Simple. Vehicles that can run on ethanol, the so called flex fuel vehicles, get a 50% bonus on gas mileage for the purposes of Corporate Average Fuel Economy (CAFE) calculations. Make all the company's vehicles be flex fuel vehicles and presto, chango, each company's CAFE jumps from today's 27 mpg to 40.5 mpg. Problem solved.
Cost? Trivial. They have to specify that fuel system elastomers (mostly hoses and gaskets) will withstand ethanol. This isn't hard, this stuff already withstands gasoline, and most elastomers that are gasoline proof are also alcohol proof. The auto makers simply specify alchohol resistance on all their purchase orders, and the suppliers will do the rest. Alcohol resistant hoses and gaskets don't cost anymore than what the industry uses today. The fuel injectors have to inject about 1/3rd more alcohol than gasoline, but the injectors are all controlled by microprocessors. Add a bit more programming (code) and the micro will squirt in the right among of alcohol for proper engine operation. More code is cost free.
Marketing can have a field day trumpeting how green the flex fuel vehicles are.
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