Under the Kyoto Protocol, trading of emission permits is proposed to reduce overall greenhouse gas emissions. Starting in 2008, a worldwide trading program will be operational. Recently, the European parliament has taken legislative steps to set up a greenhouse gas emissions allowance trading system for energy intensive sectors within the European Union (EU) member states in 2005. Later on, this program may be extended to other sectors such as the transport sector.This is not surprising since road transport is the fastest growing producer of greenhouse gases in the EU. At present, voluntary agreements with the automobile industry are the cornerstone of the EU policy to tackle this problem. Since these measures are expected to be insufficient to realize the reduction agreed on, other policy instruments should be applied. This paper explores the possibilities to implement permit program in private road transport, which includes an active involvement of households and transport industry. At present, there are no examples of allocation of permits to households. Although the permit system does not reduce emissions as such, it provides a direct incentive to achieve a fixed level of emissions, at the lowest cost and assuring flexibility amongst the market players.in: Proceedings 83th Annual Meeting Transportation Research Board (TRB), Washington, 16 p.