The imperativeness of environmental quality in the United States transportation sector amidst biomass-fossil energy consumption and growth

Abstract

The recent historical increase in energy-related CO2 emissions globally have put the United States of America’s (USA) transportation sector in the spotlight, courtesy of the significantly high pollutant emissions from this particular sector. Taking a cue from this, this paper follows sustainable development goals of the United Nations, and investigates the impact of biomass energy consumption, fossil fuel energy consumption, and economic growth (GDP) on carbon dioxide (CO2) emissions in the transportation sector of the USA. In doing so, this study also employs the Gregory-Hansen cointegration, Hatemi-J cointegration, cointegration regression (FMOLS, DOLS, and CCR), and Spectral Breitung-Candelon causality test for the period between 1981Q1 and 2019Q4. The findings reveal that (i) a significant nonlinear cointegration among the environmental quality determinants is observed, using the threshold cointegration test. This test determines the structural breaks endogenously and combines two cointegration tests, namely the Gregory-Hansen Cointegration and Hatemi-J Cointegration tests; (ii) while the use of biomass energy consumption and real GDP have a negative effect on CO2 emissions in the transportation sector, the rising fossil fuel energy consumption is associated with increasing the CO2 emissions that are stemming from the transportation sector; (iii) in the long-run, biomass energy consumption, fossil fuel energy consumption, and real GDP cause CO2 emissions to stem from the transportation sector in the USA at different frequency levels. In general, the current study offers policy insights for the transportation sector of the USA and other similar economies that replicate the same conditions.