Rising Incomes, Transport Demand, and Sector Decarbonization

As income increases, people become more mobile and spend more on carbon-intensive transportgoods and services. This paper estimates income elasticities of transport consumption using household survey data for 18countries, which are then used to simulate transport carbon footprint and carbon inequality by 2035. It first shows thatin low- and middle-income countries (i) many households mostly walk and do not use transport services, (ii) incomeelasticity of private transport expenditure is high, and (iii) many households do not own a car. Both results suggesta future steep growth of emissions as incomes expand. Using estimates of income elasticities of vehicle ownership andvehicle use, the paper shows that carbon footprint will increase on average by 52 percent for these countries asincomes reach their 2035 levels. Finally, it decomposes carbon dioxide emissions along the within-country incomedistribution. Car ownership and carbon dioxide emissions are highly concentrated at the top. By 2035, carbon inequalitywill increase in some countries but decrease in others. Such results can be used for modeling future distributionalimplications of climate and energy policies.