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

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  • Paulo Pires Moreira

    (Universidade Aberta)

  • Fernando Caetano

    (Universidade Aberta)

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.

Suggested Citation

  • Paulo Pires Moreira & Fernando Caetano, 2017. "Liquefied Natural Gas as an Alternative Fuel: a Regional-Level Social Cost-Benefit Appraisal," Eastern European Business and Economics Journal, Eastern European Business and Economics Studies Centre, vol. 3(2), pages 122-161.
    • Handle: RePEc:eeb:articl:v:3:y:2017:n:2:p:122-161
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    References listed on IDEAS

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    1. repec:cdl:ucsdec:qt75k752s7 is not listed on IDEAS
    2. Mohammed Belhaj, 2003. "Estimating the benefits of clean air contingent valuation and hedonic price methods," International Journal of Global Environmental Issues, Inderscience Enterprises Ltd, vol. 3(1), pages 30-46.
    3. Richard T. Carson, 2012. "Contingent Valuation: A Practical Alternative When Prices Aren't Available," Journal of Economic Perspectives, American Economic Association, vol. 26(4), pages 27-42, Fall.
    4. Edward B. Barbier & Mikołaj Czajkowski & Nick Hanley, 2017. "Is the Income Elasticity of the Willingness to Pay for Pollution Control Constant?," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 68(3), pages 663-682, November.
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    Cited by:

    1. Yun-Ju Chen & Sheng Ming Hsu & Shu-Yi Liao & Tsung-Chi Chen & Wei-Chun Tseng, 2019. "Natural Gas or Algal Reef: Survey-Based Valuations of Pro-Gas and Pro-Reef Groups Specifically for Policy Advising," Energies, MDPI, vol. 12(24), pages 1-18, December.

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