Do the United States'fiscal decentralization, money supply, and environmental policies promote the clean energy transition?

Haseeb M., Hossain M. E., Hossain M. R., Rehman M. Z., BEKUN F. V.

Environment, Development and Sustainability, 2025 (SCI-Expanded) identifier

  • Publication Type: Article / Article
  • Publication Date: 2025
  • Doi Number: 10.1007/s10668-025-06433-8
  • Journal Name: Environment, Development and Sustainability
  • Journal Indexes: Science Citation Index Expanded (SCI-EXPANDED), Scopus, International Bibliography of Social Sciences, PASCAL, ABI/INFORM, Agricultural & Environmental Science Database, Aquatic Science & Fisheries Abstracts (ASFA), BIOSIS, Business Source Elite, Business Source Premier, CAB Abstracts, Geobase, Greenfile, Index Islamicus, Pollution Abstracts, Veterinary Science Database, Civil Engineering Abstracts
  • Keywords: Eco-innovation, Environmental policy stringency, Fiscal decentralization, Monetary policy, Renewable energy
  • Istanbul Gelisim University Affiliated: Yes

Abstract

Following the “Glasgow Climate Change Conference (COP26)” in 2021, policymakers pay more light on the role of cleaner fuels in curbing environmental destruction. Despite being the second-largest user of renewable energy, the United States (USA) has not given much attention to the factors that determine “renewable energy consumption (RENC)”. In this milieu, this study considers some unique determinants such as “monetary policy, fiscal decentralization, eco-innovation, economic growth, CO2e, the environmental policy stringency index, and economic policy uncertainty” to explore RENC. The current study uses wavelet coherence, as well as partial and multiple wavelet coherence techniques, with quarterly data extending from 1990Q1 to 2020Q4. The wavelet coherence findings show a significant long-and medium-term in-phase connection between RENC, fiscal decentralization, and economic growth, whereas money supply shows a significant in-phase connection in the medium-term frequency. Besides, increased carbon emissions, environmental policy stringency, and eco-innovation lead to higher RENC in the short-medium term. The analysis of partial and multiple are somewhat like the findings of wavelet coherence in different frequency and time domains. These results have significant policy ramifications for promoting RENC and achieving the “UN Sustainable Development Goals (UNSDGs) 7 (affordable clean energy)”. From a policy lens, the USA should decentralize its fiscal policy at the state level, allocating more funds to clean technology research and development. Additionally, sufficient financial resources for increasing investment in the renewable energy industry and stricter environmental regulations may increase the usage of clean energy.