E85 is a blended fuel composed of 85% Ethanol and 15% gasoline. Ethanol, being a form of alcohol, has less energy per litre. It requires a a vastly richer mixture then straight gasoline. So an upgraded fuel delivery system is required. As of now in most countries, it will cost more per distance traveled than straight gasoline.
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Overview
Any gasoline engine can run E85 with a carburetor change and (in some cases) larger fuel lines and a higher capactity fuel pump.
The power will be down about 15%. And fuel range will be cut in half.
To make effective use of E85, the compression ratio can be raised. However, change from 9.0 to 12.0 is need to make the same power as on straight gasoline.
A turbocharged engine can be more easily modified. Raise the boost to make up the lost power - and then gain some more. Alcohol fuel has a significant cooling effect and so permits higher boost levels.
Fuel Economy
With the same size fuel tank, E85 will travel fewer miles.
Octane and compression ratio
Corrosive effect
If any water vapor gets into Ethanol, it creates a corrosive acid, which can eat through rubber parts.
For this reason a sealed fuel system is used, such as all modern cars use anyways for emission control purposes.
Environment
Burning any hydrocarbon fuel releases COx to the atmosphere.
Corn-based methanol is not cost-effective except with government subsidies. A concern is the replacment of food crops with fuel crops, possibly causing food prices to rise.
Sugar cane-based ethanol is used in some countries.