Personal carbon trading rewards smart choices with virtual euros

LUT has conducted a study in Lahti, Finland, on how to allocate emission allowances for fair personal carbon trading. Shares based on equal-per-capita distribution are not a viable option.

Cities are encouraging more ecological mobility to reduce emissions from transport. In the future, personal carbon trading related to transportation may constitute a significant part of a carbon neutral way of life.

Residents of Lahti are taking part in climate change mitigation with a mobile application called Kulkukauppa (Mobility Trading). The application is based on LUT University's personal carbon trading scheme, which rewards users for environmentally friendly mobility. The application recognises different modes of transportation, such as driving a car, riding a bicycle, or walking.

"The carbon trading scheme allocates a certain amount of emission allowances to the users of the application. These allowances decrease depending on the person's mobility choices," explains Professor of Sustainability Science Helena Kahiluoto, the creator of the idea.

The emission allowances are calculated and allocated to each participant individually. For example, the number of children and the distance from one's home to work and services influence the amount of allowances.

"This is a practical model for allocating allowances. An equal-per-capita share would have been unrealistic and unfair," Kahiluoto relates.

A survey regarding the matter was conducted among the residents of Lahti in connection with the project CitiCAP – Citizens' cap-and-trade co-created, which also developed the Kulkukauppa application. The cap-and-trade pilot scheme in Lahti is being promoted for global use.

A way for entrepreneurs to promote sustainability

The EU's emissions trading system encourages sustainable mobility and has defined the monetary value for emission allowances. The personal carbon trading scheme developed by LUT calculates how much the application's users earn virtual euros by walking or riding their bicycles instead of driving and by not using their entire emission allowance. People can spend the virtual euros they earn on services.

By cycling, one can earn virtual currency that pays for services.
- Tuuli Ronkainen

LUT University's Junior Researcher Tuuli Ronkainen says that the city administration and regional businesses are currently discussing how people could use their virtual euros.

"The virtual currency could pay for bicycle service or translate to a reduction in bus fares. The services and rewards should be eco-friendly and not increase consumption," Ronkainen remarks.

The overall cap for emissions in the trading scheme is based on the number of application users and the environmental targets of the City of Lahti. The cap will decrease in accordance with Lahti's target schedule for cutting traffic emissions. Lahti, a city of 120 000 inhabitants, aims for carbon neutrality by 2025.

Observing your impact can motivate taking action

Decreasing emissions from mobility requires not only incentives but also urban design frameworks that guide people towards sustainable mobility choices. Examples of this include lit bicycle lanes that do not freeze over during the winter and a functional transport system.

Also personal motivation is an important driver. According to LUT's experts, the Kulkukauppa application fosters an eco-friendly identity, which is important to an increasing number of people. Seeing concrete figures gives people a sense of how much their transportation choices yield emissions in general and compared to others. This may motivate cutting these emissions. The application enables comparing data.

"The application enables us to monitor the concrete emission impact of our mobility choices and the effect they have on the environment. Many are now doing this for the very first time. It is highly important also to examine positive social pressure; how comparing your own emissions to those of others affects your actions," Researcher Ronkainen states.

In Kahiluoto's vision, the Kulkukauppa application would become a part of the local identity and promote a sense of togetherness.

Ronkainen, who is analysing the user experiences of the application, adds that health impacts are also a good motivator for making sustainable mobility choices.

"Our application calculates activity points. It tells us how much our physical activity increases when we, for instance, walk to the bus stop instead of to our own car. By walking or cycling, one can earn virtual currency that pays for services," Ronkainen highlights.

The official kick-off of the year-long pilot project is in autumn 2019 after prototype testing. Kahiluoto and Ronkainen both work on LUT's Lahti campus and predict that Lahti will have an excellent opportunity to set a global example of personal carbon trading and cutting mobility-related emissions.

The sustainability researchers expect the CitiCAP project to yield solutions to problems involving the sustainability transformation – how private citizens can be incited to change their private lives to curb climate change.

"How, for instance, can we move forward from the common presumption that when you become an adult you must get a driving license and your own a car?" Kahiluoto asks.

Change requires incentives, frameworks, and the removal of barriers related to values, identity and culture.

CitiCAP – Citizens' cap-and-trade co-created

  • The project Citizens' cap-and-trade co-created is coordinated by the City of Lahti. Duration: 1/2018 - 12/2020.
  • The project promotes functional, sustainable, low-emission mobility.
  • LUT's responsibilities in the project include the analysis of collected data and building a carbon trading scheme.
  • Funding is provided by the EU initiative Urban Innovative Actions.

More information:

Helena Kahiluoto, Professor
Tuuli Ronkainen, Junior Researcher
Ville Uusitalo, Assistant Professor
firstname.lastname@lut.fi