Summary: This report presents the research of APACE Research Ltd. to evaluate the performance of a diesel engine when fuelled with surfactant stabilized hydrated ethanol/distillate emulsions containing ignition improving additives. This report describes a test programme to evaluate the thermodynamic performance of a commercially available, unmodified engine with ethanol/distillate emulsions containing varying proportions of different ignition improvers. The significance of the results are discussed, and recommendations for further trials are presented.