IDEAS home Printed from https://ideas.repec.org/a/eee/trapol/v166y2025icp124-134.html
   My bibliography  Save this article

Fuelling the low-carbon transportation sector in emerging economies: Role of institutional quality, environmental tax, green technology innovation and biofuel

Author

Listed:
  • Behera, Biswanath
  • Sahoo, Malayaranjan
  • Sethi, Litu
  • Das, Aurolipsa
  • Sethi, Narayan
  • Ahmad, Mahmood

Abstract

Aligning with the United Nations SDGs, global efforts to enrich environmental quality can only be realized by decarbonizing carbon-intensive sectors, including transportation. Although emerging economies contribute substantially to the world economy, they struggle to achieve environmental sustainability with increasing industrialization, urban mobility, and transportation. Therefore, this study analyses whether the environmental tax (ET), green technology innovation (GTI), and biofuel use (BF) abate emissions from the transportation sector, considering 11 emerging economies from 2004 to 2022 using the dynamic fixed effect and CS-ARDL estimation techniques. The empirical analysis also discloses the imperative role of institutional quality (IQ) by integrating IQ's direct and moderation effects with GTI, BF, and ET. The empirical evidence highlights that while BF (−0.138), GTI (−0.074), and IQ (−1.303) ameliorate the decarbonization process, ET (−0.123) does not significantly decarbonize the transportation sector in the long-run. Furthermore, the results disclose an important role of IQ in moderating the emissions mitigation effectiveness of GTI (−0.174), BF (−0.129), and ET (−0.193) in emerging economies, indicating that benevolent institutional support is crucial for the sustainable transformation of the transportation sector in the long-run. Thus, this study suggests including policy mandates for generating second-generation biofuels, modernization of transportation infrastructure through green innovations, and strengthening institutional settings through a decentralized governance system to realize higher benefits and environmental goals.

Suggested Citation

  • Behera, Biswanath & Sahoo, Malayaranjan & Sethi, Litu & Das, Aurolipsa & Sethi, Narayan & Ahmad, Mahmood, 2025. "Fuelling the low-carbon transportation sector in emerging economies: Role of institutional quality, environmental tax, green technology innovation and biofuel," Transport Policy, Elsevier, vol. 166(C), pages 124-134.
    • Handle: RePEc:eee:trapol:v:166:y:2025:i:c:p:124-134
    DOI: 10.1016/j.tranpol.2025.03.006
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0967070X25001015
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.tranpol.2025.03.006?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    References listed on IDEAS

