E85 is fuel made up of up to 85% denatured fuel ethanol and gasoline. Ethanol is derived from corn as a primary source. E85 is beginning to be distributed more widely in the United States and can be used in any FlexFuel vehicle. (You should check your auto manual and labeling to make certain that your vehicle can support FlexFuel.

One of the current disadvantages of ethanol fuels is that the primary source for ethanol is derived from corn which can put pressure on necessary food stock prices. (Corn is used as livestock feed as well as human consumption.) There are other emerging approaches for deriving ethanol from other plant matter (including otherwise wasted plant matter) and these developments bear close watching.

From The Wikipedia:

There are about 1500 public E85 fueling stations available in the United States (out of 176,000 worldwide), at prices over 30% less than regular gasoline (when discounting the reduced fuel economy of E85), primarily in the corn-growing Midwest, where corn is grown and the homegrown fuel is produced. The number of gas stations offering E85 is expected to double over the next year as service stations are being offered incentives from government and ethanol industry grants up to $30,000 for the costs of retro-fitting pumps and tanks for E85 fuel. Unfortunately, this does little to offset the cost to install pumps and tanks for E85—a hefty $200,000 per station. Although ethanol contains about 65% by volume of the energy that gasoline does, the per gallon cost of E85 is 75% the price of regular unleaded gasoline. The overall consumer cost of E85 is close to E10, and any short term price advantage is usually lost because vehicles usually burn E85 quicker than regular fuel.

A recent development in the expansion of E85 filling stations is Wal-Mart’s announcement that it will possibly sell E85 at its 385 gas stations countrywide. Wal-Mart along with its popular division, Sam’s Club has a partnership with Murphy Oil Corp. which operates more than 900 gas stations in Wal-Mart parking lots. Should they decide to follow through with plans, Wal-mart has the potential to be the single largest retailer of E85 in the nation. Grocery retailers in Texas are also beginning to sell E85 at some fuel stations.

Business leaders like Richard Branson, Paul Allen, Steve Case, Vinod Khosla, John Doerr, and Bill Gates have become ethanol advocates and are investing heavily in ethanol. Microsoft co-founder Paul Allen is investing in a Seattle firm that wants to use canola oil, to create biodiesel, a biofuel associated with ethanol. And Vinod Khosla, the Kleiner Perkins partner and Sun Microsystems co-founder, has investments in two cellulosic ethanol companies. Microsoft’s Bill Gates, has bought 25% of Pacific Ethanol, a Fresno, California company that is planning to build dozens of ethanol refineries in the U.S. In July 2006 Goldman Sachs invested $27 million into a Canadian company called Iogen, which wants to produce ethanol from switchgrass, a perennial grass that is inexpensive to grow. Iogen, a non-publicly traded company, is building the world’s first full-scale commercial cellulose-to-ethanol plant by 2010. Another reason for ethanol’s popularity is its contribution toward providing economic revitalization in rural communities across the country.

Environmental Impact

When made from corn, E85 reduces lifecycle greenhouse gas emissions, which include the energy required to grow and process corn into ethanol, by 15-20% as compared to gasoline. E85 made from cellulose can reduce emissions by around 70 percent as compared to gasoline.

EPA’s stringent Tier II vehicle emission standards require that FFVs achieve the same low emissions level regardless of whether E85 or gasoline is used. However, E85 can further reduce emissions of certain pollutants as compared to conventional gasoline or lower volume ethanol blends. For example, E85 is less volatile than gasoline or low volume ethanol blends, which results in fewer evaporative emissions. Using E85 also reduces carbon monoxide emissions and provides significant reductions in emissions of many harmful toxics, including benzene, a known human carcinogen. However, E85 also increases emissions of acetaldehyde–a toxic pollutant. EPA is conducting additional analysis to expand our understanding of the emissions impacts of E85.

    (From The Wikipedia)