Ethanol (bio-ethanol) or ethyl alcohol (C2H5OH) is a clear colourless liquid which is biodegradable and low in toxicity.   Ethanol can be obtained from the conversion of carbon based feedstock, such as sugar cane, and is produced by the sugar fermentation process.  Feedstocks such as sugar cane are considered renewable because the energy they ultimately produce is derived from the sun.  Being CO2 neutral, ethanol does not add to the stock of total carbon dioxide in the atmosphere when burned. 

Another advantage of ethanol is the ease with which it can be easily integrated into the existing road transport fuel system.  With no modification, no effect on vehicle warranties and no reduction in performance for the consumer, existing cars can run on E10, a blend of 90% petrol and 10% ethanol.  Vehicles which run on 100% ethanol are also available, as are flex fuel vehicles (“FFV”), which can run on petrol or ethanol or a mixture of both, the most common being an 85% ethanol blend (E85).   Existing fuel pumps are already being converted for E10 blends in various countries, as are products and infrastructure for E85 blends.

In 2006 global ethanol fuel use was estimated at 48 bn litres and is expected to increase to 100 billion litres by 2010; in order to meet these projections existing production must substantially increase.* Brazilian FOB ethanol spot prices on 27th March 2008 were US$0.534 per litre which compares profitably with average production costs in the region of US$0.22 per litre. 

* source F.O.  Licht