Exploring the interplay of renewable energy and carbon dioxide emissions across US sectors through wavelet approach

Abstract

Climate change presents urgent challenges that require simultaneous attention to environmental and economic dimensions. Addressing this global issue involves tackling its root causes and closely monitoring progress in energy transition efforts to formulate effective strategies. Understanding the complexities and opportunities of shifting toward low-carbon economies underscores the necessity for innovative sector-specific policies promoting sustainable energy practices and reducing air pollution. An insightful grasp of how energy transitions impact environmental sustainability is critical, highlighting sector-specific dynamics for informed policy and decision-making. This study employs a wavelet approach to explore the relationship between CO₂ emissions and renewable energy consumption, analyzing both aggregate and sector-specific metrics. This time-varying analysis offers a view of how this relationship evolves over time, providing valuable insights into the effectiveness and outcomes of sustainable energy strategies. Drawing on a dataset spanning from January 1989 to March 2022 in the United States, the research identifies coherence and co-movements across different frequencies and time dimensions. Results underscore the need to tailor energy strategies to sector-specific dynamics, particularly noting that despite the growing adoption of renewable energies in industrial and transportation sectors, their impact on reducing CO₂ emissions remains limited. However, the electric power sector shows a promising potential for reducing emissions through increased renewable energy integration.