Also known as: Ethyl alcohol, EtOH, bioethanol
Ethanol is blended into gasoline for a variety of business and policy reasons. Ethanol has high octane and can be used as an octane booster. Because ethanol contains oxygen, it can be used to reduce the carbon monoxide emissions from burning gasoline. Also, as a renewable fuel, ethanol blending is mandated in some markets to reduce reliance on fossil fuels.
Fuel ethanol is typically manufactured by fermenting the sugars in agricultural products such as corn, sugar cane, and beets. When produced this way, it is able to receive biofuel credits in countries with these regulations. In the US, most ethanol is produced through fermentation of corn. In Brazil, sugar cane is the most common feed stock.
When blended into gasoline, ethanol significantly raises the octane and vapor pressure. However, its impact on both qualities varies widely with the concentration of ethanol in the mix and the chemical properties of the other hydrocarbons in the blend. As a result, ethanol is typically blended into gasoline in fixed ratios (e.g., 10%, 15%). Ethanol-blended gasoline is kept segregated from ethanol-free gasoline.
Ethanol has an energy content that is about 70% of typical gasoline. As a result, vehicles using ethanol blended fuels will have lower fuel economy. The price of ethanol blended fuel typically reflects this.
Ethanol highly miscible with water. Consequently, ethanol and gasoline/ethanol blends must be kept clear of any water contamination. Otherwise the water (and any contaminants that collect in the water) would form a solution in the fuel and ultimately end up in vehicle engines. To avoid this, ethanol is typically kept separate from gasoline until loaded into a tank truck for final delivery. This means ethanol can not be distributed through the pipeline systems that move large volumes of gasoline in most countries. Ethanol shipments are primarily by (more expensive) truck, rail or barges.
FIND OUT MORE
The Refinery Reference Desk includes content derived from our industry experts as well as from public data sources such as company websites. Nothing herein is intended to serve as investment advice. This material is based on information that we believe to be reliable and adequately comprehensive, but we do not represent that such information is in all respects accurate or complete. McKinsey Energy Insights does not accept any liability for any losses resulting from use of the content.