Tradeable Mobility Credits Could Complement Distance-Based Road Charging

Key Points

• Professor David Hensher AM has proposed combining distance-based road user charging with tradable mobility credits in a “push-pull” policy framework.
• The proposal is presented in a University of Sydney Business School think piece published on 6 October 2026.
• The proposed system would combine a monetary road-user charge with credits that travellers could earn, spend, save or trade.
• Credits could reward public transport use, walking, cycling, verified carpooling, off-peak travel and, in the proposed example, electric-vehicle use.
• Hensher’s model uses an illustrative conversion of 1 mobility credit (CR) to $0.10, rather than presenting that value as an established tariff.
• A worked Sydney example shows how public transport and other credited behaviours could offset part of a distance-based road charge.
• The proposal also considers starter credits for lower-income areas and mobility-impaired drivers, alongside reduced charging in areas with poor public transport access.
• The framework could reduce the amount of revenue generated by distance-based charging, creating a potential concern for government treasuries.
• The proposal identifies possible roles for national and state governments, councils, transport authorities, public transport operators, employers, developers and mobility-service providers.
• Hensher describes the model as a hybrid system in which road user charging acts as the “push” and mobility credits provide the “pull”.

Sydney Now Magazine (SNM) October 6, 2026 – A new transport policy proposal from Professor David Hensher AM examines how distance-based charging for car use could be combined with tradable mobility and environmental credits to encourage changes in travel behaviour while addressing concerns about equity and public acceptance. The proposal is set out in a University of Sydney Business School “Thinking outside the box” think piece published on October 6, 2026.

The central proposal is to combine a price-based road user charging system with a credit-based incentive system. Rather than relying solely on motorists paying for road use, the framework would allow travellers to earn credits through selected behaviours and use those credits to offset charges or pay for eligible transport services.

The University of Sydney identifies the article as a think piece by Professor David Hensher AM. It examines what the university describes as tradeable mobility and environmental credits within a push-pull approach to distance-based charging.

What is the proposed push-pull transport charging system?

The proposal seeks to combine two different policy mechanisms.

Road user charging, including distance-based charging, would provide the “push” component. Under such a system, motorists would face charges based on factors such as the distance travelled, time of travel and location.

Mobility credits would provide the “pull” component. Travellers could earn credits by choosing behaviours that the scheme is designed to encourage, including public transport, walking, cycling, carpooling and travelling outside peak periods.

In the University of Sydney think piece, Hensher argues that combining the two mechanisms could provide motorists with options to alter their behaviour rather than simply facing a financial charge.

The proposal therefore moves away from a framework based only on penalties or costs and towards one in which financial incentives are incorporated into demand management.

The underlying concept is not presented as entirely new. The think piece notes that mobility credits aligned with carbon credits have previously been proposed and operated in different forms, with varying results. It also refers to previous research into transferable mobility credits as an alternative to conventional congestion pricing.

How would tradable mobility credits work?

Tradable mobility credits are generally described as a cap-and-trade mechanism for travel demand.

Under the proposed approach, a regulator would allocate credits to travellers. Those credits could then be used for eligible travel or traded between users.

A traveller with relatively low car-use requirements could potentially have credits left over and sell them to another traveller who requires more mobility credits.

The model therefore attempts to allow individual travel needs to be reflected through a market rather than imposing exactly the same behavioural response on every motorist.

The think piece cites earlier work suggesting that such systems can contribute to congestion reduction while potentially supporting revenue neutrality and equity objectives. It also notes that pricing systems and credit-based systems can produce comparable efficiency outcomes under ideal conditions while having different distributional and behavioural consequences.

A significant distinction is that a credit system can incorporate redistribution through the initial allocation of credits. That feature is identified as one reason mobility credits have been considered potentially more acceptable than pricing-only approaches.

Why does the proposal combine road user charging with mobility credits?

The think piece identifies a gap between research on road user charging and research on mobility credit systems.

According to the proposal, existing studies have often considered price-based instruments and credit-based instruments separately. Hensher’s approach instead seeks to connect the two.

The proposed framework would combine the price signal of road user charging with quantity-based incentives created through mobility credits.

The objective is not simply to impose a charge on motorists but to create opportunities for them to reduce the effective cost through behaviours that support the policy’s wider transport objectives.

The approach is described as “Behavioural Change and Tradeable Mobility Credits in a Push-Pull setting”. It is linked in the source to work by Hensher and other researchers examining behavioural responses to combinations of transport pricing and incentives.

What behaviours could earn mobility credits?

The proposed credit system would need rules defining which behaviours are rewarded, how credits are calculated, how they can be spent and traded, and when they expire.

The think piece proposes beginning with a relatively simple reward-only structure.

