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ABSTRACT The transition to renewable energy sources is imperative for sustainable economic growth (GDP) and environmental resilience. The present study examines the impact of economic policy uncertainty (EPU), geopolitical risk (GPR), financial market uncertainty (FMU), GDP, trade openness (TRA), and environmental, social, and governance‐related uncertainty (ESGU) on renewable energy transition (RET) in the United States from 2002 to 2023. The utilization of nonlinear approaches, namely, kernel‐based regularized least squares (KRLS), and Rényi‐based effective transfer entropy (RETE), facilitates the revelation of heterogeneous relationships and causal influences among these factors. The empirical findings reveal that ESGU, FMU, EPU, GPR, and TRA variables have positive and significant effects on the transition to renewable energy, whereas GDP has a negative and significant effect on the transition, especially according to the RETE analysis that takes into account outliers and nonlinear interactions. On the other hand, average marginal effect (AME) results assessing the conditional mean effects reveal that ESGU and FMU have negative and significant effects on the transition to renewable energy, whereas EPU, GPR, GDP, and TRA variables have positive and significant effects on the transition. These findings highlight the importance of reducing market uncertainty and fostering stable policy environments to accelerate the RET. Our study contributes to literature by employing advanced nonlinear methodologies, offering a nuanced understanding of the dynamic interactions influencing renewable energy adoption. Policy recommendations include enhancing regulatory stability, promoting sustainable investments, and taking financial and GPR into account to facilitate a smoother transition toward a greener economy.
Özkan et al. (Mon,) studied this question.