I found this on the interent, which covers part of the subject. Ethanol contains oxygen so in a sense, adding ethanol to the fuel is a way of diluting it.
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Ethanol vehicles are conventional vehicles that have metallic and rubber based materials replaced with ethanol compatible substitutes. In addition, the timing is adjusted to ensure complete combustion of the ethanol. These vehicles require a set fuel mixture that typically contains up to 85% anhydrous ethanol, in order to operate efficiently.
During the past few years, several major automobile manufacturers have developed flexible fuel vehicles (FFVs) that can run on petrol or E85 fuel (85% ethanol by volume) or any blend of ethanol and petrol from 0% to 85% ethanol. The main differences between ethanol FFVs and petrol vehicles are the materials used in the fuel management system and modifications to the engine calibration system. The corrosive effect of a fuel rises with increasing ethanol content. Materials that normally would not be affected by low percentage ethanol blends have been found to dissolve in the presence of higher ethanol concentrations, including aluminium, brass, zinc and lead. Even if the parts made from these materials do not fail, insoluble compounds will be introduced into the fuel, causing plugged vehicle fuel filters. Terne (lead-tin-alloy) plated steel, commonly used for petrol fuel tanks, and lead-based solder are also incompatible with high concentrations of fuel ethanol. Non-metallic materials that degrade when in contact with high concentrations of fuel ethanol include natural rubber, polyurethane, cork gasket material, leather, polyvinyl chloride (PVC), polyamides, methyl-methacrylate plastics, and certain thermo and thermoset plastics. The swelling and embrittlement of rubber fuel lines and o-rings can, in time, lead to component failure.
These problems are eliminated in dedicated ethanol vehicles and FFVs by using unplated steel, stainless steel, black iron and bronze, which have all shown acceptable resistance to ethanol corrosion. Non-metallic materials successfully used with E75 and E85 include thermoset reinforced fiberglass, thermo plastic piping, neoprene rubber, polypropylene, nitrile, Viton and Teflon materials.
