Nonlinear impacts of environmental transport taxes and biofuel consumption on greenhouse emissions in the four largest European Union countries

Abstract Incompatible with the pioneering role of the transportation sector in greenhouse gas (GHG) emissions, this research mainly deals with GHG emissions from the transport sector. In this context, the study looks at the four leading European Union (EU) countries (i.e., Germany, France, Italy, and Spain), investigates emissions from their sub‐types of the transport sector (i.e., aviation, rail, and road), uses environmental transport taxes (ETAX) as the main explanatory variable in the bivariate modeling, and considers biofuel consumption (BIO) as a control factor in the multivariate modeling. The study uses monthly data between 2004 and 2022, bivariate and multivariate quantile‐on‐quantile regression as well, and Granger causality‐in‐quantiles as the main approaches. The results demonstrate that (i) ETAX is completely inefficient on aviation and road transport GHG emissions; (ii) ETAX curbs rail transport GHG emissions in France at only middle quantiles; (iii) with the moderating impact of BIO, ETAX becomes effective in declining aviation, rail, and road transport GHG emissions (iv) BIO has a certainly reversing impact on the nexus between ETAX and transport sector GHG emissions. Overall, the study highlights that ETAX has a stand‐alone ineffective impact in curbing transport sector GHG emissions, but BIO has a certain moderating contribution in this manner. Thus, the study strongly recommends taking further actions, such as more use of BIO as in the case of this study, to support ETAX practices in combating GHG emissions for the EU countries.