Shifting gears? The CO2-emission impact of Austria’s car purchase and use policies

Policy makers likely have to resort to a mix of complementary policies to achieve global carbon-neutrality targets. To support effective policy design, we analyse the effect of environmental policies targeting vehicle use and purchase decisions on CO 2 emissions from passenger cars in Austria from 1965 to 2019. First, we propose a novel environmental policy stringency index tailored to the Austrian transport sector. Second, we analyse the effect of policies on transport-related CO 2 emissions using a structural vector autoregressive model to account for interdependencies between variables. We find that policies targeting the investment decision to buy new cars reduce emissions in Austria in the long run, but their effect materializes with a delay. In terms of stringency levels implemented, the annual engine-related tax shows the strongest impact, while the new vehicle registration tax shows a weaker effect. In contrast, policies targeting car usage produce immediate effects that fade over time.