This chapter discusses effects of ethanol production from different substrates on environmental factors and potential applications. Ethanol is a clear, colorless, flammable liquid with a pleasant smell. It has somewhat sweet flavor in dilute aqueous solution, but has a burning taste in more concentrated solutions. Dried ethanol residues have been found on 9000 year old pottery in China, which indicates that Neolithic people in this part of the world might have consumed alcoholic beverages. Ethanol can be made synthetically from petroleum or by microbial conversion of biomass materials through fermentation and the latter is termed as bioethanol. Other microorganisms capable of fermenting a great variety of sugars including hexoses and pentose are the fungi belonging to genera Mucor, Rhizopus, Monilia, Neurospora and Paecilomyces giving high ethanol yields when cultivated under anaerobic conditions. Several kinds of carbohydrate-rich raw materials are used for ethanol production. These can be classified into three groups of agricultural products: all sugar, starch and lignocellulose.