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A system of tradable CO2 permits applied to fuel consumption by motorists

  • Raux, Charles
  • Marlot, Grégoire

Decentralized transferable permit systems in the transport sector can be of interest with regard to reducing greenhouse gas emissions, in spite of anticipated transaction costs. This paper describes a potential application of a domestic market for car fuel consumption permits. The marginal costs of consumption reduction vary sufficiently according to motorists' residential locations to consider permit exchanges. Economic evaluation of this system shows that there are transfers of surplus between the various groups of motorists according to their residential locations. The central government may lose significant revenues when compared with a conventional fuel tax. Lastly, the issue of transaction costs, the benefits and disadvantages in terms of social acceptability and equity are discussed.

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Article provided by Elsevier in its journal Transport Policy.

Volume (Year): 12 (2005)
Issue (Month): 3 (May)
Pages: 255-265

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Handle: RePEc:eee:trapol:v:12:y:2005:i:3:p:255-265
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  1. Baumol,William J. & Oates,Wallace E., 1988. "The Theory of Environmental Policy," Cambridge Books, Cambridge University Press, number 9780521311120, October.
  2. Charles Raux, 2004. "The Use of Transferable Permits in Transport Policy," Post-Print halshs-00067895, HAL.
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