This paper presents results from the newly developed DTReM-LV model (Dynamic TRansport emission Model) for CO2 policy mitigation analysis and design in the transport sector in Latvia. Despite the large number of studies analysing transport sector decarbonisation scenarios, previous research has focused much on the analysis of particular policy measures and/or technologies. Authors believe that there is still a gap in studies offering a complex evaluation of policy packages and their effects, especially if one looks at European countries with less advanced economies. This papers aims to fill this gap by providing a comprehensive tool for CO2 emission reduction policy analysis in road transport sector at the country level. The overall aim of the model is to improve the knowledge-base and modelling capacity underpinning policy decision-making in the transport sector. Results from scenario studies suggest that CO2 emission savings range from small savings up to around a third savings in 2030 compared to the baseline scenario. Best results are achieved through improving the acceptance of public transport, implementation of a combined package of policies promoting alternative fuel vehicles and by improving the fuel efficiency and reducing the average age of the car stock.