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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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    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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