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Ethanol, empirical C2H6O and molecular CH3CH2OH (also known as ethyl alcohol, grain alcohol, drinking alcohol, and pure alcohol) is a volatile liquid suitable for use as a fuel. It has been used throughout history as a psychoactive drug in alcoholic beverages, fuel for lamps and heaters, an accelerant for fires, an ingredient in medicine, a component of synthesizing chemical products, and a transportation fuel. The largest use at present is as a transportation biofuel additive to gasoline for automobile engines. Ethanol can help reduce dependence on petroleum, increase octane, and reduce tailpipe pollution (including greenhouse gases from direct combustion).

Ethanol has a long history as a fuel. In 1826, U.S. inventor Samuel Morey developed an internal combustion engine that would run on ethanol and turpentine, and in 1860 German inventor Nicholas Otto fueled one of his engines with ethanol. By the 1890s, ethanol was used to fuel farm machinery in Europe. In 1896, Henry Ford built the Quadracycle, his first automobile, to run on pure ethanol. In 1908, he began production of the Model T. It had a flexible hybrid engine able to use gasoline, kerosene, or ethanol. Ethanol can also be used as a rocket fuel.

Ethanol can be produced directly from sugars through fermentation and distillation processes; from starches, as in maize or other grains, which must first be converted to simple sugars through a process called saccharification; from cellulose (wood, grasses, or the inedible parts of plants), which requires a greater amount of processing to produce the sugars needed for fermentation; and from ethylene, a petroleum by-product, by cracking a long chain of hydrocarbons found in crude oil at high temperatures and using a phosphoric acid or another appropriate catalyst. Bio and Petro ethanol have identical chemical formulas. Ethanol produced for fuel is usually dehydrated to increase its usable energy content per unit volume and/or to increase its ability to be mixed with gasoline or used directly as a fuel, and to reduce the risk of hydrous ethanol corrosion in vehicles. Dehydration is typically done through a single- or multistep distillation process with an additive such as benzene or by forcing the vapor through a molecular sieve.

Ethanol can be mixed with gasoline to increase the octane of the gasoline or used directly as a fuel. It is used in standard mixtures ranging from 10 percent ethanol and 90 percent gasoline (E10) through E100 (100 percent ethanol). Engines must be designed specifically to use the ethanol mixture. Some vehicles (FFVs) use flexible fuel (flex fuel) engines, which are designed to use a range of different mixtures. Most modern (as of 2013) FFVs are optimized to use E15 to E85 fuels, though the technology exists to make engines that run on E0 to E100 and some vehicles are designed to do so.

Policies have played an important role in the use of ethanol. In the United States the unfavorable tax on camphene, a blend of kerosene and ethanol, in the late 19th century and the discovery of inexpensive oil combined to differentially encourage gasoline use in transportation. Prohibition in the United States (1920–33), which significantly reduced production of ethanol, also discouraged the use of ethanol as a fuel. The oil embargo in 1973 led to increased interest in renewable resources, including ethanol. However, it was not until the Energy Policy Act of 2005 and the Energy Independence and Security Act of 2007 that ethanol production significantly accelerated in the United States, the largest consumer of transportation-related petroleum products.

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