Why How it works Questions Pathway Collaborate
A research initiative for clean mobility

Does clean mobility have an untested policy instrument?

Tradable Fuel Permits for light-fleet mobility may finally be testable.

M-Tokens are a proposed digital form of Tradable Fuel Permits. They would guarantee a declining pathway for light-fleet fossil-fuel use by progressively limiting the amount of fuel that can be purchased, while allowing people and organisations to decide how they respond.

Why M-Tokens? Express interest

Why consider a downstream quantity instrument?

Carbon taxes and emissions trading put an upstream price on carbon. But even a large increase in that price has only a modest impact on mobility choices: each additional €100 per tonne of CO₂-e adds only about €0.24 per litre to the price of petrol. See the calculation and sources. Upstream carbon pricing is therefore never likely to rise high enough to strongly influence individual mobility choices.

Upstream carbon pricing

Price → quantity

Carbon taxes and emissions trading put a price on emissions upstream. Fuel demand responds indirectly to the resulting change in fuel price, alongside other market and policy influences.

Downstream Tradable Fuel Permits

Quantity → price

Sets the quantity of fossil fuel that can be purchased. Trading determines the scarcity price needed to reconcile demand with that quantity.

A testable architecture: M-Tokens

The proposal turns Tradable Fuel Permits into a digital system that could be modelled, prototyped and experimentally tested before contemplating real-world policy adoption.

1 M-Token = the right to purchase the quantity of fossil fuel for light-fleet use whose combustion emits 1 kg CO₂-e.

How M-Tokens would work

1

Government sets the quantity

Government establishes a national quarterly M-Token quantity covering permitted fossil-fuel purchases for the entire light fleet — households and organisations — declining on a predetermined pathway.

2

Allocate to people

All available M-Tokens are allocated free to qualifying people each quarter, with none allocated to organisations. An Equity Adjustment Factor varies allocations according to differing mobility needs and constraints, with an Equity Backstop for hardship and exceptional circumstances.

3

Trade through the market

Licensed market-makers stand ready to buy surplus M-Tokens from people and sell to organisations or to people needing more. People may also sell or gift M-Tokens directly to other people or organisations.

4

Organisations buy

Organisations receive no free allocation and must acquire all the M-Tokens needed for their light-fleet fossil-fuel purchases. This creates continuing demand for surplus M-Tokens held by people and helps ensure an active market.

5

Use money + M-Tokens

Buying petrol or diesel for light-fleet use requires money plus surrender of M-Tokens corresponding to the fuel's emissions content. Different fuels have different emissions factors, and the emissions factor for the same fuel may vary by source or over time.

6

Fuel retailers account for M-Tokens

Fuel retailers collect the required M-Tokens with each light-fleet fossil-fuel sale and periodically account for and surrender them to Government.

Want more detail?
Read the explainer, extended abstract, system specification, conference poster, and the report that initiated the M-Tokens project. Supporting material →

The important questions are empirical

M-Tokens are deliberately designed to make a binding fossil-fuel constraint as attractive and equitable as possible to people and households. All available M-Tokens are allocated free to people — including those who use little or no fossil fuel — while organisations receive none. People who need fewer M-Tokens can sell their surplus, so the economic value created by the constraint is distributed broadly through society.

Both the underlying TFP concept and these features of the M-Token design raise empirical questions that should be tested rather than assumed. The purpose of the M-Tokens initiative is to determine whether they work as intended, and whether the overall approach can be tested rigorously enough to justify — or rule out — a real-world pilot.

The empirical questions

First, the underlying TFP concept. Then, the specific M-Token design.

Mobility choices

Would a visible, tradable quantity constraint change people's trip, mode, vehicle and energy-source choices — and by how much?

Implementation

Could digital identity, payments and fuel-retail systems make participation nearly frictionless while minimising fraud?

Policy interaction

How would Tradable Fuel Permits interact with upstream carbon pricing, fuel taxes, road pricing, electrification policy and other transport and climate policies?

Markets

Would the M-Token market function as intended — including with zero allocation to organisations — and how would prices, trading, liquidity and banking respond as the available quantity declines?

Equity

Would the M-Token allocation approach distribute benefits and costs equitably, including for people with differing mobility needs and constraints?

Acceptability

Would M-Token design features — including free allocation to people, zero allocation to organisations, equitable allocation and the ability to trade — make a binding fossil-fuel purchase constraint publicly acceptable?

From questions to evidence

These questions would not be answered one at a time. Different research methods would address several of them, with evidence accumulating through progressively more realistic stages. A policy pilot should be the end of that pathway, not the beginning. Each stage should proceed only if the preceding evidence justifies it.

The stages

1. Model

Use existing data and specified assumptions to estimate distributional outcomes, market behaviour, emissions pathways and interactions with other policies.

2. Experiment

Use choice experiments and simulated M-Token markets with participants to test mobility decisions, trading behaviour, understanding, equity perceptions and acceptability.

3. Prototype

Build and test the digital wallet, allocation, trading and fuel-purchase architecture, including identity, payments, accounting and fraud controls.

4. Field trial

Test actual participant behaviour and system operation over time at limited scale, without yet implementing M-Tokens as public policy.

5. Policy pilot

Test M-Tokens as a real-world policy instrument, if the preceding evidence supports proceeding.

Want to test it with me?

I am looking for researchers, policymakers, practitioners, technology partners and research funders interested in helping test whether Tradable Fuel Permits could become a practical policy instrument for clean mobility.

If you would like to contribute to research on TFPs, the development or testing of M-Tokens, or simply follow the work, please fill in the form below. Your responses will be sent directly to me by email.

I’m interested in: (tick all that apply)
↑ Back to top