Do environmental technologies help to reduce transport sector CO2 emissions? Evidence from the EU15 countries

A growing number of studies empirically investigate the nexus between CO2 emissions and technological progress in the existing literature. However, these studies largely ignore sectoral-level differences. We argue that as the contribution of different sectors to carbon emissions are not equal, the environmental impact of technological progress might vary across sectors. The main purpose of this paper is to fill this research gap for the transport sector. To this end, we specifically focus on the EU15 countries over the period between 1977 and 2015. In order to empirically analyze this link, we use the Mean Group, Common Correlated Effects Mean Group, and the Augmented Mean Group estimators. Unlike the earlier country-level empirical studies, our findings reveal that environmental technologies have a statistically insignificant positive effect on CO2 emissions from the transport sector. Moreover, while economic growth and energy consumption lead to more pollution, the effect of urbanization on emissions is not statistically significant. It is recommended that the policymakers of EU15 countries should pay special attention to the transport sector for becoming a carbon-neutral economy by 2050.