Bio-fuels get the attention of engine researchers ever since it was known that it has the potential to be used as an alternative to petroleum fuels for the purpose of reducing GHG emissions and improving performance characteristics of internal combustion engines. This project is devoted to the investigation of brake power, specific fuel consumption, thermal efficiency, CO and CO2 emission characteristics of a single cylinder, four stroke and constant speed spark ignition (SI) engine used for powering irrigation pumps. The analysis was made by blending bio-ethanol (produced locally from sugar factory molasses) with gasoline in different ratios of E0, E10, E15, E20 and E25. The performance analysis was conducted by using eddy current dynamometer testing instrument and the GHG emission by using UEI QUINTOX flue gas analyzer K9206. Ethiopian and other international standards were used as a standard operating procedure for the analysis. From the research it was found that brake power, brake thermal efficiency, fuel consumption rate and brake mean effective pressure values increased with increasing ethanol blend ratio amount with gasoline. Brake specific fuel consumption and exhaust gas temperature values decreased with increasing ethanol blend ratio amount with gasoline. Moreover, it was observed that CO emission was decreased in a large amount while CO2 emission was found to increase in a very small amount with increasing the percentage of ethanol blended with gasoline. Finally, E25 was found to be the optimum blend ratio from the tested blends. Taking the value of E0 as a reference, E25 blend shows incremental of 12.1% in brake power, 11.8% in brake mean effective pressure and 7.6% in brake thermal efficiency. It also shows a reduction of 7.3% in brake specific fuel consumption, 3.3% in exhaust gas temperature and 65% in CO emission. Small incremental of CO2 emission (5.7%) in E25 blend can be avoided by using different types of additives. Moreover, the CO2 that is absorbed during biomass plantation can offset the CO 2 produced when ethanol is burned.