Since ethanol is a renewable source of energy and has lower carbon dioxide (CO(2)) emissions than gasoline, ethanol produced from biomass is expected to be used more frequently as an alternative fuel. It is recognized that for spark ignition (SI) engines, ethanol has the advantages of high octane and high combustion speed and the disadvantage of ignition difficulties at low temperatures. An additional disadvantage is that ethanol may cause extra wear and corrosion of electric fuel pumps. On-board hydrogen production out of ethanol is an alternative plan. Ethanol has been used in Brazil as a passenger vehicle fuel since 1979, and more than six million vehicles on US highways are flexible fuel vehicles (FFVs). These vehicles can operate on E85 - a blend of 85% ethanol and 15% gasoline. This paper investigates the influence of ethanol fuel on SI engine performance, thermal efficiency and emissions. The combustion characteristics of hydrogen enriched gaseous fuel made from ethanol are also examined. Ethanol has excellent anti-knock qualities due to its high octane number and a high latent heat of evaporation, which makes the temperature of the intake manifold lower. In addition to the effect of latent heat of evaporation, the difference in combustion products compared with gasoline further decreases combustion temperature, thereby reducing cooling heat loss. Reductions in CO(2), nitrogen oxide (NOx), and total hydrocarbons (THC) combustion products for ethanol vs. gasoline are described. (C) 2010 Elsevier Ltd. All rights reserved.