German chemical giant BASF has entered into cooperation with China's Envision Energy to develop a process for converting green hydrogen and CO2 into e-methanol, the company said on Monday.

BASF will provide its Synspire catalyst technology, which Envision Energy will integrate into a process design as part of its energy management systems. The feasibility is to be demonstrated next year at Envision Energy's site in Chifeng, China.

"By combining our innovative catalyst technology with Envision Energy's expertise, we are confident we can unlock the full potential of green hydrogen and CO2 conversion to e-methanol," said Detlef Ruff, senior vice president, process catalysts at BASF.

E-methanol is one of the most versatile and clean-burning fuels, according to BASF. It has immense potential to replace conventional fossil fuels and become an alternative energy source for road, sea and air transportation.

"Driving and delivering sustainable energy solutions can only be achieved through organizations coming together," Envision Energy's Vice President Frank Yu said.

The collaboration demonstrated the Chinese company's commitment to "bringing innovative advances to the sustainable energy value chain, and to create sustainable energy solutions that are economically viable and environmentally friendly," Yu added.

The European Union (EU) aims to reduce CO2 emissions in transportation by using e-fuels such as e-methanol for combustion engines. By 2034, ships must be fueled with at least 2 percent sustainable fuels. The same quota will be imposed on aircraft starting from 2025.