CH2O2 processed into alcohol (5)
I believe the answer is:
hooch
'alcohol' is the definition.
(hooch is a kind of alcohol)
I don't understand how the remainder of the clue works.
(Other definitions for hooch that I've seen before include "moonshine" , "alcoholic drink" , "Strong illicit liquor" , "Illicitly distilled spirit" , "Illicit alcohol" .)