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

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 a uniquely broad coverage of developing countries. The paper employs the Tapio decoupling model over the period 1990-2018 to demonstrate that high-income countries are almost twice as likely to have reached relative decoupling as low and middle-income countries (70 vs 36 percent, while the latter are almost twice as likely to be in a state of negative decoupling as the former (17 versus 41 percent). This paper conducts index-decomposition and econometric analysis to shed light on the factors driving transport-related carbon emissions. 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.