Greenhouse gas (GHG) emissions are declining in all major sectors in the European Union, with the exception of one sector that has seen a significant increase in GHG emissions over the past decade - transport sector. The European transport sector faces a significant challenge in achieving the decarbonization goal set by the European Green Deal. Although the European Commission is planning to introduce a set of EU-level measures, such as the inclusion of road transport in the EU Emissions Trading System, the progress of greening the transport sector has so far largely depended on national policies. To understand whether European countries are committed to rapidly adapt to low-carbon transport systems, it is crucial to evaluate what progress have national policies achieved so far in moving towards a sustainable transport system. This study used a three-level assessment of transport sector sustainability across European countries. First, this study assessed the overall sustainability level of the transport sector in all European Union Member States and the United Kingdom using the composite sustainability index method for cross-country comparison. Countries were compared using 15 transport indicators grouped into four dimensions (mobility, sustainability, innovation, and environment) based on the latest available data from 2017 obtained from Eurostat, European Commission, and Odysee-Mure databases. Second, in order to identify the dynamics of progress, Logistic Mean Division Index (LMDI) decomposition analysis was conducted to assess the changes in greenhouse gas (GHG) emissions from the transport sector over ten years, taking into account the five main factors: emission intensity effect, renewable energy (RES) transition effect, energy intensity effect, economic growth effect, and population growth effect. Third, to analyse what has impacted the sustainability of the transport sector in countries, the study highlighted several key policies (directions) for decarbonizing transport from the analysis outlining the good practice policies from the best performing countries. The combined results of the composite sustainability index and decomposition analysis revealed significant differences between Nordic, Western, and Eastern European countries, suggesting that different approaches should be taken in developing effective sustainability policies for transport.