    as
    1. Emad Kazemzadeh & José Alberto Fuinhas & Narges Salehnia & Matheus Koengkan & Masoud Shirazi & Fariba Osmani, 2024. "Factors driving CO2 emissions: the role of energy transition and brain drain," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 26(1), pages 1673-1700, January.
    2. Erik Haites, 2018. "Carbon taxes and greenhouse gas emissions trading systems: what have we learned?," Climate Policy, Taylor & Francis Journals, vol. 18(8), pages 955-966, September.
    3. Djellouli, Nassima & Abdelli, Latifa & Elheddad, Mohamed & Ahmed, Rizwan & Mahmood, Haider, 2022. "The effects of non-renewable energy, renewable energy, economic growth, and foreign direct investment on the sustainability of African countries," Renewable Energy, Elsevier, vol. 183(C), pages 676-686.
    4. Richard S. J. Tol, 2014. "Correction and Update: The Economic Effects of Climate Change," Journal of Economic Perspectives, American Economic Association, vol. 28(2), pages 221-226, Spring.
    5. Chen, Ruotian & Yang, Hangjun & Wang, Kun & Jiang, Changmin, 2024. "Impacts of a sustainable aviation fuel mandate on airline competition — Full-service carrier vs. low-cost carrier," Transportation Research Part B: Methodological, Elsevier, vol. 190(C).
    6. Salim, Ruhul A. & Hassan, Kamrul & Shafiei, Sahar, 2014. "Renewable and non-renewable energy consumption and economic activities: Further evidence from OECD countries," Energy Economics, Elsevier, vol. 44(C), pages 350-360.
    7. Zheng, Shiyuan & Jiang, Changmin & Fu, Xiaowen & Ge, Ying-En & Shu, Jia, 2022. "Subsidies for green technology adoption under uncertain demand and incomplete information," Omega, Elsevier, vol. 112(C).
    8. Geissler, Caleb H. & Ryu, Joonjae & Maravelias, Christos T., 2024. "The future of biofuels in the United States transportation sector," Renewable and Sustainable Energy Reviews, Elsevier, vol. 192(C).
    9. Dolge, Kristiāna & Barisa, Aiga & Kirsanovs, Vladimirs & Blumberga, Dagnija, 2023. "The status quo of the EU transport sector: Cross-country indicator-based comparison and policy evaluation," Applied Energy, Elsevier, vol. 334(C).
    10. Stef, Nicolae & Başağaoğlu, Hakan & Chakraborty, Debaditya & Ben Jabeur, Sami, 2023. "Does institutional quality affect CO2 emissions? Evidence from explainable artificial intelligence models," Energy Economics, Elsevier, vol. 124(C).
    11. Muhammad Shahzad Sardar & Nabila Asghar & Hafeez ur Rehman, 2024. "Moderation of competitiveness in determining environmental sustainability: economic growth and transport sector carbon emissions in global perspective," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 26(1), pages 1481-1503, January.
    12. Tol, Richard S.J., 2017. "The structure of the climate debate," Energy Policy, Elsevier, vol. 104(C), pages 431-438.
    13. Alataş, Sedat, 2022. "Do environmental technologies help to reduce transport sector CO2 emissions? Evidence from the EU15 countries," Research in Transportation Economics, Elsevier, vol. 91(C).
    14. Nida Khan & Kumarasamy Sudhakar & Rizalman Mamat, 2021. "Role of Biofuels in Energy Transition, Green Economy and Carbon Neutrality," Sustainability, MDPI, vol. 13(22), pages 1-30, November.
    15. Panayotou, Theodore, 1997. "Demystifying the environmental Kuznets curve: turning a black box into a policy tool," Environment and Development Economics, Cambridge University Press, vol. 2(4), pages 465-484, November.
    16. Litu Sethi & Biswanath Behera & Narayan Sethi, 2024. "Do green finance, green technology innovation, and institutional quality help achieve environmental sustainability? Evidence from the developing economies," Sustainable Development, John Wiley & Sons, Ltd., vol. 32(3), pages 2709-2723, June.
    17. Kong, Qingxu & Jiang, Changmin & Ng, Adolf K.Y., 2021. "The economic impacts of restricting black carbon emissions on cargo shipping in the Polar Code Area," Transportation Research Part A: Policy and Practice, Elsevier, vol. 147(C), pages 159-176.
    18. Nordin, Ida & Elofsson, Katarina & Jansson, Torbjörn, 2024. "Cost-effective reductions in greenhouse gas emissions: Reducing fuel consumption or replacing fossil fuels with biofuels," Energy Policy, Elsevier, vol. 190(C).
    19. Yuriy Bilan & Yaryna Samusevych & Serhiy Lyeonov & Marcin Strzelec & Iryna Tenytska, 2022. "The Keys to Clean Energy Technology: Impact of Environmental Taxes on Biofuel Production and Consumption," Energies, MDPI, vol. 15(24), pages 1-22, December.
    20. Okumus, İlyas & Guzel, Arif Eser & Destek, Mehmet Akif, 2021. "Renewable, Non-renewable Energy Consumption and Economic Growth Nexus in G7: Fresh Evidence from CS-ARDL," MPRA Paper 114136, University Library of Munich, Germany.
    21. Jiang, Changmin & Yang, Hangjun, 2021. "Carbon tax or sustainable aviation fuel quota," Energy Economics, Elsevier, vol. 103(C).