Under the illustrative framework, credits could be earned for:

Public transport use

Train, metro and bus boardings would receive credits. An off-peak multiplier would provide an additional incentive for travel outside the busiest periods.

The Sydney example uses five credits per public transport boarding and an off-peak multiplier of 1.3.

Walking and cycling

The proposed example assigns one credit per kilometre to walking and cycling, subject to a daily cap intended to limit potential fraud.

Carpooling and car sharing

Verified carpooling or car-sharing activity could also generate credits. The example assigns 0.5 credits per kilometre for the car driver.

Electric vehicles

The proposal includes a specific environmental credit for electric vehicles, using 2.5 credits per trip in the example.

The source says this could support the sustainability rationale of the scheme and address criticism that road user charging would also apply to electric vehicles.

Autonomous electric vehicles are not included in the example because the proposal states that their treatment remains uncertain.

How would the credit currency be valued?

The think piece proposes an illustrative internal unit called a Credit, or CR.

For accounting purposes, the example sets 1 CR at $0.10 of mobility value.

This is explicitly an example rather than a proposed final government tariff.

Under that arrangement, a $2 transport value would equal 20 CR. Users could then earn, save, spend or trade the credits.

The proposed system could operate through a multi-period wallet, allowing credits to remain available across different periods while still imposing an expiry date.

The example assumes credits expire after 90 days. The stated purpose is to encourage continued participation and reduce incentives for excessive accumulation of credits.

The source also proposes that credits could be redeemed against road user charges or public transport fare wallets.

How could equity be incorporated into the system?

Equity is an important element of the proposed framework.

The think piece suggests monthly starter allocations for low-income postcodes and mobility-impaired drivers.

It also proposes possible geographic exemptions or reduced road user charging in areas where public transport services are limited, at least until transport services are improved.

The underlying issue is that a distance-based charge could affect people differently depending on where they live, their transport alternatives and their ability to change travel behaviour.

A worker in an area with frequent public transport may have more opportunities to earn credits through alternative modes than someone living in a location where public transport is limited.

The proposed geographical and targeted measures are intended to recognise that difference.

What would the proposed Sydney charging example look like?

The think piece provides a worked Sydney example using illustrative figures for a potential 12-month pilot.

The example assumes a credit value of $0.10 per CR.

For cars, the proposed distance-based charging rates are:

• 3 cents per kilometre during off-peak periods in the metropolitan area.
• 7 cents per kilometre during morning and afternoon peaks.
• A 50 per cent additional charge for CBD cordons or identified bottleneck links.
• A possible flat 3 cents per kilometre for rural and regional journeys, although this is not applied to the Sydney example.

The source stresses that these values are arbitrary assignments for the example and that further research would be required before appropriate values could be established.

How does the worked Sydney example calculate the charge?

The illustrative traveller drives eight kilometres into Sydney’s CBD during the morning peak and eight kilometres back during an off-peak period.

The morning journey is subject to the peak rate and a 50 per cent CBD adjustment.

The calculation is:

8 km × $0.07 × 1.5 = $0.84

The off-peak return journey is calculated as:

8 km × $0.03 = $0.24

Together, the road user charge is therefore $1.08.

At the illustrative rate of $0.10 per credit, the $1.08 charge corresponds to 10.8 CR.

The traveller also makes an off-peak train journey. Five credits are awarded for the boarding, with the 1.3 off-peak multiplier increasing the reward to 6.5 CR.

Without the electric-vehicle adjustment, the resulting position is:

6.5 CR – 10.8 CR = -4.3 CR

The example therefore produces a shortfall of 4.3 CR, equivalent to $0.43 under the illustrative peg.

The traveller could pay that amount, earn additional credits through more eligible travel, or purchase credits from another user.

For an electric vehicle, the proposed additional 2.5 CR adjustment would reduce the amount payable in the example.

The calculations demonstrate the intended operation of the push-pull model: the road charge remains in place, but selected behaviours can reduce the net burden.

Could the system reduce government road-charging revenue?

Yes. Revenue is identified as one of the central policy challenges in the proposal.

A conventional distance-based charging scheme could be designed to generate a specific level of government revenue. If motorists can earn credits and use them to offset road charges, the amount ultimately collected could be lower.

The think piece specifically identifies this as a potential sticking point where treasuries have established revenue expectations from distance-based charging.

The issue therefore extends beyond transport behaviour. Governments would have to determine whether the benefits of reduced congestion, increased public transport use and other outcomes justified the potential reduction in direct charging revenue.

Who could fund a mobility-credit scheme?

The proposal identifies several possible funding sources.

National and state governments could potentially contribute because they may benefit from lower congestion, reduced emissions and improved productivity.

Local councils could benefit from reduced traffic, safer streets and improved urban amenity.

