Ethanol (C₂H₅OH) is an alcohol that can be used as an alternative fuel as a blend with petroleum fuel or on itself. Ethanol is not to be mistaken with methanol (CH₃OH), which can also be used as an alternative fuel. Ethanol can be produced many different ways, but the most common method is by fermenting sugars, which makes ethanol a first generation biofuel. Ethanol fuel is used in internal combustion engines in pure form or in a mixture with gasoline or diesel. The combustion of pure ethanol with oxygen (O₂) produces the byproducts carbon dioxide (CO₂) and water (H₂O).

Ethanol fuel is used in internal combustion engines in pure form or in a mixture with gasoline. It is said that a 10%-15% ethanol gasoline blend can run on any gasoline car newer than the year 2000. Ethanol blends with higher percentages will damage the engine. Ethanol in pure form could in theory power cars, but it is not practical for multiple reasons. In some countries ethanol blends are mandatory, like Brazil, where gasoline is mixed with 25% ethanol. There are multiple blends, but the most common ethanol blends are:

• 10% ethanol and 90% gasoline (E10): No modifications necessary for a standard gasoline engine to be powered by E10 fuel.
• 15% ethanol and 85% gasoline (E15): Little to no modifications necessary for a standard gasoline engine to be powered by E15 fuel.
• 25% ethanol and 75% gasoline (E25): Little modifications necessary for a standard gasoline engine to be powered by E25 fuel.
• 100% ethanol and 0% gasoline (E100): Special engine is necessary to be powered by E100 fuel, but is also very uncommon.

The combustion of pure ethanol has no nitrogen oxide (NOx) emissions, no sulpher oxide (SOx) emissions and very low particulate matter (PM) and carbon dioxide (CO2) emissions compared to gasoline or diesel. A mixture of ethanol and gasoline will result in lower emissions than regular petroleum fuel. Ethanol fuel is toxic, but it does not evaporate as quickly as petroleum fuel and it also can be extinguished with water. The disadvantage of ethanol blends is that the fuel efficiency decreases with higher percentage of ethanol in the blends, but on the other side also do the greenhouse gas emissions decrease.

It is not possible to retrofit a diesel engine to use ethanol fuel. Therefore ethanol fuel is not available at bunkering stations.