A SAAB 9-5 powered by ethanol, an eco-friendly renewable energy source, will go on sale on the Swedish market next year.

The Saab 9-5 BioPower will be the first prestige vehicle in this market niche, and is supported by favourable environmental and business tax concessions.

Its 2.0-liter turbocharged engine also delivers a significant performance improvement when running on ethanol-based fuel, while still able to use petrol if required.

In Sweden, Saab 9-5 BioPower customers will be able to use E85 fuel (85 per cent ethanol/15 per cent petrol) which costs about 25 per cent less per litre at the pumps. They will also be exempt from projected city congestion and parking charges. In addition, company car drivers will qualify for a 20 per cent reduction in car benefit tax.

On the road, the 132 kW/280 Nm Saab 9-5 BioPower running on E85 delivers sportier performance due to a significant 22 kW lift in maximum power and 40 Nm more torque, compared to its petrol-powered equivalent.

Whilst fuel economy is unlikely to show an improvement in general city driving, preliminary testing indicates that a 15 per cent improvement can be expected at cruising speeds thanks to better combustion and higher efficiency.

Cars running on ethanol, which is distilled from agricultural crops and biomass, are governed by the same laws of physics as those using petrol.

This means both ethanol and petrol engines emit CO2 as an inevitable consequence of the combustion process. However, there is a crucial difference: burning ethanol, in effect, recycles CO2 because it has already been removed from the atmosphere by photosynthesis during the natural growth of agricultural crops.

In contrast, the use of petrol injects into the atmosphere additional new quantities of CO2.

Saab's powerful Trionic engine management system is re-programmed to accommodate the different ignition timing characteristics and fuel/air mixture requirements of ethanol. Other modifications required are the use of ethanol-compatible materials for the fuel tank, fuel lines and connectors.

During the development of the BioPower engine Saab engineers worked with General Motors colleagues in Brazil where 100 per cent ethanol (E100), produced locally from sugar cane, is the dominant fuel in that market.

"Our engine management system automatically adjusts for the type of fuel so, if there is no ethanol available, the customer can simply run on petrol at any time," says Kjell Bergström, President and CEO of Saab Automobile Powertrain AB.

"Turbocharged engines are particularly well-suited to exploiting the benefits of ethanol and our work with this engine indicates there is a great deal of development potential."

The OECD estimates that there is currently enough global resource of biomass for biofuels such as ethanol to meet two thirds of the world's current transport needs.

Saab Automobile Chairman and CEO Peter Augustsson says: "In the near term, I am convinced that ethanol is a viable solution to our transport needs. It does not require the introduction of expensive new technology, our cars can and already use it, and it can be distributed within our existing supply infrastructure."

The Saab 9-5 BioPower is scheduled to go on sale in Sweden in mid 2005. Prices will be announced shortly and are expected to show only a very small increase over the standard models.