The world is striding towards a sustainable energy era with considerable emphasis on energy efficiency and use of renewable energy sources along with concerns of the environmental aspect for the achievement of the Kyoto targets of greenhouse gas emissions reduction. The objective of this paper is to investigate the thermal performance, exhaust emissions and combustion behavior of small capacity CI engine using varying energy fractions of ethanol. Significant reductions have been observed for CO2 (carbon-di-oxide), NOx, (oxides of nitrogen) and smoke with the use of ethanol in CI engine. CO (carbon mono-oxide) and HC (hydrocarbons) increased with the increase of ethanol energy fractions. Moreover, the study reveals that increasing the ethanol energy ratio in the fuel results in the decrease of combustion duration and increase of ignition delay. It is also observed that maximum heat release rate as well peak pressure increases upto a certain ethanol energy fraction and beyond which it decreases. (C) 2017 Elsevier Ltd. All rights reserved.