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Conversion of Shipping Fleets from Diesel to Compressed Natural Gas: A Real Options Analysis

Author

Listed:
  • Xian, Hui
  • Colson, Gregory J.
  • Karali, Berna
  • Wetzstein, Michael

Abstract

This study incorporates Real Options to determine the conditions under which it would be profitable for a regional shipping company to consider CNG (Compressed Natural Gas) as opposed to conventional diesel for the heavy-duty truck fleets. Such analysis can avoid the shipping industry adopting alternative energies, which are feasible under net present value (NPV) but infeasible in terms of market conditions. Ultimately, given fuel price patterns, our model could indicate an optimal selection of fuels, which provides some guidelines for a regional heavy-duty truck fleet company to make fuel selections and policy implications for government incentives about alternative fuels.

Suggested Citation

  • Xian, Hui & Colson, Gregory J. & Karali, Berna & Wetzstein, Michael, 2014. "Conversion of Shipping Fleets from Diesel to Compressed Natural Gas: A Real Options Analysis," 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota 170285, Agricultural and Applied Economics Association.
  • Handle: RePEc:ags:aaea14:170285
    DOI: 10.22004/ag.econ.170285
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    File URL: http://ageconsearch.umn.edu/record/170285/files/Hui%20Xian_AAEA2014_poster_submit.pdf
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    References listed on IDEAS

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    Cited by:

    1. repec:gam:jeners:v:12:y:2019:i:3:p:351-:d:200186 is not listed on IDEAS
    2. Josifovic, Aleksandar & Roberts, Jennifer J. & Corney, Jonathan & Davies, Bruce & Shipton, Zoe K., 2016. "Reducing the environmental impact of hydraulic fracturing through design optimisation of positive displacement pumps," Energy, Elsevier, vol. 115(P1), pages 1216-1233.
    3. repec:eee:eneeco:v:70:y:2018:i:c:p:132-142 is not listed on IDEAS
    4. repec:spr:masfgc:v:23:y:2018:i:7:d:10.1007_s11027-017-9771-y is not listed on IDEAS
    5. repec:gam:jeners:v:11:y:2018:i:11:p:2934-:d:178675 is not listed on IDEAS

    More about this item

    Keywords

    Demand and Price Analysis; Resource /Energy Economics and Policy; Risk and Uncertainty;

    JEL classification:

    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources

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