A tradable carbon credit incentive scheme based on the public-private-partnership

Abstract

This paper proposes a tradable carbon credit scheme under a public-private partnership (PTCS) to reduce congestion and carbon emissions in the network, considering two travel modes with the public transit and the private cars. The PTCS involves three key entities: the traveler, the enterprise, and the government. A three-layer non-linear model is developed to formulate this problem. At the upper level, the government determines the credit scheme and the optimal subsidy to the enterprise, aiming to reduce carbon emissions, travel time, and the monetary cost. In the middle level, the costs and benefits of the enterprise are taken into account. While travelers redeem the carbon credits from the enterprise by opting for public transport, the enterprise can also gain financial benefits from green-mode travelers, including the flow benefits and the unit subsidy from the government. At the lower level, travelers choose their routes and travel modes under the given credit scheme, following the rule of the user equilibrium. We analyzed how the PTCS affects emissions and travel time and validated our findings with two numerical studies using a single OD toy network and the Sioux Falls network. Additionally, with government subsidies, the profitability of the enterprise can be increased to a great extent, achieving a triple-win situation for the enterprise, government, and travelers. This research shed light on promoting low-carbon travel, reducing emissions, and increasing the utilization rate of public transportation.