) to avoid misuse as a beverage (1).

As a transportation fuel, ethanol can be used in the following ways:

  1. 1. As an additive to gasoline – in USA typically using 10% ethanol ("gasohol"), in the EU max 5% and in Brazil normally 22%.

  2. As a component of reformulated gasoline both directly and/or in the form of ethyl tertiary butyl ether (ETBE). (It should be noted that ETBE is not currently used in reformulated gasoline.)

  3. Blended with 15 percent (or sometimes more) gasoline known as E85.

  4. 4. Mixed with ignition improvement additive to be used in diesel engines specially configured for that purpose.

In cases 1-3 the ethanol will have to be dry (below 200-1000 ppm water depending on use, climate and anti-corrosion additions. In case 4, the ethanol contains 5% water.

Adding ethanol to gasoline ("gasohol"), or as ETBE to reformulated gasoline, does not require specially configured vehicles. Almost all existing vehicles will tolerate these fuels without problems and with likely advantageous emission benefits (1).

Ethanol has high octane number and can be used as a substitute for lead in gasoline but other lower cost substitutes are available (w1). By blending 22% anhydrous ethanol with gasoline to produce gasohol, Brazil was able to eliminate completely the requirement for lead as an octane enhancer (2).

Further characteristics of ethanol include:

  • It is a renewable resource, facilitating reduced independence on oil imports.

  • Compared to conventional fuels, it has the potential to produce less emissions of air pollutants and especially life cycle emissions of greenhouse gases (w2). This is because the CO2 released during combustion is the same that was previously taken up during plant growth. However, depending on the production method, high energy inputs and N2O generation from fertilizers may more than offset this advantage. In the US for example, more energy is used to produce ethanol than the energy that is realized in the ethanol itself. (3)

  • It has about 33% per liter lower energy density than gasoline, leading to a lower vehicle driving range.

  • As an octane enhancer in gasoline, it increases the volatility when mixed in the 0-20 % range and unless offset by low volatility blending components tends to increase evaporative hydrocarbon emissions.

  • It absorbs water and will cause phase separation in gasoline mixtures if water comes into the distribution, storage or vehicle fuel system.

  • It tends to increase aldehydes emissions.


Regarding transport and storage of ethanol, its propensity to absorb water has been an issue as well as problems with corrosion. Generally no special storage and dispensing equipment is required at ethanol refueling facilities (4) as dry ethanol is compatible with plain steel. Only certain fiberglass tanks and some tank liners may not be compatible. Current fuel distribution and storage systems are not watertight, and water tends to carry impurities with it. Ethanol will not be significantly degraded by small amounts of clean water, though the addition of water dilutes its value as a fuel (1). Partly for this reason the primary use of ethanol in the transportation sector is expected to be as a fuel additive to conventional fuels (4). Fuel dispensers must have appropriate elastomers for ethanol and must not use plain aluminum components.


"Estimates of the cost of production of ethanol in Brazil are about 15 cents/gallon. ... However, in the US, fuel ethanol is produced from corn which is much more expensive than production from sugarcane. As a result, production costs in the US have ranged from about 91-227 cents/gallon" (w1)(24-60 cents/liter). . According to (5), in 1999 the average wholesale price of pure ethanol in the US was 91-227 cents/gallon (24-60 cents/liter). , while the effective price was 50 cents/gallon (13 cents/liter) due to the alcohol fuel tax incentive of 53 cents/gallon (14 cents/liter).

The relatively high price of ethanol (ranging from US$ 0.25 to 0.4 per liter in USA in the last few years, which is equivalent to US$ 0.41-0.66 per liter of gasoline on an energy basis) "has effectively ruled out its use as a motor fuel except where (as in Brazil and the U.S.) it is heavily subsidized" (2).

"Because ethanol is basically an agricultural product, agricultural economics and institutions dominate its production, and its price is related to crop prices" (1). Thus high agricultural inputs, including energy, can lead to higher fuel prices, as well as influencing the potential to avoid greenhouse gas generation. Production of ethanol for fuel is also in direct competition with food production in most countries (2).

The costs for ethanol fueling facilities and modifications to maintenance facilities "vary substantially on the basis of the specific circumstances and equipment, a typical estimate for a 200-bus transit fleet is US$ 300,000 for modifications to one maintenance garage and US$ 400,000 for one ethanol fueling facility" (1).


Brazil is the world's largest ethanol fuel producer as well as consumer. As a response to the 1170s oil crisis, the government created PROALCOOL, a program to increase sugarcane alcohol production to use as a substitute for gasoline. The program was successful, and large volumes of ethanol were produced for use both in its pure form and as a gasoline additive. Ethanol fueled vehicles were produced and became popular (around 5 million passenger cars)during the 1980s, until ethanol shortages shook consumers' confidence. Since then, sales of ethanol vehicles have declined significantly, and so has the use of pure ethanol as a fuel, but it remains an important component of "gasohol" (up to 24% in 2001, (6)) to this day (7).

In the United States, fuel ethanol is likewise mostly used as an additive to gasoline, though to a far lesser extent than in Brazil (2). "In 2000, 99.7% of fuel ethanol consumed in the United States was in the form of 'gasohol' or 'E10' (blends of gasoline with up to 10% ethanol)" (5). "It serves as an as an oxygenate (to prevent air pollution from carbon monoxide), as an octane booster (to prevent early ignition, or 'engine knock'), and as an extender of gasoline. It is produced and consumed mostly in the Midwest, where corn-the main feedstock for ethanol production-is produced" (5).

Sweden also has experience with ethanol, where it is used as a substitute for diesel in around 300 city buses in the capitol (9). From 2004 almost all 95 octane gasoline in Sweden will contain 4-5% ethanol produced both nationally and imported from other EU countries, the latter heavily subsidized wine ethanol.


In the United States, "the current size of the ethanol industry depends significantly on federal laws and regulations that promote its use for air quality and energy security purposes, as well as tax incentives that lessen its cost to consumers. Without these, it is likely that the industry would shrink substantially in the near future. However, if fuel ethanol process costs can be decreased, or if gasoline prices increase, ethanol could increase its role in U.S. fuel consumption" (5). According to (4), "incompatibility with existing infrastructure is another obstacle for ethanol."

The experience in Brazil has shown that prices compared to conventional fuels, as well as the reliability of supply play a major role in consumer acceptance and hence market penetration.

In order to efficiently utilize ethanol's potential to cause low greenhouse gas emissions, production methods should be designed to minimize energy expenditure. According to (7), "because the major consumer of energy in the ethanol chain is the ethanol processing plant, emissions from the use of ethanol could be improved significantly if there were scope for reducing fossil energy consumption on the plant."

Production of ethanol from sugar derived from cellulose has long been highlighted as the most attractive method of the future.

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