The basic steps for large scale production of ethanol are: microbial (yeast) fermentation of sugars, distillation, dehydration ,and denaturing (optional). Prior to fermentation, some crops require saccharification or hydrolysis of carbohydrates such as cellulose and starch into sugars. Saccharification of cellulose is called cellulolysis . Enzymes are used to convert starch into sugar.
Fermentation
Ethanol is produced by microbial fermentation of the sugar. Microbial fermentation will currently only work directly with sugars. Two major components of plants, starch and cellulose, are both made up of sugars, and can in principle be converted to sugars for fermentation. Currently, only the sugar (e.g. sugar cane) and starch (e.g. corn) portions can be economically converted. However, there is much activity in the area of cellulosic ethanol, where the cellulose part of a plant is broken down to sugars and subsequently converted to ethanol.
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Distillation
For the ethanol to be usable as a fuel, water must be removed. Most of the water is removed by distillation, but the purity is limited to 95-96% due to the formation of a low-boiling water-ethanol azeotrope. The 95.6% m/m (96.5% v/v) ethanol, 4.4% m/m (3.5% v/v) water mixture may be used as a fuel alone, but unlike anhydrous ethanol, is immiscible in gasoline, so the water fraction is typically removed in further treatment in order to burn with in combination with gasoline in gasoline engines.
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Dehydration
There are basically three dehydration processes to remove the water from an azeotropic ethanol/water mixture. The first process, and also the most used one, is called azeotropic distillation, and consists of adding benzene or cyclohexane to the mixture.
When these components are added to the mixture, it forms an heterogeneous azeotropic mixture in vapor-liquid-liquid equilibrium, which, when distillated, produces anhydrous ethanol in the column bottom, and a vapor mixture of water and cyclohexane/benzene, which when condensed becomes a two-phase liquid mixture.
The second method, called extractive distillation, consists of adding a ternary component which will increase ethanol relative volatility. When the ternary mixture is distillated, it will produce anhydrous ethanol on the top stream of the column. A third method consists of an adsorption of water into molecular sieves. It is done by passing the stream composed by ethanol and water into a fixed bed made of zeolites as adsorbends, which pores will retain water. Another process involves use of calcium oxide as a desiccant.
Adapted from wikipedia