Danish shipping giant AP Moller-Maersk will “leapfrog” transition fuels and move directly to net-zero fuels such as ammonia and methanol, according to chief executive Soren Skou.

The world’s largest container liner operator has deselected several fuels including LNG and biomethane, and will focus on alternative fuels as it intensifies its decarbonisation efforts.

“I strongly believe that we, as an industry leader with the resources available to us, have an obligation to do all we can to get to a carbon-neutral fleet as fast as possible,” Skou wrote in the company's 2020 Sustainability Report.

“We will not be using transition fuels, but will instead leapfrog directly to net-zero fuels.”

The company has “deselected” a number of potential technologies, including bio-methane and LNG, fuel cells, nuclear and onboard carbon-capture systems.

“For bio-methane and LNG, we are very concerned with levels of methane emissions, and the risk of tying investments to marginal CO2 reductions rather than transformation to real net-zero emissions solutions,” the company said.

Maersk added that fuel cells were put on hold "because they are not ready to be produced efficiently at scale and cost is still high, but we monitor this technology closely”.

The four fuels under consideration are biodiesel, methanol, lignin and ammonia.

“Our analysis shows that the technologies are available,” the report said.

“As a result, and in response to the increased urgency of delivery on decarbonisation, we believe that the right thing to do is to leapfrog to pure net-zero vessel technology without any transitional technologies.”

Retrofit opportunity

Skou told analysts in the company’s earnings call this week that it had not yet decided which route it would take.

“We’re still working out what is the best fuel for us for the future,” he said.

“But the alternatives we are looking at are fuels which are using the basic principle of a combustion engine. That means, if we find the right solution, there will be a big retrofit opportunity for us.”

He said methanol and ammonia engines will be more expensive than conventional engines.

“But it’s not that we see a huge mountain of capex [capital expenditure] coming at us if we end up — where we think we will end up — with ammonia or methanol, or something like that, as a future fuel.”

Skou said sustainability remained a priority for the company throughout the pandemic.

“Even as the urgent priorities of the pandemic and our business transformation have kept us busy, sustainability remains at the top of our agenda,” Skou wrote.

“We see an acceleration in expectations from all stakeholders, not least customers, investors and employees.”

He added that the company was accelerating its efforts to decarbonise shipping.

Maersk remains committed to its goal of reaching net zero in 2050, as well as a 60% relative reduction in emissions from shipping by 2030 compared to 2008.

Forms 50-strong decarbonisation department

Those efforts have led to the creation of a new department at Maersk charged with coordinating its carbon-cutting efforts.

The new decarbonisation unit came into operation in January and is tasked with ensuring collaboration across commercial, operational, technological and corporate entities.

The sustainability report said a team of more than 50 people “will ensure that decarbonisation is a business priority embedded across the entire company”.

Maersk believes there is also a market for net-zero emissions shipping and cites the success of its Maersk ECO delivery product.

The product was launched in 2019 and Maersk said it remains one of only a few options for carbon-neutral emissions shipping on the global market so far.

The system uses externally certified biodiesel in the form of used cooking oil to power vessels.

The company said customer uptake had “exceeded our expectations”, with 10 major customers purchasing the carbon-neutral emission system.

Maersk added that the number was expected to increase, with some customers looking to cover all of their shipments to the eco-shipment scheme.

Skou said Maersk is investigating how it can expand its net-zero ambition.

“We recognise that climate action is a strategic imperative for our company, and have redesigned our organisation in order to embed the agenda and ensure collaboration across our business activities,” Skou said.