AbstractCarbon supported nanostructured palladium or palladium alloys are considered the best performing anode electrocatalysts currently employed in alkaline electrolyte membrane direct ethanol fuel cells (AEM‐DEFCs). High initial peak power densities are generally obtained as Pd preferentially favors the selective oxidation of ethanol forming acetate thus avoiding strongly poisoning intermediates such as CO. However, few studies exist that investigate DEFC performance in terms of both energy efficiency and discharge energy density, as well as power density depending on the concentration of fuel. In this paper we have determined such parameters for room temperature air breathing AEM‐DEFCs equipped with Pd based anodes, anion exchange membranes and FeCo/C cathode electrocatalysts. Combined with the optimization of the fuel composition a maximum energy efficiency of ≈7 % was obtained for this AEM‐DEFC. Such a performance suggests that devices of this type are suitable for supplying low power applications such as small portable electronic devices.