The new VE Commodore Series II will run on an alcohol shandy known as E85 - a mixture of 85 per cent ethanol and 15 per cent petrol, which is now offered at some service stations by Caltex. It will cost 20¢ a litre less than regular unleaded.

The new Commodore is being marketed as a ''flex fuel'' vehicle as it can also run on E10 (10 per cent ethanol, 90 per cent petrol), regular unleaded and premium unleaded.

Ethanol produces 40 per cent fewer greenhouse gas exhaust emissions, it can be made from renewable plant matter and, in a few years' time, from processing household waste, according to Richard Marshall, Holden's energy and environment director.

''Long-term, we think it has the ability to displace up to 30 per cent of Australia's petrol use,'' Mr Marshall said.

Victorian Industry Minister Jacinta Allan said the government was supporting Holden, Caltex, Veolia, Mitsui and Coskata in a scheme to develop a next-generation bio-ethanol plant to turn garbage into 200 million litres of ethanol a year.

However, you can't travel as far on a litre of ethanol as you can on a litre of petrol and will therefore use more - up to 30 per cent more. And as there is no official scheme for measuring ethanol fuel consumption - as there is for petrol - Holden will not be telling consumers how much E85 mileage they can expect from the new car.

Its newly engineered ethanol capability has reignited Commodore sales to Brazil, the second largest ethanol producer in the world. The first batch of 600 Commodores will sail in October, then 150 a month, to be sold as ''Chevrolet Omega Fittipaldi'' specials - named after Brazil's former formula one champion Emerson Fittipaldi.