Do environmental policy stringency and green energy mediate the relationship between economic policy uncertainty and environmental sustainability in OECD countries?

In a context of increasing economic volatility and recurrent policy adjustments, economic policy uncertainty (EPU) has intensified, raising questions about its impact on environmental sustainability. This study investigates how EPU reshapes the relationship between economic growth and environmental quality in 16 OECD economies during 1995–2021, incorporating the mediating role of environmental policy stringency (EPS) and green energy (GE) within a theoretical framework based on the Environmental Kuznets Curve. Complementary panel techniques, such as Pooled OLS, FGLS, and System GMM, are used to control for endogeneity, unobserved heterogeneity, and time dynamics. The results show that EPU significantly reduces the ecological footprint, indicating that, in contexts of high institutional quality, uncertainty can be associated with environmental improvements. This effect is not direct but operates through institutional and technological channels, by strengthening environmental regulation and reallocating investment toward clean technologies. Furthermore, the existence of an inverted U-shaped ecological footprint (EKC) and an inertial component is confirmed, while economic globalization contributes to its reduction, whereas environmental taxes are not individually significant. Robustness analyses, including Lewbel-type instruments and alternative measures of variables such as the load capacity factor, as well as the findings themselves, confirm the stability of the results. Overall, the findings indicate that the environmental impact of uncertainty is associated with institutional quality and technological development, suggesting that policies aimed at strengthening environmental regulation and promoting the energy transition can channel their effects toward improved environmental sustainability.