this is from the Canadian renewable fuels website. THis is the page on small engines.
Ethanol and Small Engines
All gasoline currently available is intended for automobile use. Small engine manufacturers (including those who design motorcycles, boats, recreational equipment and lawn and power equipment), therefore, design their engines around the fuels made for automobiles. Since the mid-1980s, manufacturers have indicated that ethanol-blended fuels could be used in equipment with small engines, with certain precautions. It is very important to consult the owner's manual to review the use of ethanol blends for the particular make of your small engine.
In the past, some manufacturers of small engines expressed concern that the materials may not be compatible with ethanol. The companies have performed their own testing, and most accept the use of ethanol-blended fuels.
Small engine manufacturers have expressed some concerns about inadequate lubricity resulting from the use of ethanol blends. Tests conducted by Valvoline Oil Company have shown a slight increase in lubricity, and have put these concerns to rest.
Because ethanol absorbs water in the fuel tank and lines, it can help to prevent the accumulation of water in the gas tank. However, if excessive water is absorbed, a phase separation could occur, resulting in a mixture of alcohol and water in the bottom of the tank. This would make it very difficult for the engine to operate and can cause corrosion. Even at 70% relative humidity, with the cap off of the fuel tank, it would take hundreds of days for the ethanol to absorb this much moisture. By taking caution that no water enters the system, ensuring that the equipment has a properly sealing tank cap, and by filling the tank before extended storage periods, the probability of excessive water in the tank can be minimized. Some manufacturers recommend draining the tank and system before storage. In environments with high humidity, this is the best method of preventing water accumulation. Some manufacturers may also recommend treating the fuel with a stabilizer to inhibit the oxidation and subsequent deterioration of the gasoline during storage.
While some small engine manufacturers may express concern about blends with levels of ethanol that are too high, it is important to remember that the Canadian General Standards Board regulates fuel quality and prescribes the limit of ethanol in fuel as up to 10%. All gasolines sold in Canada (ethanol blends included) must meet these regulations, and those who blend their fuels with ethanol are extremely careful not to over-blend, due to the higher cost of the ethanol component.
Ethanol 'enleans' the fuel by providing it with additional oxygen, and thereby raises the air/fuel ratio, which may benefit engines that have not recently been tuned, or that have dirty air filters. Some manufacturers may require an adjustment in air intake to correct the air/fuel ratio for some small engines. In some applications, such as with boats and snowmobiles, where there is extended operation at wide-open throttle (WOT), the owners manual may suggest a jet-size change to restore the intended air/fuel ratio. Snowmobiles and other equipment used in extreme cold often specify a rich air/fuel ratio, and the engines may be sensitive to enleanment.
Only a few manufacturers may make these recommendations, but it is very important to consult the owners' manual. Even if some manufacturers discourage the use of ethanol-blended fuels for their equipment, it does not mean that they are lower quality fuels. It may simply be that the particular manufacturer has not yet conducted a test program or wants more field experience with these fuels.