Convergence in road transport CO2 emissions in Europe

Abstract

In Europe, the transport sector accounts for more than 27% of total CO2 emissions and, within this sector, road transport is by far the largest polluter. This fact has placed road transport emissions abatement firmly on the agenda of global alliances. In this paper, we examine the convergence in per capita road transport CO2 emissions in a sample of 22 European countries over the 1990–2014 period. We find evidence that European countries converge to one another but depending on certain structural factors (conditional convergence), and that the convergence speed has increased over time. Our results show that this conditional convergence process has led to undesirably high levels of emissions since a large part of the laggard (less polluting) countries have caught up with the leaders (more polluting) countries. We then estimate a conditional convergence dynamic panel data model to examine the structural factors affecting the convergence process and its influence on the convergence speed. Given that in our sample road transport CO2 emissions depend almost exclusively on (fossil) fuel consumption, we focus on the determinants channelled through the use of energy in the sector. By using alternative econometric approaches (pooled-OLS, fixed-effects and instrumental variables), our results show that the convergence process is conditioned by factors such as economic activity and fuel prices, and that some of these factors have a significant effect on the convergence speed. Our results imply that the European transport policy should reduce the differences in structural factor endowments among countries to enable the absolute convergence towards a lower level of emissions in a reasonable period of time.