Consumer-Based Carbon Reduction Incentives: A Proposed Mixed Incentive Scheme for Reducing Co₂ Emissions From Transport

To be cost effective the abatement greenhouse gases should be spread across the spectrum of emission sources. While energy production generates the largest share of greenhouse gases, emissions produced by vehicular transport in Australia is still a significant contributor and should bear at least some burden of abatement. Approaches to reducing greenhouse gases have tended thus far to focus on industry. In the transport sector, this industry-based approach has focussed on emission standards. But to be truly cost effective, incentives to reduce emissions need to be targeted at the point of use, by both industry and the private individuals. This paper explores the benefits and limitations of adopting a mixed incentive scheme applied to fuel consumers to reduce greenhouse gas emissions from transport. The proposed consumer-based carbon reduction incentive scheme (CBCRI) incorporates elements of tradeable permits, carbon taxes and emission reduction subsidies.