EBS uses as-needed direct injection of ethanol in a turbocharged gasoline-fueled engine to boost the overall fuel octane rating to more than 130. The high octane rating allows the engine to use massive levels of turbo boost without lowering the engine's compression. To make a long story short —lots of power and torque can be produced very efficiently by a small engine, with a 1.5-liter 4 cylinder EBS engine producing roughly the same performance as a 3.0-liter V6, using much less fuel.
A really interesting aspect of the EBS solution is the low quantity of ethanol needed to enable a car with the fuel efficiency of a hybrid - a two- to six-gallon auxiliary ethanol tank would last for two to four months of driving.
Much more info at the EBS site here.
[Thanks for the tip, Kevin!]