In the quest for sustainability of island regions, coastal shipping ought to be at the forefront because it provides essential and often sole lifeline services for the island inhabitants and visitors. Air pollution caused by the exhaust emissions of coastal ships has a detrimental environmental effect upon the coastal human population and the natural resources. The high coastal shipping activity within the Greek seas and the environmental vulnerability of the Greek coasts present a case that undoubtedly deserves particular attention. To this extent, the utilization of liquified natural gas (LNG) for powering island ferries constitutes a promising alternative to oil-fuel for achieving a sizable reduction of SOX, NOX, and particulate matter (PM) exhaust pollution. Furthermore, in their effort to improve the quality of the shipping services, island communities often appear to be constantly pushing for new vessels, and LNG engines constitute a suitable opportunity for fleet renewal through the introduction of “green” shipboard technology. In this paper, the connection of the Greek Dodecanese Islands and the main port of Piraeus with an oil- vs. LNG-fueled ferry line is analyzed. The results indicate that, compared to conventional oil-fuel, natural gas currently offers a favorable alternative in terms of private costs (technical and fuel costs), as well as in terms of the external (damage) costs due to ship exhaust pollution. It is also shown that the LNG shipboard technology has the prospect of extending its advantage with respect to private costs, due to the increasing pressure on oil-fuel–related environmental control and the expansion of the natural gas market. Finally, a justifiable argument is made regarding the improvement of the techno-economics of the LNG ferry through the utilization of the “land transport equivalent” principle, in conjunction with “green” technology funding under the European policy framework for transport, energy, and regional development.
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