Danish shipping giant AP Moller-Maersk A/S plans to roll out the first of eight large container vessels fueled by carbon-neutral methanol in 2024, four years after the company rebuffed liquefied natural gas (LNG) as a low-carbon transition fuel.

The vessels are to be built by Hyundai Heavy Industries (HHI) with nominal capacity of about 16,000 containers, Maersk said. The deal with HHI includes an option for four more vessels in 2025. 

A dual-fuel setup would enable the ships to operate on methanol and “conventional low-sulfur fuel,” Maersk said. The additional capital expenditures for dual-fuel technology would be around 10-15% of the total price, allowing the ship owner “to take a significant leap forward in its commitment to scale carbon neutral solutions and lead the decarbonization of container logistics,” Maersk said.

Maersk’s methanol-powered ships would replace older vessels, generating annual carbon dioxide (CO2) emissions savings estimated at around 1 million metric tons (mmt). 

The news comes as shippers are looking for ways to lower their carbon footprints ahead of stricter International Maritime Organization decarbonization rules scheduled to go into effect in 2023. In addition, Maersk said more than half of its 200 largest customers have set or are in the process of setting zero-carbon targets for their supply chains. Customers including Amazon.com Inc., The Walt Disney Co. and H&M Group have already committed to “actively use and scale zero-carbon solutions” for their ocean transport, Maersk said.

“As an industry first, the vessels will offer Maersk customers truly carbon-neutral transportation at scale on the high seas,” Maersk said.

However, the venture is not without challenges. 

“Sourcing an adequate amount of carbon neutral methanol from Day One in service will be challenging, as it requires a significant production ramp up of proper carbon-neutral methanol production, for which Maersk continues to engage in partnerships and collaborations with relevant players,” the company said.

The ship owner recently announced a deal with renewables developer European Energy A/S to supply fuel for its first methanol-powered vessel, due in 2023. European Energy and subsidiary REIntegrate plan to build a Danish facility to produce the 10,000 mmt of carbon-neutral e-methanol needed to power the vessel. Maersk said it plans to “work closely” with European Energy and REIntegrate to develop the facility.

While the LNG bunkering sector has seen some recent growth in Europe and for the U.S. Gulf of Mexico amid the global decarbonization drive, Maersk CEO Søren Skou said late last year LNG as a marine fuel did not go far enough to lower vessel emissions.

“We don’t believe that LNG is going to play a big role for us as a transition fuel because it is still a fossil fuel,” Skou said last November. “We would rather go from what we do today, straight to a CO2-neutral type of fuel. But that will be years out in the future, I suspect.”