Can better institutions drive cleaner energy in the United States? insights from wavelet quantile regression

The transition to clean energy in the United States remains insufficient despite rising environmental concerns and increasing renewable energy adoption. This study investigates whether better institutional quality can effectively drive cleaner energy outcomes by examining the impact of governance alongside key macroeconomic factors. Using quarterly data from 1990 to 2024, the study employs a wavelet quantile regression approach to capture nonlinear and time-varying dynamics across short-, medium-, and long-run horizons. The findings reveal that economic growth, foreign direct investment, and trade openness positively influence renewable energy consumption, particularly over longer time horizons. In contrast, carbon emissions exhibit a negative relationship with renewable energy adoption. Surprisingly, institutional quality shows a predominantly negative effect, suggesting that stronger institutions may reinforce existing fossil fuel-based energy structures rather than accelerate transition. These results highlight the complexity of institutional roles in energy transformation and emphasize the need for targeted regulatory reforms to support renewable energy expansion in the United States.