Shipping decarbonization: why is no one speaking about tugs?

While the rest of the shipping sector is under accelerating pressure to decarbonize, driven by things like regulations, pressure from customers, and social pressure; there are areas of the supply chain that are often overlooked, such as tugboat services.

Today, over 21’000 tug boats operate around the world, emitting 40 million tonnes of CO2 every year. Whilst you may think it's a trivial matter given that it accounts for only 4% of total shipping emissions – this is no small matter. In fact, it is the equivalent of the emissions of more than 7 million cars per year. There is clearly an opportunity to decarbonize the maritime towage sector.

Tugboat decarbonization pressure driven at the local level

Although regulations are hitting the broader shipping sector in the short term, such as the EU Emission Trading System which enters into force for all vessels travelling in and to Europe from 2024, tugboats are exempted from that due to their small size and thus feeling less pressure. This means the majority of pressure in the short term will come from ports and tugboat service customers. Nonetheless, the maritime industry would profit from a more specific IMO regulation pushing towards port decarbonization. This would strengthen the pace of transition to a cleaner port and terminal towage services.

Some leading stakeholders in the shipping ecosystem are starting to set carbon reduction targets which will force tug players to decarbonize: several of the world’s major ports, such as Port of Singapore, Busan, Rotterdam, Antwerp are all planning to cut emissions by half or more within 2030. ?Several leading ports are reviewing and adapting their strategy towards cleaner energies, even looking into producing hydrogen directly at the port. Thus, for any player in the tug sector, being an early mover in the decarbonization transition could pay off in the mid-term by providing things such as low-carbon towage services at a green premium.

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Green tugboat technology nascent, but growing investment

?Despite the decarbonization opportunity, there have been limited trials for green tugs. Currently, electric tugs are closest to commercialization. Just this month, Damen delivered the world's first full-sized all-electric tug "Sparky" to Ports of Auckland, which is able to undertake +2 assignments before recharging and recharges in only 2 hrs, while ZEETUG, developed by Navtek, has been operating at the Port of Tuzla, Istanbul for the past two years.

However, alternative fuel options are under development and testing, and rapidly gaining focus and investment. Companies are working to develop tugs powered by green methanol, such as the collaboration of Maersk, Svitzer, and Robert Allan, and the Port of Antwerp is planning to deploy a hybrid methanol powered tug, developed by Fastwater, in 2023. Others, such as Wartsila, are developing ammonia powered engines for the shipping industry, although not tugboat specific, supported by funding from the EU. Even hydrogen is being looked to as a potential solution, with CMB delivering HydroTug (a dual fuel hydrogen-diesel vessel) in 2023.

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Challenges faced in terms of retrofit capability, operating range, and costs

With 40% of tugs in the global fleet being 15 years or younger today, and tugboats being able to operate over more than 30+ years, retrofitting will need to be part of the solution to decarbonize the full tug fleet. ?

This poses challenges for technologies such as Electric and Hydrogen. A major drawback to battery driven electric tugs is that it is hard/not possible to retrofit on existing vessels, and currently batteries are mainly suited for smaller tugs with light and short harbor duties. Requiring new tugboats in order to meet decarbonization targets will put significant cost pressure on operators, especially in a very cost sensitive market like tugboat services.

Yet, engines using alternative fuels are both possible to retrofit and are likely to perform better for heavier operations, over longer periods of time (tasks can last up to 4-5 hours per task at ports where they need to pull vessels in adjoining waterways & inland), which require solutions with higher energy density and better ability to store the power they need. Opportunity also exists here for tugboats to match alternative fuels with those used for larger future decarbonized vessels, where they could realize synergies by using the fuel infrastructure and bunkering facilities and thus make the transition a lot more economically viable.

Opportunity exists for those positioned to take advantage in the mid-long term

Short term we expect to continue to see trials and development in this space. All-electric tugboat solutions will lead the limited trials, leveraging mature battery technology, but the benefits of alternative fuels will drive rapid development and testing, meaning we should expect to see more retrofits and new engine designs coming soon.

While the technology solution for tugboat decarbonization is not yet clear, what is clear is that in the mid-to-long term there will be certain disruption in this space, and those positioned with the right technologies and relationships should be ready for a lot of activity.

Many thanks to my colleagues Katherine Cote, Ben?Banks, Asbjorn Kastaniegaard, Marit Andreassen, Wera Wilkko for the co-creation and continued thought leadership.