Recently, there has been an increased need for new urban policies in industrialized cities that take action against climate change. In particular, to achieve eco-friendly and efficient transportation systems, carbon-reducing transportation policies should be implemented while managing transportation demand. This study predicts and assesses the effects of a carbon reduction policy in terms of transportation plans, and various responses to policies by users are predicted. The aim is to develop a transportation planning model that improves the effectiveness of a carbon reduction policy. The intention is to provide reasonable support for the decision-making process with regard to the transport policy, and to establish a process for taking into account carbon emissions during the development of future transportation policies. This study used activity-based approach to identify various daily activities of individuals as the decision units of transportation and considers the trip as one of the activities of a continuous daily life. Hence, it is possible to provide analysis results that are suitable for estimating and managing carbon emissions such as introduction of policies for traffic demand management which is a policy for traffic demand management. As a result of simulation, the environmental value of the ‘car-free street’ policy was about 11,548,000 KRW/d, and that of the ‘flexible commuting time policy’ policy was 8,447,000 KRW/d. The proposed carbon reduction policy effectiveness analysis is expected to support decision making concerning carbon reduction policies. Hence, an activity-based simulation of urban transport carbon reduction will help policy-makers support rational decision-making, based on prior experimentation in urban planning and the policy impact on cities.