The Effectiveness of Policy Measures to Reduce Co2 Emissions from Passenger Cars in Austria

Passenger transport plays a crucial role in achieving climate-neutrality. While a switch to zero-emission vehicles is a crucial part in this process, policy makers likely have to resort to a differentiated mix of complementary policy measures to achieve global targets on climate-neutrality. To help policy makers design effective measures, we analyse the effect of environmental policies on CO2 emissions from passenger cars in Austria from 1965-2019. In a first step, we propose an environmental policy stringency index for the Austrian transport sector for the period 1950-2019. In a second step, we analyse the effect of different policies on transport-related CO2 emissions in a structural vector autoregressive model. This allows us to control for possible interdependencies between the variables. We find that taxes on vehicle-related emissions and policies that influence the usage of cars (through, e.g., speed limits, car-free days, road pricing) can significantly reduce CO2 emissions and contribute to an accelerated transition towards a carbon-neutral society. Among tax-based policies, we find emission-based taxes on new vehicles to be most effective. Finally, our results indicate that more efficient fuels can reduce emissions from existing vehicles at a limited magnitude