Exploring the Transition from Petroleum to Natural Gas in Tanzania’s Road Transport Sector: A Perspective on Energy, Economy, and Environmental Assessment

This study assesses the energy, economic, and environmental implications of switching Tanzania’s road transport sector to natural gas, which is slowly transitioning. In energy, the main goal is to identify the energy demand for petroleum fuel (diesel and petrol) and natural gas during the transition, while in the economy, the government revenue in the form of taxes for shifted and unshifted vehicles, as well as the loss in government revenue from petroleum fuel revenue post-transition, is assessed. In the environment, carbon emission in terms of carbon dioxide equivalent (CO2e), carbon tax revenues, and carbon credit revenues post-transition is estimated. The shift involved 10, 20, and 30% of the road vehicle population. The 10, 20, and 30% shift targeted about 142,247, 183,893, and 225,540 vehicles, which in turn dropped diesel and petrol demand by 7 and 3.68%, 7 and 3.8%, and 15 and 7.5%, respectively. In natural gas, the demand started at 0.0916 billion kg and grew exponentially by 200% and later by 300%. The transition has consequences in government revenue, which takes the form of taxes on petroleum products. The shift from 10 to 30% could lead to foregone taxes amounting to Tanzania shilling TZS 0.09, 0.31, and 0.54 trillion (US$ 33,358,680, US$ 11,490,212, and US$ 20,015,208), indicating a tax loss of about 3, 9, and 15%. Contrary, the government may benefit from these losses by lowering the amount of foreign currency necessary for oil importation. In environmental benefits, the 10, 20, and 30% shift could offset approximately 8,959,198.92119, 8,438,863.65528, and 7,918,528.38937 tCO2e, equivalent to 5.4, 10.97, and 16.47% of the road emissions. The post-transition road emissions might result in a carbon tax revenue of about US$ 71,673,591.37, 67,510,909.24, and 63,348,227.11 per year. The post-transition carbon credit revenue of about US$ 20,813,410.64, 41,626,821.27, and 62,440,231.91 is expected annually. The findings are critical for policy design and promoting a transition in the road transport sector.