Powering energy transition across market states under geopolitical risk, climate policy uncertainty, and financial conditions

The transition toward renewable energy is increasingly shaped not only by economic activity but also by uncertainty, geopolitical pressures, and changing financial conditions. Against this backdrop, this study investigates the nonlinear and distribution-dependent determinants of U.S. renewable energy consumption such as industrial production (INDP), climate policy uncertainty (CPU), geopolitical risk (GPR), and financial conditions (FC), while electricity prices (EP) and the federal funds rate (IR) are included as controls using monthly observations from January 2005 to April 2026. The analysis employs novel multivariate quantile-on-quantile kernel regularized least squares (MQQKRLS), and QKRLS estimates are used for robustness. The results reveal marked state dependence. Industrial production is generally supportive of renewable energy consumption at low-to-middle quantiles but becomes adverse at very high industrial-production states. Climate policy uncertainty is most supportive at low uncertainty levels and becomes fragmented or negative as uncertainty rises. Geopolitical risk produces alternating effects, with positive responses at both relatively low and very high-risk states. Tighter financial conditions are most detrimental at intermediate quantiles, although the effect weakens or reverses in the upper tail. The study suggests policy implications based on these results. Not applicable.