There is an urgent need to devise policy instruments that will reduce GHG emissions to a sufficient extent in order to achieve the climate targets. Approximately 16% of all greenhouse gas emissions are generated by long-distance travel. Our objective is to estimate the impact of a Tradeable Mobility Credit (TMC) scheme − where the total emissions are fixed by design whereas the price is the outcome of travelers’ choices − will have on modal split and trip cancellation for long-distance leisure travel in Europe. To this end, we develop a market equilibrium model which accounts for travel and trading decisions. For our case study consisting of a travel demand of more than 300 million trips performed annually between 3,000 city-pair connections, the credit price that emerges in the market equilibrium state is 272€ per ton of CO2 under an emission reduction target of 30%. Due to the TMC, overall long-distance leisure travel demand is reduced by 20% and the share of air among the remaining trips decreases from 50 to 42% whereas the market share of rail increases from 23 to 26%. Modal shifts and trip cancellation rates vary greatly amongst OD-pair connections, depending on the local value-of-time and the extent of modal competition for the respective connection. Our findings contribute to the on-going debate surrounding instruments for stimulating sustainable (im)mobility, in particular in the context of the long-distance travel market.

The interest in tradable mobility credits (TMC) is growing steadily. Compared to existing instruments, its cap-and-trade design for the demand side ensures that a limited quantity, e.g., traffic and related emissions, can by design not be exceeded. However, most TMC schemes are market-based financial instruments that can only be successful, if the market ensures the most efficient allocation of resources and if one can rely on the price. Hence, TMC schemes require trading activity and a liquid market that only emerges when participants are able and willing to trade. In this paper, we systematically review the TMC literature for aspects of trading activity and market liquidity, summarize the literature streams, and discuss determinants of participants’ ability and willingness to trade TMCs. During the literature review we separate those into demand-side, supply-side, and market regulation factors. This first coherent discussion of creating liquid TMC markets with substantial trading activity challenges the instrument and allows us to draw valuable conceptual implications for the TMC scheme design, but also implications for stakeholders beyond concept. Generating trading activity and liquid markets is thoroughly possible, but robustly achieving it can be challenging.

The ongoing research on tradable credit schemes (TCS) in mobility has captured the attention of policymakers, authorities and academics. Even though several studies have demonstrated the potential of such schemes, key policy design aspects that are relevant for real world implementation have been overlooked. There exists insofar no blueprint for an actual application of a TCS. We therefore propose a single all-encompassing framework for designing a TCS based on three dimensions: ownership, transfer and consumption. This framework has been developed through the extraction of policy design questions in the existing literature on TCS as well as alternative demand management schemes. Literature on the design of central bank digital currencies (CBDC) and digital tokens has been used to derive additional decisions regarding technical implementation and regulation. The decisions that are incorporated in the framework facilitate the comparison of different scheme designs in a three-dimensional space, addressing aspects of security, anonymity, centralization and technical feasibility. Hence, it provides policymakers and responsible authorities with a comprehensive framework on the essential decisions that need to be made upon practical application of a tradable credit scheme. It also serves as a means to classify existing work and develop new (or more realistic) variants of TCS that can be studied in future research endeavors. Based on the proposed framework, we devise an extensive research agenda describing directions for future research on tradable credit schemes across a variety of themes.