In order to meet the CO₂ challenge, today a wide variety of solutions are developed in the automotive industry such as advanced technologies (downsizing, VVA, VCR), new combustion modes (HCCI, stratified and lean combustion), hybridization, electrification or alternative fuels. Furthermore, couplings between these solutions can be envisaged, increasing considerably the number of degrees of freedom which have to be accounted for in the development of future powertrains. Consequently, for time and cost reasons, it is not obvious to evaluate and optimize the full potential of new concepts only by the mean of experimental investigation. In this context, system simulation appears as a powerful and relevant complement to engine tests for its flexibility and its high CPU efficiency. This paper focuses on the development of a methodology combining both simulation and experimental tools to quantify the interest of innovative solutions in the very first steps of their development. Here, this methodology is applied for the estimation of the gains offered by a highly downsized DI SI engine dedicated to ethanol-gasoline blends. For this purpose, experimental results from a supercharged SI single-cylinder engine are used to calibrate a 0D engine model. This model is based on a physical approach, called CFM1D, allowing to well represent the engine behavior in terms of heat release, knock and emissions over a large range of operating conditions. It is also investigated that engine settings can be predicted by the combustion model when increasing the amount of ethanol in the fuel, thanks to experimental data available for blend ratios up to 20%. The single-cylinder model is then used to optimize the reference gasoline configuration for two blends (E20 and E85) in terms of compression ratio and settings (spark advance, fuel air ratio...), taking into account realistic multi-cylinder constraints (maximum cylinder pressure, exhaust temperature, knock intensity, boost level). Simulation results are finally directly exploited to build maps of efficiency and emissions used by a global engine model embedded in a vehicle simulator. This model allows to simulate different driving cycles and to estimate CO₂ gains obtained by the use of ethanol combined with an increase of the compression ratio in highly downsized SI engines. Then, it is shown the interest of using system simulation with advance combustion models and methodologies to explore the potential of new solutions in the very first steps of the conception process.