A decoupling analysis of transport CO2 emissions from economic growth: Evidence from Vietnam

Abstract

Since economic reforms in the late 1980s, Vietnam’s economy has grown rapidly, but transport activity has grown faster presenting a significant challenge for reducing transport related CO2 emissions. This paper explores this challenge by comprehensively evaluating decoupling in Vietnam’s transport sector over the period 1995 to 2017. Decoupling elasticities reveal that there is no decoupling of transport volumes from GDP, but between 2011 and 2017, CO2 emissions from transport were decoupling from GDP. Digging deeper reveals that the income driver is in an expansive coupling state, and this is mostly due to the structure of the economy. Different drivers of carbon intensity were important at different times. The importance of the drivers fit a hypothesis of economic restructuring and household income growth. Energy intensity constrained emissions growth, especially from 2011, and was the key driver aiding the decoupling process. The analysis suggests that reducing transport intensity together with modal switching offers the most scope for future decoupling. Barriers that limit the decoupling process include cheap fuel prices and a lack of modal alternatives to private road transport as such appropriate policy responses should target these areas.

Highlights

1. Comprehensive analysis of decoupling in the transport sector of Vietnam.

2. Vietnamese transport volumes are not decoupling from GDP, but transport CO2 emissions are.

3. Transport intensity, incomes and economic structure hampered decoupling while energy intensity aided decoupling.

4. The decoupling effort model suggests emissions are reducible.

5. Policy responses include removing market inefficiencies and increasing modal choices.

Keywords:

• Carbon
• decoupling
• emissions
• LMDI
• transport
• Vietnam

Acknowledgements

We would like to acknowledge a helpful discussion with Eric Burdette and the helpful comments from anonymous referees that helped improve this paper.

Ethics approval and consent to participate

No human subjects involved.

Consent for publication

No human subjects involved.

Availability of data and materials

Should be easily reconstructed from the methods section but if asked will send.

Competing interests

None.

Authors' contributions

All.

Notes

1 Decoupling refers to the possibility of increasing economic growth without increasing emissions (McKinnon, 2007).

2 As of March 2020, the author could not identify any such studies for middle-income countries other than China.

3 Or negative externalities or transport volumes in general, see Loo and Banister (2016) for example.

4 Note that $CO2/\mathit{GDP}=CO2/\mathit{volumes}\times \mathit{volumes}/\mathit{GDP}.$

5 The province was the decision-making unit.

6 Indicators from IEA (2019a).

7 See Hien (2019) for an analysis of the electricity intensity of Vietnam.

8 Data from World Bank (2020) show that real pump prices of gasoline and diesel for Vietnam are cheaper except against Indonesian and Malaysian prices. Recently, the government has proposed a tax on gasoline and diesel fuels and Nong (2018) shows an expected decline of 23% of manufacturing output due to widespread use of petroleum fuels throughout the country.

9 This is not crucial as rail does not command a large share of the Vietnamese transport sector. Never more than 10% of passenger and 6% of freight volumes and most years much less than both upper limits.

10 The term net mass movement is used in the paper occasionally.

11 Railways = 1; highways = 5; waterways = 3.03; air = 13.88.

12 Tapio (2005) slightly modified the framework provided in Vehmas et al. (2003).

13 These are often referred to as drivers in this paper.

14 See equation 6b in the appendix for the equivalent version of equation 6.

15 The output effect is the amount attributable to activity driver.

16 The results with urban services labor productivity are presented in the appendix, Table 11).

17 There is a location element in the preference for road transport.

18 Careful interpretation of this data is need as it doesn’t add to 100, but this story fits the other data.

19 Vietnam’s rural population in 2018 was 64% (World Bank, 2020).

Additional information

Funding

None.