Zero fare, cleaner air? The causal effect of Luxembourg’s free public transportation policy on carbon emissions

In March 2020, Luxembourg became the first country to make public transport free. We use this unique setting to evaluate the policy’s impact on transport emissions using a synthetic difference-in-differences framework. We use spatial emissions data to construct a panel of NUTS~2 regions in the EU from 2016–2022. We estimate an average reduction of 5.9\% in road transport CO\textsubscript{2} and overall road transport GHG emissions, with larger effects for NO\textsubscript{x}. These findings are robust against confounding shifts in working from home and commuting patterns, vehicle fleet electrification, and the localized effects of the COVID-19 pandemic. Complementary event-study evidence from automatic traffic counters and air quality stations through 2023 corroborates our findings and suggests larger effects on weekends.

Recommended citation: Eibinger, T. and Sachintha, F. (2025). "Zero fare, cleaner air? The causal effect of Luxembourg's free public transportation policy on transport emissions" Working Paper. https://eibinget.github.io/files/zerofare.pdf