The potential for CO2 emissions trading in transport: the case of personal vehicles and freight

Transport currently accounts for around 25-30% of global CO2 emissions and this contribution is growing rapidly. Moreover, road transport holds by far the major part in these emissions. Because of the social and political reluctance to increase fuel taxation, it is of some interest to explore the inclusion of road transport in emission trading schemes. Starting from the theory about tradable permits, their relevance in transport emissions, their appropriate targets and their potential for practical implementation are analysed. Two proposals of tradable rights for fuel consumption are presented, the one for drivers of private vehicles, the other for freight transportation. Finally, potential pitfalls and implementation issues are also discussed. It is concluded that the cost of operating markets of fuel rights would be the price to be paid for an effective involvement of the transport sector in the effort to reduce emissions.