Although you may not know it, you may already be using this fuel in your gasoline engine. Gasoline refineries commonly add ethanol (grain alcohol) to their fuels to improve their octane rating and to control emissions. In fact, it is common for refineries to add up to 10% ethanol. In the old days, it would have been known as gasohol. Today, oil companies just promote the cleanliness of the fuels.

The octane rating of pure ethanol is 100. It has a lower specific energy than gasoline which results in a higher fuel consumption. It also has a much lower Reid Vapour Pressure, which results in more difficult cold starts for carbureted engines. As a racing fuel, besides its high anti-knock rating, it has a very high latent heat of evaporation. This means that it cools the intake charge which results in a higher volumetric efficiency from the higher density air.

Racing engines more commonly use methanol rather than ethanol primarily because of cost. Although both can be made from organic feed stocks like grains, methanol is easily manufactured from the methane in natural gas. It has a number of unpleasant characteristics and special handling methods are required to handle this fuel.

Ethanol would seem to be the ultimate green fuel because it is made from completely renewable resources. However, a significant amount of energy goes into the manufacture of ethanol which drives up the cost of the finished product. As the demand for ethanol increases, manufacturers improve their efficiencies and the price of this fuel is slowly decreasing.