Template-type: ReDIF-Paper 1.0
Author-Name: Ricardo Guerrero-Lemus  
Author-Workplace-Name: 	Departamento de Física Básica, Av. Astrofísico Francisco Sánchez s/n, Universidad
	de La Laguna, 38206 S/C de Tenerife, SPAIN.
Author-Name: Gustavo A. Marrero
Author-Email: gmarrero@ull.es
Author-Person: pma419
Author-Workplace-Name: Departamento de Análisis Económico, Campus de Guajara, Universidad de La
	Laguna, 38071 S/C de Tenerife, SPAIN.
Author-Name: Luis A. Puch
Author-Email: lpuch@fedea.es
Author-Homepage: https://www.ucm.es/fundamentos-analisis-economico2/luis-a-puch
Author-Person: ppu1
Author-Workplace-Name: Departamento de Economía Cuantitativa, Universidad Complutense de Madrid,
	Campus de Somosaguas, 28223 Madrid, SPAIN.
Author-Workplace-Homepage: https://www.ucm.es/fundamentos-analisis-economico2
Title: Costs for conventional and renewable fuels and electricity in the worldwide transport sector: a mean-variance 
	portfolio approach
Abstract: In this paper we analyze the role of changes in the fuel mix on emissions reduction and
	the diversification of risks associated to rising prices of energy. To this purpose we
	evaluate the average cost and the cost volatility of alternative fuel combinations in the
	road transport sector by means of the Mean-Variance Portfolio Theory. The results
	suggest big gains in diversification of risks and emissions reduction associated with
	shifts away the current fuel mix, which is more than 90% concentrated worldwide in
	fossil fuels. Those shifts are discussed vis à vis the policy recommendations of the
	International Energy Agency on fuel use in the transport sector, and both the business as
	usual and the low carbon scenarios of the European Commission. In particular, shifting
	toward an efficient system would involve optimizing the use of biofuels (mostly from
	endogenous feedstock), with second generation biofuels taking the lead in the long-run,
	and this combined with electricity from clean sources. This scenario would mean
	reducing cost volatility by more than 50% as well as CO2 emissions by more than 30%
	in the long-run.
Keywords: Fuel costs, road sector, efficiency frontiers, mean-variance analysis.
Length: 31 pages 
Creation-Date: 2012-07 
Number: 2012-18 
X-File-Ref: http://america.sim.ucm.es/repec/ucm/ref/doicae1218.txt
File-URL: https://eprints.ucm.es/id/eprint/15914/1/1218.pdf
File-Format: Application/pdf
Handle: RePEc:ucm:doicae:1218