    22. Lundberg, Liv & Cintas Sanchez, Olivia & Zetterholm, Jonas, 2023. "The impact of blending mandates on biofuel consumption, production, emission reductions and fuel prices," Energy Policy, Elsevier, vol. 183(C).
    23. Su, Chi Wei & Qin, Meng & Chang, Hsu-Ling & Țăran, Alexandra-Mădălina, 2023. "Which risks drive European natural gas bubbles? Novel evidence from geopolitics and climate," Resources Policy, Elsevier, vol. 81(C).
    24. Lau, Lin-Sea & Choong, Chee-Keong & Eng, Yoke-Kee, 2014. "Carbon dioxide emission, institutional quality, and economic growth: Empirical evidence in Malaysia," Renewable Energy, Elsevier, vol. 68(C), pages 276-281.
    25. Jiang, Changmin, 2021. "Aviation tax and railway subsidy: An integrated policy," Transportation Research Part B: Methodological, Elsevier, vol. 146(C), pages 1-13.
    26. Amin, Nabila & Shabbir, Muhammad Salman & Song, Huaming & Farrukh, Muhammad Umar & Iqbal, Shahid & Abbass, Kashif, 2023. "A step towards environmental mitigation: Do green technological innovation and institutional quality make a difference?," Technological Forecasting and Social Change, Elsevier, vol. 190(C).
    27. Khurshid, Adnan & Huang, Yupei & Cifuentes-Faura, Javier & Khan, Khalid, 2024. "Beyond borders: Assessing the transboundary effects of environmental regulation on technological development in Europe," Technological Forecasting and Social Change, Elsevier, vol. 200(C).
    28. Chiaramonti, David & Talluri, Giacomo & Scarlat, Nicolae & Prussi, Matteo, 2021. "The challenge of forecasting the role of biofuel in EU transport decarbonisation at 2050: A meta-analysis review of published scenarios," Renewable and Sustainable Energy Reviews, Elsevier, vol. 139(C).
    29. Valera, Hardikk & Agarwal, Avinash Kumar, 2025. "India's growing Ethanol Blending Program and implications of scalable and sustainable Methanol Blending Program for transport sector," Transport Policy, Elsevier, vol. 165(C), pages 179-193.
    30. Zheng, Shiyuan & Wang, Chunan & Jiang, Changmin, 2024. "Carrot or stick? Environmental and welfare implications of sustainable aviation fuel policies," Transportation Research Part B: Methodological, Elsevier, vol. 188(C).
    31. Rehman, Faheem Ur & Islam, Md. Monirul & Miao, Qing, 2023. "Environmental sustainability via green transportation: A case of the top 10 energy transition nations," Transport Policy, Elsevier, vol. 137(C), pages 32-44.
    32. Behera, Puspanjali & Behera, Biswanath & Sethi, Narayan, 2024. "Assessing the impact of fiscal decentralization, green finance and green technology innovation on renewable energy use in European Union countries: What is the moderating role of political risk?," Renewable Energy, Elsevier, vol. 229(C).
    33. Kwaku Addai & Souha Hanna Al Geitany & Seyed Alireza Athari & Panteha Farmanesh & Dervis Kirikkaleli & Chafic Saliba, 2024. "Do Environmental Tax and Energy Matter for Environmental Degradation in the UK? Evidence from Novel Fourier-Based Estimators," Energies, MDPI, vol. 17(22), pages 1-18, November.
    34. Shao, Jing & Jiang, Changmin & Cui, Yinglong & Tang, Yao, 2023. "A game-theoretic model to compare charging infrastructure subsidy and electric vehicle subsidy policies," Transportation Research Part A: Policy and Practice, Elsevier, vol. 176(C).
    35. Gabriel Santos Rodrigues & João Gilberto Mendes dos Reis & Olga Orynycz & Karol Tucki & Sivanilza Teixeira Machado & Helcio Raymundo, 2023. "A Study on the Viability of Adopting Battery Electric Vehicles in Bus Rapid Transit in Brazil Using the AHP Method," Energies, MDPI, vol. 16(13), pages 1-17, June.
    36. Canitez, Fatih, 2020. "Transferring sustainable urban mobility policies: An institutional perspective," Transport Policy, Elsevier, vol. 90(C), pages 1-12.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Diaz Pranita & Sri Sarjana, 2025. "A Conceptual Approach to Defining a Carbon Tax in the Transport Sector in Indonesia: Economic, Social, and Environmental Aspects," Energies, MDPI, vol. 18(13), pages 1-33, July.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Manta, Alina Georgiana & Doran, Nicoleta Mihaela & Bădîrcea, Roxana Maria & Badareu, Gabriela & Țăran, Alexandra Mădălina, 2023. "Does the implementation of a Pigouvian tax be considered an effective approach to address climate change mitigation?," Economic Analysis and Policy, Elsevier, vol. 80(C), pages 1719-1731.
    2. Wang, Yingzhi & Jiang, Xiushan & Ma, Jihui, 2025. "Emissions reduction of air transport and high-speed rail with policy intervention considering the modal competition in a network market: Environment and welfare implications," Transport Policy, Elsevier, vol. 162(C), pages 379-395.
