We have studied the reaction of ethanol and water over Ni-CeO2-x(111) model surfaces to elucidate the mechanistic steps associated with the ethanol steam reforming (ESR) reaction. Our results provide insights about the importance of hydroxyl groups to the ESR reaction over Ni-based catalysts. Systematically, we have investigated the reaction of ethanol on Ni-CeO2-x(111) at varying Ce3+ concentrations (CeO1.8-2.0) with absence/presence of water using a combination of soft X-ray photoelectron spectroscopy (sXPS) and temperature-programmed desorption (TPD). Consistent with previous reports, upon annealing, metallic Ni formed on reduced ceria while NiO was the main component on fully oxidized ceria. Ni0 is the active phase leading to both the C-C and C-H cleavage of ethanol but is also responsible for carbon accumulation or coking. We have identified a Ni3C phase that formed prior to the formation of coke. At temperatures above 600 K, the lattice oxygen from ceria and the hydroxyl groups from water interact cooperatively in the removal of coke, likely through a strong metal-support interaction between nickel and ceria that facilitates oxygen transfer.