Liquefied Natural Gas as an Alternative Fuel: a Regional-Level Social Cost-Benefit Appraisal

Paulo Moreira and Fernando Caetano ()
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Fernando Caetano: Universidade Aberta

Eastern European Business and Economics Journal, 2017, vol. 3, issue 2, 122-161

Abstract: The impact from traditional marine fuels has the potential of causing health and non-health damages and contributes to climate change. Here, the introduction of Liquefied Natural Gas (LNG) as an energy end-use fuel for marine purposes is analysed. The aim of this study is to verify LNG’s policy implementation feasibility as a step-change for a low carbon perspective for shipping by means of developing a social cost-benefit analysis on a regional basis. Emissions from the Portuguese merchant fleet, weighted by their contribution to the National Inventory, were used to quantify and monetise climate, health and non-health externalities compared with benefits from LNG as a substitute fuel. Benefits from the policy implementation are those related to the reduction of external environmental, health and non-health impacts. Costs are those that nationals are willing to pay for. In this sense, to estimate the value of the atmospheric air - a non-market commodity - people were asked about the price they hypothetically are willing to pay by responding to a specific questionnaire. The present study, based on a social cost-benefit analysis, indicates that benefits are almost 8 times superior to the costs and is consistent with real world efficiency gains. Although it addresses Portuguese particularities, this methodology should be applied elsewhere.

Keywords: Environmental; health and non-health impacts; Liquefied Natural Gas; Contingent valuation; Social Cost-benefit Analysis; Portuguese merchant fleet (search for similar items in EconPapers)
Date: 2017
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