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Demand for cleaner, cheaper and renewable alternate fuel sources has opened a lot of new avenues in area of automotive fuels. Moving away from the existing dependency on the fossil fuels with a stress on the renewable sources and eco-friendliness has become one of the key-driver for the development. Ever increasing cost and limited availability of the fossil fuels has led many automotive manufacturers to look at alternate sources for fuel. Some important alternate fuels like biogas, vegetable oil and its esters, alcohols, compressed natural gas (CNG), liquefied petroleum gas (LPG) and hydrogen are rapidly finding a place in automotive applications. Ethyl alcohol popularly known as ethanol, produced from renewable energy sources like biomass has been tested extensively in internal combustion engines. Due to the high latent heat of evaporation, high octane number and high flammability temperature, ethanol has positive influence on the engine performance.