This is not unexpected news. Besides borrowing styling cues from the Continent (Europe for you Americans) like BMW, Volvo should be providing Europe's engine-of-choice as well.
Anyway, here are some of the engine details per Carscoop:
The new D5 diesel uses an array of innovative engineering solutions such as sequential twin turbochargers, ceramic glow-plugs and piezoelectric fuel injectors. The result is an improved power output of 205hp and 420Nm of torque combined with low fuel emissions of 164g/km and a fuel consumption of just 6.2 lt /100 km (38mpg US - 45.6mpg UK) - which is a pretty good figure for a car the size of the S80.
The new engine should be available in the flagship S80 sometime after March. There's even talk it'll migrate to the all-new S60 which is scheduled to debut later this year.
Will us Yanks see diesel-powered Volvos in the near future? Probably not. Heck, we don't know how long Volvo will even be around!