Energy price reform to mitigate transportation carbon emissions in oil-rich economies

This study examines the impact of domestic fuel prices, population, and economic activity on transport CO2 emissions, employing Saudi Arabia as a case study. The research uncovers statistically significant long-term associations between these variables. Despite transport CO2 emissions demonstrating slight responsiveness to fuel price alterations, with estimated elasticity values between – 0.1 and – 0.15, the study affirms the relevance and timeliness of the Saudi government's strategy to curtail fuel incentives. Projections for a 2030 scenario, encompassing heightened economic activity aspirations and further escalations in domestic fuel prices to mirror true market costs, revealed a 1.8 percent annual reduction in transport CO2 emissions from 2021 to 2030 compared to a scenario with unchanging fuel prices. The insights from this study bear significance not only for Saudi Arabia but also for other oil-rich nations striving to pave the way toward a sustainable transportation future.

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Published in: Environmental Economics and Policy Studies
License: https://creativecommons.org/licenses/by/4.0
See article on publisher's website: https://dx.doi.org/10.1007/s10018-024-00400-9