Fuel ethanol is most commonly used as a fuel for internal combustion, four­cycle, spark-ignition engines in transportation and agriculture. It can be used as a direct replacement fuel for gasoline, or can be blended with gasoline as an extender and octane enhancer. The research octane number (RON) of ethanol is about 113 and as such ethanol blending enhances the octane rating of the conventional fuel [37]. The octane number is a quantitative measure of the maximum compression ratio at which a particular fuel can be utilized in an engine without some of the fuel/air mixture "knocking." By defining an octane number of 100 for iso-octane and 0 for и-heptane, linear combina­tions of these two components are used to measure the octane number of a particular fuel. Therefore, a fuel with an octane number of 90 would have the same ignition characteristics at the same compression ratio as a 90/10 mixture of iso-octane and и-heptane. It should be noted that there are several different rating schemes for octane numbers of fuels: research octane num­ber, motor octane number (MON), and the average of the two ((R + M)/2) that is often called the anti-knock index (AKI) or pump octane number (PON). The research octane number (RON or F1) simulates fuel performance under low severity engine operation, whereas the motor octane number (MON, or F2) simulates more severe operation that might be incurred at high speed or high load. Therefore, RON is nearly always higher in value than MON for the very same fuel. In the United States, the octane of a gasoline is usually reported as the average of RON and MON, that is, (R + M)/2.

The use of ethanol to replace gasoline requires modifications to the car­buretor, fuel injection system components, and often the compression ratio. Therefore, efficient and safe conversion of existing gasoline engines is a complex matter. Engines specifically designed and manufactured to oper­ate on ethanol fuel, or predominantly ethanol fuel, will generally be more efficient than modified gasoline engines. Ethanol concentrations of between 80 and 95% can be used as fuel, which eliminates the need for cumbersome dehydration processing steps thus simplifying the distillation step. This complication comes from the fact that the ethanol-water solution makes an azeotropic mixture at 95.4% of ethanol (by mass), a minimum boiling mix­ture. In many cases, the conversion of engines to operate on azeotropic etha­nol may be simpler and more cost-effective than ethanol dehydration as an effort to produce 99+% purity of ethanol.

In the United States, E85 is a federally designated alternative fuel that contains 85% ethanol and 15% gasoline. As of 2003, there were hundreds of thousands of E85 vehicles on the roads in the United States. As of 2010, almost 8 million vehicles on U. S. highways were flexible fuel vehicles [38]. E85 vehicles are flexible fuel vehicles that can run on a very wide range of fuels, ranging from 100% gasoline (with 0% ethanol) to 85% ethanol (with 15% gasoline), however, they run best on E85 [36]. Nearly all the major auto­mobile makers offer many models of passenger cars and sports utility vehi­cles (SUVs) with E85 engines.

In the United States, the National Ethanol Vehicle Coalition (NEVC) is actively promoting expanded use of 85% ethanol motor fuel based on its clean burning as well as renewability of the fuel. E85 fuel can achieve a very high octane rating of 105. As an extra incentive plan for E85 users, the U. S. federal government provides federal income tax credits for the use of E85 as a form of alternative transportation fuel. The E85 vehicles undoubtedly help alleviate the petroleum dependence of the world by using renewable alterna­tive fuel source.

In unmodified engines, ethanol can replace up to 20% of the gasoline, that is, E20. In the United States, up to 10% blend of ethanol, E10, is quite popularly used. Blending ethanol with gasoline extends the gasoline sup­ply, and improves the quality of gasoline by increasing its octane value as well as adding clean burning properties of oxygenates. There are advantages to using gasoline/ethanol blends rather than pure (or very high concentra­tion) ethanol. Blends do not require engine modification. Therefore, ethanol can be integrated rapidly with the existing infrastructure including gasoline supply and distribution systems.

Even though the use of ethanol in specially designed two-cycle engines has been demonstrated on a number of occasions, it is not yet commercial­ized. One of the major issues has been the fact that ethanol does not mix well with lubricating oil typically used for such engines. Therefore, development of lubricating oils that are not affected by ethanol is an important step for this application.

Similarly, the use of ethanol in diesel-fueled engines is quite feasible, but is not practiced much, due to a number of technical difficulties. These limitations are based on ethanol’s inability to ignite in compression ignition engines as well as poor miscibility with diesel. However, ethanol can be used in supercharged diesel engines for up to about 25% of the total fuel, prefer­ably the rest being diesel. This can be achieved by delivering ethanol from a separate fuel tank and injecting it into the diesel engine through a super­charger air stream. This mode of fuel delivery system may be called a "dual fuel system" in comparison to blended fuel that is delivered as a preblended fuel from a single fuel tank. Ethanol can also replace aviation fuel in aircraft engines, even though this potential is not commercially exploited.

As a recent effort, a dual-fuel internal combustion engine (ICE) technol­ogy has been developed and demonstrated, in which ethanol is used as a cofuel with acetylene (C2H2) that is the principal fuel in this specific appli­cation. The dual-fuel system has been favorably demonstrated on modified gasoline and diesel engines originally designed for cars, trucks, forklifts, tractors, and power generators. Up to 25% of ethanol in acetylene-based dual-fuel systems has been successfully tested. The role of ethanol was found very effective in eliminating knocking/pinging and lowering the combustion temperatures thus reducing NOx emissions from combustion [39, 40].