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Personal tradable carbon permits for road transport: Why, why not and who wins?

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  • Wadud, Zia

Abstract

Personal road transport sector poses a significant challenge in reducing carbon emissions. This paper evaluates a policy approach known as personal tradable carbon permits to reduce carbon emissions from personal vehicles. The policy is a downstream tradable permit where individuals are allocated carbon emission caps. The policy is qualitatively evaluated in the context of carbon taxes and some upstream tradable permit options. The biggest disadvantage of such a policy is the initial set up costs. Personal tradable permits, however, are more effective than carbon taxes and are also capable of stabilizing the gasoline prices faced by the consumers when the underlying oil prices fluctuate. Since equity effects are often a concern to policy makers, the effect of such personal carbon permits on the distribution of burden is quantified in a partial equilibrium framework for the US population. Different permit allocation strategies are investigated in this regard. Using US consumer expenditure survey data, and incorporating a differentiated price response for different households, we find that all three allocation strategies considered are progressive: a per adult based allocation is the most progressive, a per vehicle allocation nearer to proportional, and a per capita allocation in between the two. Personal tradable permits therefore take care of equity concerns directly through the design of the policy.

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Bibliographic Info

Article provided by Elsevier in its journal Transportation Research Part A: Policy and Practice.

Volume (Year): 45 (2011)
Issue (Month): 10 ()
Pages: 1052-1065

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Handle: RePEc:eee:transa:v:45:y:2011:i:10:p:1052-1065

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Related research

Keywords: Personal tradable carbon permits; Road transport; Carbon emissions; Climate change policy; Equity; Fuel demand elasticity;

References

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  1. E Verhoef & P Nijkamp & P Rietveld, 1997. "Tradeable permits: their potential in the regulation of road transport externalities," Environment and Planning B: Planning and Design, Pion Ltd, London, vol. 24(4), pages 527-548, July.
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  3. Niemeier, Debbie A. & Gould, Gregory & Karner, Alex & Hixson, Mark & Bachmann, Brooke & Okma, Carrie & Lang, Ziv & Heres Del Valle, David, 2008. "Rethinking Downstream Regulation: California's Opportunity to Engage Households in Reducing Greenhouse Gases," Institute of Transportation Studies, Working Paper Series qt2ct0n1xv, Institute of Transportation Studies, UC Davis.
  4. Parry, Ian, 2003. "Are Emissions Permits Regressive?," Discussion Papers dp-03-21, Resources For the Future.
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  8. Henrik Hammar, Asa Lofgren and Thomas Sterner, 2004. "Political Economy Obstacles to Fuel Taxation," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3), pages 1-18.
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  13. Charles Raux, 2004. "The Use of Transferable Permits in Transport Policy," Post-Print halshs-00067895, HAL.
  14. Raux, Charles & Marlot, Grégoire, 2005. "A system of tradable CO2 permits applied to fuel consumption by motorists," Transport Policy, Elsevier, vol. 12(3), pages 255-265, May.
  15. Zia Wadud & Daniel J. Graham & Robert B. Noland, 2010. "Gasoline Demand with Heterogeneity in Household Responses," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 47-74.
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  18. Pezzey, John C.V., 2003. "Emission Taxes and Tradable Permits: A Comparison of Views on Long Run Efficiency," 2003 Conference (47th), February 12-14, 2003, Fremantle, Australia 58198, Australian Agricultural and Resource Economics Society.
  19. Casler, Stephen D. & Rafiqui, Aisha, 1993. "Evaluating Fuel Tax Equity: Direct and Indirect Distributional Effects," National Tax Journal, National Tax Association, vol. 46(2), pages 197-205, June Cita.
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Citations

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Cited by:
  1. Bastani, Parisa & Heywood, John B. & Hope, Chris, 2012. "The effect of uncertainty on US transport-related GHG emissions and fuel consumption out to 2050," Transportation Research Part A: Policy and Practice, Elsevier, vol. 46(3), pages 517-548.
  2. Schwanen, Tim & Banister, David & Anable, Jillian, 2011. "Scientific research about climate change mitigation in transport: A critical review," Transportation Research Part A: Policy and Practice, Elsevier, vol. 45(10), pages 993-1006.
  3. Kyle Kinler & Jeffrey Wagner, 2014. "Greenness versus safety in vehicle footprint selection," Letters in Spatial and Resource Sciences, Springer, vol. 7(1), pages 35-45, March.
  4. Ch'ng, Kean Siang, 2010. "Individual tradable permit market and traffic congestion: An experimental study," MPRA Paper 26638, University Library of Munich, Germany.

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