E85 fuel economy could approach that of gasoline if manufacturers optimized engines for that fuel
Consumers Reports was testing an engine for which no effort had been expended to accommodate combustion properties of ethanol. My Silverado, by adjusting the timing and lean/rich mixture only, reduces the mileage difference by about half.
A turbo charged engine that senses the presence of ethanol and adjusts boost pressure and fuel mixture accordingly would be the simplest solution. I think Saab is working on something in that area.