    3. Xu, Yuchao & Zhang, Yahua & Deng, Xin & Lee, Seung-Yong & Wang, Kun & Li, Linbo, 2025. "Bibliometric analysis and literature review on sustainable aviation fuel (SAF): Economic and management perspective," Transport Policy, Elsevier, vol. 162(C), pages 296-312.
    4. Wu, Jiaxuan & Sun, Xiaoqian & Xu, Yifan & Jiang, Changmin & Wandelt, Sebastian, 2025. "Hydrogen airport location selection and fleet assignment under policy considerations," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 197(C).
    5. Yemane Wolde-Rufael & Eyob Mulat-weldemeskel, 2023. "Effectiveness of environmental taxes and environmental stringent policies on CO2 emissions: the European experience," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 25(6), pages 5211-5239, June.
    6. Josef Gotvald, 2024. "The role of environmental taxes and other political instruments on the road to climate neutrality [Role environmentálních daní a dalších politických nástrojů na cestě za klimatickou neutralitou]," Český finanční a účetní časopis, Prague University of Economics and Business, vol. 2024(1), pages 47-76.
    7. Wang, Zhuowei & Yu, Jiangbo (Gabe) & Chen, Anthony & Fu, Xiaowen, 2024. "Subsidy policies towards zero-emission bus fleets: A systematic technical-economic analysis," Transport Policy, Elsevier, vol. 150(C), pages 1-13.
    8. Yue, Shuai & Liao, Weijun & Ji, Qing & Wang, Chunan, 2025. "The effect of financial performance on aviation carbon emissions," Journal of Air Transport Management, Elsevier, vol. 126(C).
    9. Jiang, Changmin & Liu, Yan, 2025. "The role of sustainable aviation fuel in CORSIA: An economic analysis," Energy Economics, Elsevier, vol. 143(C).
    10. Yang, Shuangpeng & umar, Muhammad, 2022. "How globalization is reshaping the environmental quality in G7 economies in the presence of renewable energy initiatives?," Renewable Energy, Elsevier, vol. 193(C), pages 128-135.
    11. Jiang, Weiling & Jiang, Keyao & Zhang, Zhihao & Martek, Igor & Ruan, Congping & Lu, Gan, 2025. "The impact mechanism of political risk on foreign renewable energy investment in developing countries: The mediating role of vulnerability," Energy Policy, Elsevier, vol. 198(C).
    12. Junaid Ashraf & Aiman Javed & Muhammad Asif Khan, 2025. "An analysis of the environmental consequences of natural resources and economic openness: the moderation role of institutional quality," Economic Change and Restructuring, Springer, vol. 58(3), pages 1-24, June.
    13. Wang, Erhong & Padhan, Hemachandra & Pruseth, Sujit Kumar & Ma, Junwei, 2024. "Government efficiency, green technology, and ecological footprint: Strategic framework for natural resource management efficiency targets," Resources Policy, Elsevier, vol. 91(C).
    14. Carfora, Alfonso & Scandurra, Giuseppe, 2019. "The impact of climate funds on economic growth and their role in substituting fossil energy sources," Energy Policy, Elsevier, vol. 129(C), pages 182-192.
    15. Fotio, Hervé Kaffo & Poumie, Boker & Baida, Louise Angèle & Nguena, Christian Lambert & Adams, Samuel, 2022. "A new look at the growth-renewable energy nexus: Evidence from a sectoral analysis in Sub-Saharan Africa," Structural Change and Economic Dynamics, Elsevier, vol. 62(C), pages 61-71.
    16. Priyanka Pradhan & Puspanjali Behera & Litu Sethi & Badri Narayan Rath & Narayan Sethi, 2025. "Can green growth and ecological footprint mitigation go hand on hand? The role of sectoral energy consumption, green innovation, and greenfield investment in emerging economies," Economic Change and Restructuring, Springer, vol. 58(2), pages 1-27, April.
    17. Minglin Wang & Shaolong Zeng & Yunzhe Wang & Zhengxia He, 2022. "Does Clean Energy Use Have Threshold Effects on Economic Development? A Case of Theoretical and Empirical Analyses from China," IJERPH, MDPI, vol. 19(15), pages 1-18, August.
    18. Zheng, Shiyuan & Wang, Chunan & Jiang, Changmin, 2024. "Carrot or stick? Environmental and welfare implications of sustainable aviation fuel policies," Transportation Research Part B: Methodological, Elsevier, vol. 188(C).
    19. Dissanayake, Sumali & Mahadevan, Renuka & Asafu-Adjaye, John, 2020. "Evaluating the efficiency of carbon emissions policies in a large emitting developing country," Energy Policy, Elsevier, vol. 136(C).
    20. Jimoh S. Ogede & Musa O. Oduola & Hammed O. Tiamiyu, 2024. "Income inequality and carbon dioxide (CO2) in sub-Saharan Africa countries: the moderating role of financial inclusion and institutional quality," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 26(7), pages 18385-18409, July.

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:trapol:v:166:y:2025:i:c:p:124-134. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/wps/find/journaldescription.cws_home/30473/description#description .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.