Green fuels and new engines to consume them could help limit climate-warming emissions from giant ships that keep the world economy moving. 

The shipping industry emitted a record 936 million metric tons of carbon dioxide in 2021, according to data from BloombergNEF. That’s less than 3% of global CO2 emissions, but still more than what Germany — Europe’s biggest industrial economy — produces in a year.  

Shipbuilders have tried to tackle the problem by making bigger and more efficient boats, but the sector’s carbon footprint has continued rising as global trade has grown.

While some companies are now considering imaginative fixes such as installing giant kites to capture wind and propel their cargo ships, another potential solution on the horizon is a cleaner-burning fuel called methanol, which can be produced from natural gas or biomass, or even by combining carbon dioxide with hydrogen. The Danish startup Blue World Technologies has just raised €37 million ($36.9 million) from investors including Breakthrough Energy Ventures, which is backed by Bill Gates, to help it scale up production of a new system that could power large ships using methanol. 

It’s possible to simply burn methanol in an engine like petroleum-based fuels — and some cars do just that. But it’s more efficient to extract the hydrogen molecules from methanol and run them through a fuel cell. Blue World estimates that using a fuel cell can save as much as 30% of the fuel compared to a combustion engine.

“The methanol that's going to be used on those ships in the future will be, at least initially, more expensive, so that will come with a green premium,” said Blue World’s Chief Executive Officer Anders Korsgaard. “Our place in the world is to lower that green premium.”To use methanol in this way normally means passing it through a device known as a reformer to extract the hydrogen, which is then consumed via the fuel cell.

Blue World has developed a high-temperature fuel cell that is able to take a mixture of gasses directly from the reformer — including small amounts of carbon monoxide that would spoil a regular commercial cell. Blue World’s process only produces water and carbon dioxide, which can then be compressed, stored and later combined with hydrogen again to make more methanol.Overall, the process could prove to be a cheaper and cleaner way to deploy methanol.The technology is still at a fairly early stage, with the new investment, Blue World will soon be ready to take big orders. The first stage of its serial manufacturing site in Aalborg, Denmark could make enough fuel cells in a year to power five large container ships. The next step would be scaling up to 10 times that level by 2024, according to Korsgaard.

That scale and the technology itself could make Blue World an interesting opportunity for A.P. Moller - Maersk A/S. The Danish shipping giant has already earmarked as much as $2.1 billion for a dozen ships capable of running on methanol set to be delivered from 2024. 

“The reason we chose methanol is it won’t be too different to what we’re doing today,” Maersk’s head of green fuel sourcing Berit Hinnemann said in an interview. “We needed to make an impact already this decade and green methanol, we find, is a solution.”

While the first ships will have engines that burn methanol, the company is looking into fuel cells for potential future orders, Hinnemann said. Maersk is interested in the technology because it uses fuel more efficiently. As green sources of methanol are much more expensive than fossil fuels, any efficiencies will be valuable as the industry expands. The company is also looking at the potential of green ammonia, among various new technologies that could play a role in its decarbonization. The first batch of methanol-burning ships will help Maersk cut emissions by as much as 1.5 million tons annually, equivalent to about 4% of its total carbon emissions last year. But the company has committed that all future new build vessels under its ownership would be equipped to use carbon neutral fuels as it aims to reach net-zero emissions by 2050. To get there and stay in business, it will need a lot more low-carbon ships. 

“Fuel cells are a technology that we are looking into,” Hinnemann said. “In this space, we will see a lot of innovation.”