Ethanol is an alcohol-based alternative fuel produced by fermenting and distilling starch crops that have been converted into simple sugars.

Feedstocks for this fuel include corn, barley, switchgrass and wheat. Ethanol can also be produced from "cellulosic biomass" such as trees and grasses and is called bioethanol. Ethanol is most commonly used to increase octane and improve the emissions quality of gasoline.

Ethanol can be blended with gasoline to create E85, a blend of 85% ethanol and 15% gasoline. E85 for example, qualifies as alternative fuels under the Energy Policy Act of 1992 (EPAct). Vehicles that run on E85 are called flexible fuel vehicles (FFVs) and are offered by several vehicle manufacturers.

In some areas of the United States, lower concentrations of ethanol are blended with gasoline. The most common low concentration blend is E10 (10% ethanol and 90% gasoline). While it reduces emissions, E10 is not considered an alternative fuel under EPAct regulations.