The small local distilleries would obtain their feed-stock locally be it lawn clippings and of all sorts of garden waste from landscape contractors, out of date food, bakery waste and cellulose packing from local supermarkets, could be used too, when more ethanol fuel is needed cellulose and lignin could be enzymatically transformed into ethanol, this would breed competition between the different distillery's/fuel manufactures, which there hasn't been in the fuel industry for many years. Ethanol would be used in personal cars just as petrol is now and bio-diesel in the larger ships and aeroplanes. I would like Briton to lead the world in ethanol production because it is here that I've built a thermodynamicly efficient engine.
Most Flex-fuel car owners would only ever put e85 in and they drive miles to get the best price. The car being flex is only a convenience to the builders as once they’re sold they never use gasoline again. So most of those cars really aren't flex, they're really dedicated e85 cars that can use gasoline when the owner really needs to.
If high compression ethanol cars where available everyone that has bought a flex for green reasons would change immediately to one of those and any people less green would buy one also.