Trends in the automotive market require the application of new engine technologies, which allows for the use of different types of fuel. Since ethanol is a renewable source of energy and has lower $CO_2$ emissions than gasoline, ethanol produced from biomass is expected to be used more frequently as an alternative fuel. It is recognized that for spark ignition (SI) engines, ethanol has the advantages of high octane number and high combustion speed. Due to the disadvantages of ethanol, it may cause extra wear and corrosion of electric fuel pumps. On-board hydrogen production out of ethanol is an alternative plan. This paper investigates the influence of ethanol fuel on SI engine performance, thermal efficiency and emissions. The combustion characteristics with hydrogen-enriched gaseous fuel from ethanol are also examined. As a result, thermal efficiency increase compared to gasoline. Also, reductions in $CO_2$, NOx, and THC combustion products for ethanol vs. gasoline are described.