Decarbonisation of European Union road freight transport: Evidence from dynamic panel modelling

Road freight transport is a major contributor to greenhouse gas (GHG) emissions in the European Union, yet the relationships between economic growth, transport energy-use performance, and emissions remain insufficiently understood, particularly in the context of cross-country differences in environmental conditions and climate policy. While existing research has extensively examined the energy-growth-environment nexus, limited attention has been given to freight transport as a distinct sector and to heterogeneity across EU countries. This study develops an empirical framework to examine both direct and indirect links between economic growth, transport energy-use performance, and emissions. Using panel data for 24 EU countries over the period 1990-2021, the analysis applies Dynamic Common Correlated Effects (DCCE) models, complemented by clustering and mediation techniques, to account for cross-country heterogeneity and transmission mechanisms. The results show that economic growth significantly increases GHG emissions, while improvements in transport energy-use performance reduce emissions, especially in less environmentally advanced countries. At the same time, improved transport energy-use performance partially offsets the impact of economic growth, supporting the presence of a mediation mechanism. Moreover, the effect of economic growth on emissions is weaker in countries with more advanced green transport and policy profiles, indicating partial decoupling between growth and environmental pressure. These findings suggest that economic growth alone cannot ensure emission reductions in the road freight sector. Effective decarbonisation therefore requires a combination of technological improvements and well-designed policy measures that promote more efficient energy use and reduce emission intensity, including environmental taxation and fleet modernisation incentives.