The Impact of Oil Price on Carbon Dioxide Emissions in the Transport Sector: The Threshold Effect of Environmental Policy Stringency

Xingong Ding and Mengzhen Wang ()
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Xingong Ding: College of Economics and Management, Beibu Gulf University, Qinzhou 535011, China
Mengzhen Wang: Department of Economics and International Trade, Hubei University of Automotive Technology, Shiyan 442002, China

Energies, 2024, vol. 17, issue 17, 1-17

Abstract: Carbon dioxide emissions from the transport sector make a significant contribution to global greenhouse gases, and understanding the factors that influence these emissions is beneficial for devising effective emission reduction policies. Oil prices are an important influencing factor since the fuel used in the transport sector is primarily based on oil, and fluctuations in oil prices directly impact the sector’s CO 2 emissions. Additionally, environmental policies, as a key means of controlling CO 2 emissions, can affect the relationship between oil prices and CO 2 emissions in the transport sector. Therefore, this study aims to examine the impact of oil prices on CO 2 emissions in the transport sector and explore the nonlinear role of environmental policy stringency in this relationship. Based on data from 27 OECD member countries and 6 non-member countries from 1990 to 2019, we used the environmental policy stringency index as a threshold variable to construct a panel threshold regression model. The analysis results indicate a double-threshold effect: when the environmental policy stringency index is low, the impact of oil prices on CO 2 emissions in the transport sector is not significant. However, when the index reaches the first threshold, the impact of oil prices significantly increases; upon reaching the second threshold, the effect is further intensified. This paper also analyzes the three subindicators—market-based policies, non-market-based policies, and technology support policies—to clarify the distinct impact mechanisms of different types of environmental policies. Finally, based on the research findings, we propose policy recommendations to achieve carbon dioxide emission reduction targets in the transport sector.

Keywords: transport sector; oil prices; environmental policy stringency; OECD; threshold effect (search for similar items in EconPapers)
JEL-codes: Q Q0 Q4 Q40 Q41 Q42 Q43 Q47 Q48 Q49 (search for similar items in EconPapers)
Date: 2024
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