Ethanol is presently the most widely used alternative fuel in the world. It is an alcohol-based fuel produced from crops which contain sugar, or by pre-treatment of starch crops. Feedstocks for this fuel include sugar cane, sugar beet, corn, barley and wheat.

Ethanol can also be produced from "cellulosic biomass" such as trees and grasses and is called bioethanol. It only takes three days to ferment a mash, after which the alcohol may be distilled out at reasonably low temperatures, thereby saving on the energy cost of production.

Four countries have developed significant ethanol fuel programs: Brazil, Colombia, China and the United States. Brazil uses sugarcane as primary feedstock, while more than 90% of the ethanol produced in the U.S. comes from corn.

Crops with higher yields of energy, such as switchgrass and sugar cane, are more effective in producing ethanol than corn. Ethanol can also be produced from sweet sorghum, a dryland crop that uses much less water than sugarcane and produces food and fodder in addition to fuel.

Ethanol can be used as fuel for vehicles with spark ignition engines either alone or as an additive to gasoline. Fuel system design must be compatible with the percent of ethanol permitted, and all current production spark ignition vehicles are designed to be compatible with up to 10% ethanol. Pure ethanol must not be used in fuel systems that are not designed for it. Since 1999 an increasing number of vehicles in the world are manufactured with engines which can run on any fuel from 0% ethanol up to 100% ethanol without modification.

A positive environmental aspect is that ethanol is a renewable resource, unlike oil, gas or coal, and in some cases may even be produced from waste material.

Compared with conventional unleaded gasoline, ethanol is a particulate-free burning fuel sources that combusts cleanly with oxygen to form carbon dioxide and water. Pure usage of ethanol rather than gasoline in your vehicle reduces its total carbon dioxide emissions, mile for mile, by about 13%. Ethanol is considered to be a carbon neutral fuel meaning that if the sugar cane were left to rot it would produce the same amount of CO2 emissions as burning the ethanol used from it.

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