Probabilistic Cost-Benefit Analysis for Shifting Transit Vehicles from Gasoline to Compressed Natural Gas in Lebanon

Abstract

After the recent deepwater gas discoveries in the eastern Mediterranean countries that share the same geological offshore basin with Lebanon, Lebanon’s government estimates that there are potential natural gas reserves of around 25 trillion cubic feet, located in its offshore territory. This potential has risen hope for a future with greater energy independence and lesser urban pollution within the two main sectors power generation and transportation. In this realm, this paper presents an ex-ante evaluation of shifting transit vehicles fleet from the current practice of gasoline fuel into natural gas fuel. The evaluation is done through probabilistic cost benefit analysis (CBA). The various options and scenarios for this shift is established taking into consideration the type of natural gas fuel, type of deployment, and stages of deployment. Costs associated with each scenario are estimated and include costs of required infrastructure and refueling stations, capital cost for vehicles, natural gas (NG) converters, fuel costs, life cycle vehicle operating costs and emissions. Expected benefits include direct user savings, emissions reductions, and health benefits. Scenarios of the effects of fuel price fluctuations will be addressed within the CBA analysis using the probabilistic approach. A Monte Carlo simulation will be applied to capture the variability and sensitivity of each of the input parameters, in specific the economic parameters, the interest rate and inflation rate. Results of comparing the costs, outcomes/benefits, strengths and weaknesses of the considered options are provided for the short and long terms.