There are a few different aspects contributing to the answer to this question. The current method of producing ethanol from corn makes a 10-20% reduction in carbon that would result in an overall reduction of CO2 emissions of only 2%. Ethanol does not burn as efficiently as gasoline though, so more ethanol will be consumed in running an engine than gasoline. There is also the point to be made that ethanol is currently being produced in factories that use coal burning to convert the corn, causeing pollution on the creation end of ethanol as well.
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