Impact of the environmental taxes on reduction of emission from transport in Latvia

Abstract

Transport has a significant contribution to climate change and many post-Soviet republics, including Latvia, struggle to decrease these emissions to reach carbon neutrality by 2050. In this paper, we have focused on the assessment of environmental taxes (energy, transport) as the most important economic instrument used in Latvia’s environmental policy to reduce transport-related emissions and predict road transport decarbonisation pathways using the regression analyses. The results show that existing environmental taxes in Latvia reduce transport emissions and also have a significant fiscal impact. The research confirms that fuel consumption has the most significant effect on transport emissions. To achieve a decarbonisation target, a significant reduction in fossil fuel consumption is required. This can be achieved by increasing taxes on fuel, supporting environmentally friendly infrastructure as well as increasing motivation for electric car use and social innovation (e.g. modal shift, car-pooling, teleconferencing) to decrease the demand for mobility.