Promoting Liquefied Natural Gas (LNG) Bunkering for Maritime Transportation: Should Ports or Ships Be Subsidized?

Jingwen Qi, Hans Wang and Jianfeng Zheng
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Jingwen Qi: Department of Logistics and Maritime Studies, The Hong Kong Polytechnic University, Hung Hom, Kowloon, Hong Kong, China
Hans Wang: Faculty of Business, The Hong Kong Polytechnic University, Hung Hom, Kowloon, Hong Kong, China
Jianfeng Zheng: Transportation Engineering College, Dalian Maritime University, Dalian 116026, China

Sustainability, 2022, vol. 14, issue 11, 1-16

Abstract: Alternative fuels have been recognized as a promising method to alleviate the air emission problem of the maritime industry. LNG, as one of the most promising alternative fuels in shipping, has attracted extensive attentions, and government subsidies are extensively adopted to promote its application. We consider two-stage subsidy methods in this paper and aim to find the optimal subsidy plan under different scenarios. Distinguished from previous studies, we obtain the analytical solution to the subsidy plan optimization model. It is revealed that subsidizing ships or ports performs better in the homogeneous scenario, but a uniform subsidy amount would lead to a waste of subsidy when ships are heterogeneous. Besides, the influence of critical parameters on the optimal LNG selling price are also analyzed, and the conclusions we obtain correspond with the intuition, showing the details of as well as the logic behind such correlations.

Keywords: liquefied natural gas (LNG); subsidy plan design; maritime transportation (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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