Understanding the challenge of decoupling transport-related CO2 emissions from economic growth in developing countries

Abstract

The transition to net zero requires full decarbonization of the transport sector, currently one of the leading sources of emissions globally. Transport-related carbon emissions are growing fastest in the developing world. This makes it particularly critical to understand whether low- and middle-income countries are making progress towards decoupling transport sector emissions from economic growth, as well as the extent to which their current emissions trajectory is being shaped by structural factors versus more amenable policy choices. This paper assembles and analyzes a comprehensive dataset on transport-related emissions with uniquely wide coverage of developing countries. The paper employs the Tapio decoupling model to demonstrate that only 36 percent of developing countries achieved (mainly relative) decoupling for transport-related carbon emissions over the period 1990-2018, compared to 70 percent of high-income countries. To shed light on the factors driving transport-related carbon emissions, the paper conducts both index-decomposition and econometric analysis. Index decomposition reveals that there have been only relatively modest reductions in the transport emissions intensity of GDP since 1990, and that these have not been large enough to offset economic growth in middle-income countries and demographic growth in low-income countries. Regression analysis further shows that urbanization and industrialization are important correlates of transport-related emissions, while the correlation of policy choices with reduced emissions is rather weak. Overall, developing countries are lagging-behind in the decoupling of transport-related emissions, and accelerating progress will be particularly challenging due to the very low baseline of transport emissions per capita, and the strong influence of structural factors on emissions trajectories.

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