Impact of climate policy uncertainty on energy efficiency in the United States

The persistent occurrence of extreme weather is a tip-off to impending climate change challenges and the need to focus on maintaining sustainable development. Climate policy uncertainty (CPU) is a vital factor for energy efficiency (EE) in the United States (US). The US wields substantial influence in the world's financial and economic sphere, and any changes in the country's climate policies can have a disruptive influence on nations worldwide. In recent times, US climate policies have fluctuated significantly, holding to current global realities. Therefore, the current study assesses the impact of CPU on EE in the US using annual time series data from 1987 to 2023. To address the instability and nonlinearity inherent in time series data, we utilize the novel Quantile on Quantile Kernel-Based Regularized Least Squares (QQKRLS) technique, as introduced by Adebayo et al. (2024), for data analysis. The QQKRLS findings unveil a predominantly positive relationship between EE and CPU, yet the strength of this relationship varies considerably across different quantiles. A relatively weak connection is present in the lower quantiles of both variables. Thus, affirming the EE-enhancing role of the CPU in the US. It is recommended that policymakers implement strategies like aligning climate policies across different government levels to improve confidence in the direction of environmental policies and climate actions.