Transport authorities could benefit from increased public transport use and reduced pressure on roads.

Public transport operators could potentially gain additional passengers and improved use of existing assets.

The proposal also identifies MaaS platform providers, employers and developers or property owners as potential participants.

Employers could benefit from lower parking requirements and potentially more reliable commuting, while developers and property owners could benefit from lower demand for expensive car parking and greater value associated with accessible locations.

The think piece also identifies polluters as a possible funding source if the credit system is connected with emissions trading or offset mechanisms.

What government coordination would be required?

The proposed model could involve responsibilities across different levels of government.

The think piece identifies potential State and Federal jurisdictional issues and suggests that agreed financial transfers could be one way to address those responsibilities.

For a system to operate across a metropolitan region, decisions would be required on credit allocation, road-charging rules, eligible behaviours, trading arrangements, redemption, monitoring and enforcement.

The governance question would therefore be significant because the proposed credit market would interact with road charging, public transport and potentially environmental policy.

What does the proposal mean for electric vehicles?

The proposal specifically includes electric vehicles within its credit structure.

The suggested 2.5 CR reward per EV trip would provide an environmental incentive while still allowing electric vehicles to be included in the road user charging framework.

This is important because a distance-based charging system that applies to all vehicles would otherwise reduce or remove one financial advantage associated with electric vehicles: avoiding fuel-based taxes or charges linked directly to petrol and diesel consumption.

The proposed environmental credit provides one possible way of distinguishing vehicle characteristics within the wider charging system.

However, the source does not present the EV credit as a final policy recommendation with an established monetary value. It forms part of the illustrative Sydney framework.

What are the main challenges facing tradable mobility credits?

The principal challenges identified by the proposal concern revenue, government preparedness, jurisdiction, equity and system design.

The government would need to decide how much revenue should be collected through road user charging and how much should be redirected through credits.

A trading market would also require rules governing how credits are created, transferred, redeemed and expired.

The allocation of starter credits would require decisions about which groups receive additional support and on what basis.

There would also need to be safeguards against fraudulent claims for activities such as walking, cycling or carpooling.

Finally, the relationship between the road charging system and public transport would need to be carefully structured so that incentives correspond with services that travellers can realistically access.

What is the background to the mobility-credit proposal?

The concept builds on a wider body of research into congestion pricing, road user charging and tradable mobility credits.

The University of Sydney think piece cites research including work by Álvarez-Ossorio and colleagues, Servatius and colleagues, Glavić and colleagues, Verhoef, de Palma, Chen and others. It also references recent work by Hensher, Bliemer and Loder on road user charging and behavioural responses.

The basic concept of tradable mobility credits is to create a limited or allocated quantity of travel-related credits that can be used and traded. People who need fewer credits can potentially transfer their surplus to people who need more.

The proposal developed by Hensher adds this credit mechanism to distance-based road user charging, creating a combined price-and-incentive framework.

The University of Sydney published the think piece on October 6, 2026, identifying it as part of its “Thinking outside the box” series.

What could the proposal mean for motorists, public transport users and policymakers?

For motorists, the proposed framework would mean that a distance-based road charge would not necessarily represent the full financial outcome of their travel behaviour. Drivers could potentially reduce their net charge by earning credits through eligible activities.

For public transport users, walking and cycling participants, and verified carpool users, the proposed system could create a financial reward for behaviours that reduce reliance on single-occupancy car travel.

For policymakers, the principal implication would be the need to balance several objectives at the same time: congestion management, revenue, equity, environmental outcomes and public acceptance.

The proposal does not establish a final government policy or confirmed Sydney charging regime. Instead, it presents an integrated conceptual and modelling framework in which road user charging supplies the price-based constraint and mobility credits provide incentives for behavioural change.

What is the prediction for transport users and governments?

If a system based on this proposal were developed further, its effect on transport users would depend heavily on the final charging rates, credit allocations, eligible behaviours and availability of alternative transport.

Motorists with relatively flexible travel patterns could potentially benefit by shifting trips to public transport, walking, cycling, carpooling or off-peak periods. Motorists with limited alternatives could require stronger equity measures or larger credit allocations to prevent disproportionate impacts.

For governments, the most immediate policy issue would be balancing the behavioural benefits of credits against the possibility of reduced road-charging revenue. The proposal indicates that successful implementation would require coordination between government levels and transport stakeholders.

For public transport operators, greater use of services could create additional demand, while the credit system could provide a direct financial incentive for travellers to consider public transport.

The overall framework therefore points towards a transport-demand system in which road user charging provides the “push”, while tradable mobility credits provide the “pull”. The University of Sydney source presents this as a hybrid demand-management concept rather than a confirmed charging policy.