Technological transport-adjusted environmental Kuznets curve dynamics: New insights for global carbon emission mitigation

Abstract

Transportation services play a key role in the operation of the modern economy, but their environmental impacts are also becoming more and more challenging to reconcile with the global decarbonization targets. This paper investigates the trends in the economic growth-carbon emissions relationship from two complementary angles: the conventional Environmental Kuznets Curve (EKC) and a transport-adjusted EKC that separates the moderating effect of the transport sector’s competitiveness. The Westerlund (2007) cointegration test is conducted on 121 countries categorized regionally based on their emissions data, in the panel between 2014 and 2024, and the results validate the existence of a stable long-run relationship in each panel. We use Driscoll-Kraay estimation as the main methodology, and panel quantile regression (PQR) as a robustness check to account for possible cross-sectional dependence and distributional heterogeneity. We find significant regional variation, with the traditional inverted-U relationship between growth and emissions for Africa and the Americas, and the turning points already surmounted by higher-income economies, but a positive growth-emissions relationship throughout for European countries, a reflection, we show, of the omission of the transport channel. The transport-adjusted model corrects this by showing the same inverted-U pattern for Africa, the Americas and Asia and Pacific at broadly similar turning points as the baseline model but showing that the turning point for transport-sector emissions in Europe is not observed, even at the highest incomes. This comparison shows that a region’s total emissions curve can conceal a long-term mismatch between growth and decarbonization rates, particularly in transport, and that transport-sector decoupling lags behind the economy’s apparent progress in advanced economies.