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[Display omitted] The sustainable development goal of combating climate change highlights the importance of the transportation sector. This study analyzes the impact of eco-innovations in transportation along with traffic-TRF (road, rail, air), infrastructure development, green finances, trade globalization on demand, transport emissions, and greenhouse gas emissions from 1994 to 2020 in EU25 economies. Furthermore, the policy impact of innovation and taxes and renewables are estimated using their interactions. We employed second-generation approaches, PMG-ARDL, Panel Corrected Standard Errors (PCSE) and Granger causality. The results reveal that green transport neutralizes pollutant emissions, and traffic increases emissions by 17.5%, while green taxes limit them to 15.3% and 39.3% in the long and short run. Green taxes are a short-run tool; however, long-run sustainable targets depend on green transport, renewables, and R&D. European economies must revisit their transport and environmental policies, as current progress may not lead toward sustainable transportation. [ABSTRACT FROM AUTHOR]