Fuel systems have to be engineered to accept a high ethanol content, but once modified, internal-combustion engines run on ethanol-gasoline mix quite well.
The objection is exactly the same as it has always been to ethanol as fuel - not economically feasible, if the cost of growing the feedstock crops, harvesting, malting, and distilling the alcohol from the mash is factored in. The portion of the fuel that is ethanol is not taxes as is the refined hydrocarbon portion.
It is possible to make ethanol from a fraction of natural gas, ethene, but ethene makes up only a small portion of the components of natural gas. Natural gas is mostly methane, which itself is a much better fuel for most internal combustion engines. It is just a bear to fuel up with the stuff, as it requires pressurized containers for storage.
The government should subsidise that thar still in my garage instead of sendin' them danged revenuers with their axes...that still is fer makin' fuel fer my car, I swear. :-)
"...it requires pressurized containers for storage."
Kegs? :-)