Conversion of carbon dioxide (CO2) into value added products by electroreduction is one of the attractive means to reduce CO2 and it must trigger a sustainable solar-fuel-based economy. However, achieving this process requires catalysts with high activity, selectivity, and durability. Alloy catalysts can achieve superior performance to single metals while reducing the cost by finely tuning the composition and morphology. Pd-Sn nanoparticles alloy is known currently as the most active electrocatalyst for CO2 electroreduction reaction, but the reaction pathways to produce ethanol are not clear. In this work, we present the results of theoretical studies aimed at elucidating the optimal mechanism and the effects of the reaction environment of gas and liquid on the intrinsic activity and selectivity of alloy catalysts for the reduction of CO2. In addition, through tuning Pd-Sn catalyst with adding oxygen and sulfur atom, the reaction energy can be significantly reduced, eventually reducing the limiting voltage of the electrode reaction to - 0.51 eV. Density functional theory calculations of the reaction free energy diagrams suggest that the rate-determining step is hydrogenation of CO to CHO, this is easier than CO or CHO dimerization. The calculations also illustrate the rationality of the gas phase model compared to the liquid phase. [GRAPHICS] .