Investigating the role of green transport, environmental taxes and expenditures in mitigating the transport CO2 emissions

ABSTRACT

Transportation sector is considered a major contributor to the release of the carbon emissions in the atmosphere. The present research explores the effect of traffic, environmental taxes and expenditures on transport-related carbon emissions. We apply a cross-sectional autoregressive distributed lags estimator for short- and long-run estimates by using panel data for 35 OECD countries. We demonstrate traffic increase transport-related carbon emissions by 14.65% on average. Transport-related carbon emissions will rise by 1.5% over the near term as a result of the combined effect rail and road-vehicles, and energy consumption. Environmental expenditures and green transportation, on the other hand, will cut transportation emissions by 21.7% and 45.20% in the short and long runs, respectively. Furthermore, the findings reveal an inverted u-shaped link between transportation-related carbon emissions and consumption. Based on real-world evidence, this study advises that some countries reduce traffic while simultaneously increasing spending on the development of environmentally friendly transportation options.

KEYWORDS:

• CS-ARDL
• traffic movement
• transport energy consumption
• environmental expenditure
• green transport
• OECD

Policy implications

This study’s findings have several policy implications for transportation experts and economists. First, OECD countries should impose limit road traffic in the short term because it emits more CO₂ than railway traffic does. In the long run, countries must improve their management of road and rail movements to reduce emissions. Second, empirical findings suggest that countries should reduce the extensive use of locomotives by approximately 56%, which can enable government bodies or transportation experts/policymakers to improve the environment. Third, governments should increase their environmental budgets by an average of around 9% to reduce CO₂ emissions. Their environmental spending strategies can be improved to maintain nonrenewable resources. Fourth, OECD countries should produce use green transport (electric road and rail vehicles) for around 37% of their transport needs. Finally, carbon taxes and R&D expenditures must be planned and allocated at a rate of approximately 27.1% in the long run.

This study’s limitations concern its use of road and railway traffic movements, energy use, green transportation, and environmental expenditures to evaluate the influence on TCO₂ emissions in OECD countries. Environmental technology, population agglomeration, and institutional quality can all be added to this research in the future. More specific policy practitioners will include those involved in green transportation, green financing, and green technology, as well as emerging economies.

Disclosure statement

No potential conflict of interest was reported by the author(s).