Fiat Powertrain Technologies aims to launch an ethanol-powered engine in Brazil by 2010 for use in trucks and agricultural machinery, according to the company's regional manager.

The initiative is aimed squarely at Brazil's huge cane harvesting industry and the engine will cut farming and transport costs as producers can run it on cost-price fuel using the ethanol they make.

Around EUR10m are being invested in development of the engine, which will be a conventional engine adapted for the renewable fuel.

"With ethanol, safety is required. We want a totally secure project," Franco Ciranni, Fiat Powertrain Technologies manager for the countries of South America's Mercosul economic area, told Reuters.

A small amount of diesel would be needed to combust the ethanol, but the two fuels would not mix until injected into the combustion chamber from separate tanks, which developers say avoids dangers inherent in mixing the fuels.

"Use of additives (in ethanol) makes running (an engine) dangerous, subject to explosions," said FPT's product development engineer Joao Irineu Medeiros.

"The diesel will be just enough for ignition and the ethanol will complete the combustion," he said.

Cloves Mendes, FPT's head of new technologies said ethanol would cost industry users a third of the diesel price, though larger volumes were needed.

The trucks would have chassis from Iveco, a Fiat Group company, and Bosch injection systems.