The role of environmental policy in decarbonization in the United States

Abstract In light of renewed United States of America (USA) commitments to the Paris Agreement, this study dissects the nation’s carbon emission problem by tracking how carbon pricing, regulatory stringency, resource dependence, trade, and global integration interact to shape per capita CO 2 emissions (CPC) from 1990 to 2021. By establishing the intricate dynamics among environmental policies, economic factors, resource dependency, and globalization in shaping the trajectory of carbon emissions, this study modelled the autoregressive distributed lag (ARDL) and the resulted long-run estimates have shown that environmental tax revenue (ETR) is paradoxically associated with increasing the emissions in long-run, hinting at design flaws or lagged adjustment in the USA fiscal instruments. The policy-related predictor, such as environmental policy stringency (EPS), has only been seen as an important player in keeping emissions downward with a significant reduction potential. However, total natural resource rents (TNR), likewise, nudge emissions upward, similar to the globalization’s (GBKOF) impact on the emissions, and trade openness (Trade). Dynamic simulations of ± 10% shocks underline the asymmetry of policy effects: cutting the ETR sparks a sharp increase in emissions, whereas tighter regulation yields great and steadier gains. A highly significant error-correction term (−0.9) signals rapid convergence to equilibrium, and Granger causality tests reveal that the stringent policy has reverse causality with emissions, where the rest of the predictors show forward causality. Only GBKOF has shown significant bidirectional causality. The findings urge USA policymakers to recalibrate environmental tax policies, hard-wire regulatory ambition into federal-state frameworks, and ensure green globalization to diffuse low-carbon technologies to reduce environmental degradation.