The heat of combustion tells us how much heat is released by the complete reaction of one mole of a fuel (or substance) with oxygen in which the products are usually carbon dioxide and water. Since the heat of combustion of ethanol is lower than fuel, it produces less energy per mole of substance. However, this doesn't necessarily mean that it's not a good source of fuel.
Ethanol undergoes combustion with oxygen to form carbon dioxide and releases heat in the process.
C2H5OH + 3O2 -> 2CO2 + 3H2O
This is much more like to completely combust as it only requires 3 moles of oxygen, rather than octane (main component of fuel):
C8H18 + 25/2O2 -> 8CO2 + 9H2O
which requires 12.5 moles of oxygen.
Ethanol is also considered a renewable resource because it can be fermented from plants such as sugar cane, wheat and corn. When the ethanol is combusted, the CO2 produced returns back to the photosynthesis cycle, therefore it is regarded as a renewable resource.
These are just a few of a number of arguments for the use of ethanol as a potential source of fuel.
