Holden is expected to unveil a version of the Commodore family sedan and wagon that can run on anything from 100 per cent petrol to E85, a shandy of 15 per cent petrol and 85 per cent ethanol, while fuel supplier Caltex will trial a chain of E85 fuelling stations across Melbourne in a joint venture that will help both companies develop a strategy for introducing the fuel nationally.

The fuel is also expected to cost a lot less at the pump, with ethanol production costs running at about 50 cents a litre.

Caltex said its ''Bio E-Flex'' fuel would ''offer an energy option beyond the traditional fuel mix that can significantly reduce greenhouse gas emissions''.

Holden, meanwhile, is expected to announce that engines fitted to its Commodore range will soon roll off its Adelaide production line with E85 compatibility as standard.

Owners will then be able to decide if they want to fill the car's tank with petrol or any other combination of the fuel-ethanol mix up to E85.

While Holden has not sold an E85-compatible car in Australia before, Swedish car maker Saab has tried to attract buyers to the fuel. But Saab's 9-5 BioPower, introduced to Australia in 1997, was stifled by the limited availability of E85 refuelling stations and dropped this year.