Advanced Search
MyIDEAS: Login to save this paper or follow this series

Costs for conventional and renewable fuels and electricity in the worldwide transport sector: a mean-variance portfolio approach

Contents:

Author Info

Abstract

In this paper we analyze the role of changes in the fuel mix on emissions reduction and the diversification of risks associated to rising prices of energy. To this purpose we evaluate the average cost and the cost volatility of alternative fuel combinations in the road transport sector by means of the Mean-Variance Portfolio Theory. The results suggest big gains in diversification of risks and emissions reduction associated with shifts away the current fuel mix, which is more than 90% concentrated worldwide in fossil fuels. Those shifts are discussed vis à vis the policy recommendations of the International Energy Agency on fuel use in the transport sector, and both the business as usual and the low carbon scenarios of the European Commission. In particular, shifting toward an efficient system would involve optimizing the use of biofuels (mostly from endogenous feedstock), with second generation biofuels taking the lead in the long-run, and this combined with electricity from clean sources. This scenario would mean reducing cost volatility by more than 50% as well as CO2 emissions by more than 30% in the long-run.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://eprints.ucm.es/15914/1/1218.pdf
Download Restriction: no

Bibliographic Info

Paper provided by Universidad Complutense de Madrid, Facultad de Ciencias Económicas y Empresariales, Instituto Complutense de Análisis Económico in its series Documentos de Trabajo del ICAE with number 2012-18.

as in new window
Length: 31 pages
Date of creation: Jul 2012
Date of revision:
Handle: RePEc:ucm:doicae:1218

Contact details of provider:
Phone: 913942604
Fax: 913942531
Email:
Web page: https://www.ucm.es/icae
More information through EDIRC

Order Information:
Postal: Facultad de Ciencias Económicas y Empresariales. Pabellón prefabricado, 1ª Planta, ala norte. Campus de Somosaguas, 28223 - POZUELO DE ALARCÓN (MADRID)
Email:
Web: https://www.ucm.es/fundamentos-analisis-economico2/documentos-de-trabajo-del-icae

Related research

Keywords: Fuel costs; road sector; efficiency frontiers; mean-variance analysis.;

Other versions of this item:

This paper has been announced in the following NEP Reports:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Merton, Robert C., 1972. "An Analytic Derivation of the Efficient Portfolio Frontier," Journal of Financial and Quantitative Analysis, Cambridge University Press, Cambridge University Press, vol. 7(04), pages 1851-1872, September.
  2. Shimon Awerbuch, 2006. "Portfolio-Based Electricity Generation Planning: Policy Implications For Renewables And Energy Security," Mitigation and Adaptation Strategies for Global Change, Springer, Springer, vol. 11(3), pages 693-710, May.
  3. Lutz Kilian, 2008. "The Economic Effects of Energy Price Shocks," Journal of Economic Literature, American Economic Association, vol. 46(4), pages 871-909, December.
  4. Ajanovic, A. & Haas, R., 2010. "Economic challenges for the future relevance of biofuels in transport in EU countries," Energy, Elsevier, Elsevier, vol. 35(8), pages 3340-3348.
  5. Harry Markowitz, 1952. "Portfolio Selection," Journal of Finance, American Finance Association, American Finance Association, vol. 7(1), pages 77-91, 03.
  6. Marrero, Gustavo A., 2010. "Greenhouse gases emissions, growth and the energy mix in Europe," Energy Economics, Elsevier, Elsevier, vol. 32(6), pages 1356-1363, November.
  7. Schade, Burkhard & Wiesenthal, Tobias, 2011. "Biofuels: A model based assessment under uncertainty applying the Monte Carlo method," Journal of Policy Modeling, Elsevier, Elsevier, vol. 33(1), pages 92-126, January.
  8. Juul, Nina & Meibom, Peter, 2011. "Optimal configuration of an integrated power and transport system," Energy, Elsevier, Elsevier, vol. 36(5), pages 3523-3530.
  9. Gül, Timur & Kypreos, Socrates & Turton, Hal & Barreto, Leonardo, 2009. "An energy-economic scenario analysis of alternative fuels for personal transport using the Global Multi-regional MARKAL model (GMM)," Energy, Elsevier, Elsevier, vol. 34(10), pages 1423-1437.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Gustavo A. Marrero & Luis A. Puch & Francisco J. Ramos-Real, 2013. "Mean-variance portfolio methods for energy policy risk management," Documentos de Trabajo del ICAE, Universidad Complutense de Madrid, Facultad de Ciencias Económicas y Empresariales, Instituto Complutense de Análisis Económico 2013-41, Universidad Complutense de Madrid, Facultad de Ciencias Económicas y Empresariales, Instituto Complutense de Análisis Económico.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:ucm:doicae:1218. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Águeda González Abad).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.