Among the existing cleaner energy sources, there is the vehicular natural gas (NGV). Its usage as an energy source in the transportation sector - consumption is projected to increase around 52% worldwide between 2008 and 2035 - and it represents an alternative to reduce environmental damages caused by the increasing use of polluting energy sources. In the social, political and economic contexts, sustainable actions are expected by individuals and firms. Thus, this study aims to evaluate the option of flexible fuel vehicles conversion to natural gas (NGV), considering the contribution for the sustainability as the primary motivator. The real option methodology and Monte Carlo Simulation are employed to model it as an European option, since the decision to fuel the tank with NGV, gasoline or ethanol, in each period is independent of the previous one, such as Bastian-Pinto, Brandão and Alves (2010), regarding the low capillarity of NGV gas stations as an additional factor of incertainty. Therefore, we calculate the value of the flexibility, as a result of such conversion, taking into account the uncertainties related to the fuel prices and the NGV shortage due to the low capillarity of NGV gas stations. The results show that for a 25% NGV shortage - considering the number of NGV gas stations in Rio de Janeiro - a minimum driving distance of 1.200 km is required per month in order to have a positive option value. Besides, the option value can reach 416.8% over the cost of conversion, or 31% of the vehicle value, without taking into account the tax benefits on this fuel given by the Brazilian regulation. The results also suggest that there is a gain embedded in the option related to sustainability, since NGV is a cleaner energy source.
Natural gas vehicle; Fuel shortage; Real options; Sustainability; Fuel conversion
