Driving towards a sustainable future: Transport sector innovation, climate change and social welfare

Abstract

The growing population and rising need for transportation amplify emissions, elevating the corresponding welfare costs. This research examines the effect of transportation sector Innovation in mitigating emissions and decreasing welfare costs. The study selected the 15 most polluted European economies from 1994 to 2020 and employed second-generation econometric approaches. The study used the Westerlund panel co-integration technique and pooled mean group estimate strategy to examine the long and short-term relationships. Additionally, a fixed and random-effects model is employed to assess the consistency of the results. The research utilized the Granger causality methodology to investigate the outcomes specific to each country. The findings indicate that the implementation of new technologies for transport has a restraining effect on demand, transportation, and overall emissions in both the long and short term. Moreover, the interaction of renewable technologies with green energy profoundly impacts the European economies. The results show that environmental degradation increases temperature and rainfall uplift welfare costs. The country-specific results demonstrate a significant causal association among variables in the major economies, endorsing the effect of innovation in mitigation efforts and climate change on surging the welfare cost. The results suggest that green transport using renewable energies is the way to achieve carbon neutrality, decrease welfare costs, and 2050 sustainable transport targets.