No smoke billowed from the stacks of the Aurora Botnia, a 150-meter (492-foot) cargo and passenger ferry that can transport around 900 people, as it quietly crossed the narrow Gulf of Bothnia from Vaasa in Finland to Umea in Sweden, the world's northernmost year-round shipping and passenger traffic route.

The hybrid ferry runs partly on batteries and in August, its liquified natural gas (LNG) was replaced with biofuels, making it one of the world's first larger carbon-neutral ferries, operator Wasaline's technical director Jonas Teir told AFP as he gave a tour of the engine room.

Wasaline said the route is "the world's first green shipping corridor in operation", cutting the carbon emissions that cause dangerous climate change.

"We are currently operating with biogas and HVO (hydrotreated vegetable oil), so we are operating completely carbon neutral," Teir said.

"We are also installing more battery capacity which will reduce the need for fuel and other resources for energy," he said, explaining that more battery power would increase capacity from today's 2.2 MWh to 12.6 MWh.

That will make it the largest marine battery hybrid system in operation globally.

New European Union rules on reducing greenhouse gas emissions and increasing renewable and low-emission fuels in the maritime sector came into force this year.

Member states of the International Maritime Organization were also set to formally adopt the Net Zero Framework -- the first global carbon-pricing system -- on October 17, but the vote was postponed by a year after the United States opposed the carbon-cutting plan and threatened to impose sanctions against countries backing it.

The global shipping industry, which transports nearly 90 percent of the world's cargo and still relies heavily on fossil fuels, is responsible for around two to three percent of global greenhouse gas emissions each year.

- Pooling carbon deficit -

Wasaline benefited from its collaboration with several large nearby tech and energy companies keen to test out their cutting edge emission-reduction technology on the vessel, "a win-win situation for all parties involved", Teir said.

"We are one of the smaller shipping companies in the world, so being a forerunner is also something that sets a little bit of a benchmark for the bigger ones," he added.

Because the ferry has met EU climate targets, it can use a new EU mechanism allowing it to sell the carbon emissions it "saved" to another shipping company, which can then mark it down as its own emission reduction.

"The pooling mechanism makes it economically viable to run 100 percent on biofuels," Teir said.

Fanny Devaux, deputy director of shipping at European NGO Transport & Environment, said Aurora Botnia demonstrated "real progress in energy efficiency and electrification".

But the shipping industry needs to steer away from biofuels, she said.

"There just isn't enough sustainable biowaste to power all the ships in the world."

"The ultimate goal must be to replace fossil fuels with scalable fuels that can achieve deep, verifiable emission reductions without harming ecosystems," she said, citing e-fuels such as e-methanol, e-ammonia, and hydrogen made from renewable electricity.

Reducing energy consumption "through operational and technical efficiency" remained the most important rule in the energy transition, Devaux stressed.

Docking in the small Swedish port of Umea where the open sea glittered, still ice-free in October, captain Johannes Sjoholm said it felt like he was "part of something bigger" by "challenging the old systems".

"We hope to be a kind of pilot project for others to see and notice that it is possible to do this this way," he said.

- Constraints -

According to Hakan Agnevall, CEO of ship engine builder Wartsila, the postponed IMO vote "opens the door to a fragmented landscape of carbon pricing mechanisms introduced by individual regions and countries".

"The EU already has its system in place, while China is signalling plans for its own programs, adding complexity to global shipping," he told AFP in an email.

Devaux said the postponed vote "introduces significant uncertainty for the shipping industry and clean tech investors".

Wartsila is currently developing new engines for more climate-friendly fuels and energy efficient technology.

"We actually have the technologies. But getting a sufficient amount of fuels, making the whole equation financially viable, those are the biggest constraints right now," he said.

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