<p>Over the last decade, there has been a significant rise in CO₂ emissions from transportation contributing to climate change. This study explores the factors influencing emission levels from the transport sector, such as low-carbon technology adoption, fossil fuel subsidies, public service quality, environmental goods advantage, trade openness, and demographic influences in G20 economies by employing a multi-path Structural Equation Modeling (SEM) approach. Our study integrates socio-economic, environmental, and demographic dimensions through the lens of six theory-driven hypotheses by employing a balanced panel data of 19 G20 Nations from 2010 to 2023 (266 observations) using SEM to assess direct, mediated, and moderated effects. This study reveals that reduced CO₂ emissions cannot be achieved through a single policy but are a systemic interplay among economic incentives, policy support, technological progress, and environmental governance. The study findings show that (1) A one-standard-deviation increase in low-carbon technology adoption led to a 0.032 standard-deviation decrease in CO₂ emissions in the transport sector. (2) Fossil fuel subsidies are directly linked to increased emissions in the transport sector, indicating a significant positive relationship (β = 0.026, <i>p</i> &lt; 0.05). (3) The results indicate that electric vehicle adoption significantly reduces transport emissions (β =  − 0.163, <i>p</i> &lt; 0.001). Lower transport emissions are further linked to comparative advantages in environmental goods that stem from structural aspects rather than technology, and (4) Trade openness correlates with reduced transport-sector CO₂ emissions (average β ≈ − 0.237), while public service quality shows a positive relationship with emissions (average β ≈ 0.158).</p>