As I explained some time ago, higher octane ethanol enables turbocharging to get more power out of the same size engine. So you can reduce the size of the engine and reduce gasoline consumption.
http://www.greencarcongress.com/2007/01/ford_to_introdu.html#more
Ford to Introduce New E85-Capable, Direct Injection, Turbocharged Engine Family
3 January 2007
With its debut of the Lincoln MKR concept car next week at the North American International Auto Show, Ford is launching its new TwinForce engine family—combining direct injection with turbocharging—in an E85-capable model.
The concept’s 3.5-liter gasoline twin-turbocharged direct-injection V-6 performs comparably to or better than V-8 engines, delivering 415 hp (310 kW) and 400 lb-ft (542 Nm) of torque on an E85 ethanol blend. The concept’s engine is mated to a six-speed transmission.
Achieving this type of performance from a V-8 would require an engine displacement of 6.0-liter or larger, nearly double the size of the 3.5-liter in the Lincoln MKR, according to Ford. As a result of the smaller V-6, the Lincoln MKR concept delivers 15% better fuel economy than a V-8 with similar performance.
(more)
ford is introducing this in an expensive car but it will be introduced into less expensive models in time.
What this means is, if you'd be satisfied with say, 200 horsepower in your family sedan you could achieve that with about a 2 liter engine with better mileage than you would get on an much larger engine running on gasoline only.
This of course, does not even approach what the MIT direct ethanol injection engine (which Ford is working with MIT engineers on) which will deliver 30% better fuel economy using an even smaller proportion of ethanol (5% to 95% gasoline).
http://www.greencarcongress.com/2006/10/startup_working.htmlMIT scientists and engineers earlier this year founded a company—Ethanol Boosting Systems, LLC (EBS)—to commercialize their work on direct-injection ethanol boosting combined with aggressive turbocharging in a gasoline engine. (Earlier post.) The result is a gasoline engine with the fuel efficiency of current hybrids or turbodiesels—up to 30% better than a conventional gasoline engine—but at lower cost.
EBS has a collaborative R&D agreement with Ford, and anticipates engine tests in 2007 with subsequent licensing to Ford and other automakers. If all goes as expected, vehicles with the new engine could be on the road by 2011.
This means that if all the cars on the road were using the MIT direct ethanol injection engines then you would achieve a 30% reduction in total gasoline consumption using an amount of ethanol which would be only 5% of the total fuel supply. And that's at a cost according to MIT estimates of $600 to $1,000 per car!
BTW, ethanol production should reach 5% of the total fuel supply in about 2 to 3 years.