Powering the U.S. Energy Transition Amid Uncertainty: Financial Development, Oil Prices, and Climate Policy Uncertainty

This study examines how climate policy uncertainty, financial development, and oil prices shape the United States energy transition, using monthly data from 2005 to 2026. Energy transition is measured by renewable energy consumption, while inflation and industrial production are included as controls. The empirical analysis applies multivariate quantile on quantile kernel regularized least squares to capture state-dependent effects across the distributions of the explanatory variables and energy transition. Preliminary evidence from unit root, normality, and nonlinearity tests supports the use of a flexible distribution-sensitive framework. The results reveal substantial heterogeneity across market states. Climate policy uncertainty records a positive coefficient of 0.0474 at the 0.05 quantile, but turns negative at the 0.40 and 0.45 quantiles, reaching −0.1579 at the 0.45 quantile, before becoming positive again at the 0.95 quantile with a coefficient of 0.0367. Financial development exhibits stronger variation, moving from −0.4659 at the 0.05 quantile and −0.5484 at the median to 0.3575 at the 0.65 quantile and 0.2548 at the 0.95 quantile. Oil prices are positively associated with energy transition at the lower tail, with a coefficient of 0.1118 at the 0.05 quantile, but become negative at higher quantiles, reaching −0.2383 at the 0.90 quantile. Quantile kernel regularized least squares estimates provide complementary robustness evidence. The findings underscore the importance of policy stability, credit allocation, and energy market conditions for renewable energy expansion during changing macroeconomic and transition conditions.