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An evaluation of the cost-competitiveness of maritime fuels – a comparison of heavy fuel oil and methanol (renewable and natural gas) in Iceland

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dc.contributor Háskóli Íslands
dc.contributor University of Iceland
dc.contributor.author Helgason, Rafn
dc.contributor.author Cook, David
dc.contributor.author Davidsdottir, Brynhildur
dc.date.accessioned 2021-01-14T14:22:54Z
dc.date.available 2021-01-14T14:22:54Z
dc.date.issued 2020-07
dc.identifier.citation Helgason, R., Cook, D. & Davíðsdóttir, B. (2020). An evaluation of the cost-competitiveness of maritime fuels – a comparison of heavy fuel oil and methanol (renewable and conventional) in Iceland. Sustainable Production and Consumption, 236-248. DOI: 10.1016/j.spc.2020.06.007
dc.identifier.issn 2352-5509
dc.identifier.uri https://hdl.handle.net/20.500.11815/2369
dc.description Publisher's version (útgefin grein)
dc.description.abstract Alternative fuels have been proposed to ensure compliance with the increasingly more stringent emission standards proposed by the International Maritime Organization. In addition, the Icelandic government aims to introduce 10% renewable energy into the maritime sector before 2030, as well as eventually phasing out the use of heavy fuel oil (HFO). This paper conducts an extended cost-competitiveness comparison concerning three fuels: conventional methanol (NG), renewable methanol (RN) and HFO in the context of the Icelandic maritime sector. NG, RN and HFO are compared and evaluated under three scenarios (low, medium and high) for fuel prices between 2018 and 2050, and three scenarios (low, medium and high) for the external costs of fuel consumption. The methodology for estimating external costs involved Impact Pathway Analysis for emissions of sulphur dioxide, nitrous oxide, particulate matter and non-methane volatile organic compounds, and increasing shadow prices for the costs of greenhouse gas emissions. The application of this methodology provides new information about the economic and environmental trade-offs between the three fuel types. In our findings, excluding external costs, HFO emerges as the most cost-competitive option. However, when the externalities of fuel consumption are monetised and added to the fuel price, NG is the most cost-competitive option when high values are assumed for external costs. RN is the most expensive option according to all trajectories for fuel prices and external costs, not becoming more cost-competitive than HFO under any scenario until the 2040s. Therefore, on cost criteria alone, it is improbable that the fuel will contribute to Iceland's 10% renewable energy goal in the maritime sector before 2030 without subsidies or renewable marine fuel quotas.
dc.description.sponsorship This paper has been funded by NordForsk (grant number 76654) via their financial support to the Nordic Centre of Excellence ARCPATH (Arctic Climate Predictions – Pathways to Resilient, Sustainable Communities), and the Icelandic Research Council (RANNIS) through grant number 163464-051
dc.format.extent 236-248
dc.language.iso en
dc.publisher Elsevier BV
dc.relation.ispartofseries Sustainable Production and Consumption;23
dc.rights info:eu-repo/semantics/embargoedAccess
dc.subject Cost-competitiveness
dc.subject Maritime fuel
dc.subject Methanol
dc.subject Heavy fuel oil
dc.subject Externalities
dc.subject Iceland
dc.subject Eldsneyti
dc.subject Olía
dc.subject Metanól
dc.subject Sjávarútvegur
dc.subject Orkuskipti
dc.title An evaluation of the cost-competitiveness of maritime fuels – a comparison of heavy fuel oil and methanol (renewable and natural gas) in Iceland
dc.type info:eu-repo/semantics/article
dc.description.version Peer Reviewed
dc.identifier.journal Sustainable Production and Consumption
dc.identifier.doi 10.1016/j.spc.2020.06.007
dc.contributor.department Hagfræðideild (HÍ)
dc.contributor.department Faculty of Economics (UI)
dc.contributor.department Líf- og umhverfisvísindadeild (HÍ)
dc.contributor.department Faculty of Life and Environmental Sciences (UI)
dc.contributor.department Umhverfis- og auðlindafræði (HÍ)
dc.contributor.department Environment and Natural Resources (UI)
dc.contributor.school Félagsvísindasvið (HÍ)
dc.contributor.school School of Social Sciences (UI)
dc.contributor.school Verkfræði- og náttúruvísindasvið (HÍ)
dc.contributor.school School of Engineering and Natural Sciences (UI)

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