Ethanol fuel is an alternative fuel to gasoline. Typically, ethanol fuel is made either from a grain such as corn or maize or from sugarcane. In the US, corn is primarily used to make ethanol fuel, while in other generally warmer locations, sugarcane is the preferred source of biomaterial for making ethanol fuel. It is also possible to distill ethanol fuel from petroleum oil, though mention of ethanol fuel usually refers to bio-ethanol.

Ethanol fuel can be used unmixed in an modified gasoline engine, but it is much more common to find an 85% gasoline and 15% ethanol fuel mixture. This mixture can be used directly in any gasoline engine. This mixture burns cleaner in the engine, causing less pollution. If the ethanol is made from renewable bio-sources, then it also reduces the use of fossil fuels. Ethanol fuel does have a few disadvantages; it has a lower energy density than gasoline, so a tank of ethanol fuel will not go as far as a tank of gasoline, and ethanol fuel can be more difficult to start in very cold temperatures.

Ethanol fuel is also used as an oxygenate additive to gasoline. In the past, the chemical methyl tert-butyl ether (MTBE) was used for this purpose. This chemical has fallen out of favor, since MTBE is hazardous and very harmful to the environment. Ethanol fuel can provide the same function without the negative effects to the environment. Oxygenating gasoline boosts the octane quality, enhances combustion and reduces carbon monoxide emissions. This practice sees more use during the winter months than it does during the summer.

In the US, bio-ethanol fuel is primarily made from corn or maize. This is largely due to the amount of corn that is grown in the US and the ease with which it is grown. Sugarcane is not as easily grown in the US.

Critics of this approach argue that the total energy input required to convert the corn into ethanol fuel is almost equal to the energy in the fuel. However, the manufacture of ethanol fuel from corn is a relatively new business in North America, and improvements in the process are expected. The current production process is almost unchanged from the way corn whiskey was made during the pioneering days. The manufacture of ethanol fuel from corn is also changing from a limited scale production to large scale production by multinational corporations. These large corporations are researching ways to make the process more efficient.

In warmer climates, sugarcane is used. This process is much more favorable in terms of the energy recovered. In some cases, the leftover cane fiber material is also burned as a bio fuel once the sugars have been removed from the sugar cane. This increases the total amount of energy recovered from the process.

Brazil and some of the Caribbean islands are significant proponents of the sugarcane approach. Ethanol fuel is a significant contributor to the fuel requirements of these locations and is likely to continue to increase in importance. Brazil is perhaps the country that has most significantly adapted this technology, with 20% of the cars now using pure ethanol and at least 50% using a blend of gasoline and ethanol. Ethanol fuel is also posed to contribute a large share to the energy equation in the US in spite of concerns about the economics of the energy balance. Ethanol fuel is a growing business, pun intended.