On cars:
ethanol is preferable to lead as an octane booster. A 10% addition of ethanol to petrol is more effective than lead at boosting octane rating (+2.5) and making car run smoother. It's cheaper than lead, and ethanol-blended fuels leave no gummy deposits, thus keeps engine clean.
Although a minimal 10% ethanol blend should be compatible with internal combustion engines, it can cause slight damage to unmodified cars, such as the deterioration of rubber/plastic components in fuel systems. Ethanol contains the hydroxyl (-OH) group, giving it an affinity for water. In vehicles, the absorption of water by ethanol-blended fuel will affect drivability and may damage engine
The need to redesign car engines (to counter ethanol-fuel problems like rise in exhaust gas temp, increased carbon despites on pistons, corrosion of metallic parts etc) is expensive.
On Environment
Combustion of ethanol is complete - this means reduced tailpipe exhausts of CO, hydrocarbons, particulates, which is particularly beneficial in high-density urban areas. However, it increases emissions of oxides of nitrogen and acetaldehyde, so that there is probably no significant overall effect on air quality. If fuel is spilt into waterways, ethanol is biodegradable and easily diluted.
It's believed the use of ethanol, a "greenhouse neutral" fuel and can reduce greenhouse emissions - because the CO2 it liberates when burnt is hust that which was used in its synthesis. However, there are greenhouse gas emissions associated the manufacture of fertilisers, cultivation and transport of crops, and the distillation process. So ethanol is not 'greenhouse neutral'
Also, large areas of agricultural land will be sacrificed to growing ethanol-crops (e.g. sugarcane). This creates problems of soil erosion, deforestation, fertiliser run-off and salinity. Disposal of smelly