Marginal Effect of Clean Energy, Nuclear Energy-Related R&D Investment, Energy Security Risk, and Policy Uncertainty on the Environment in the USA

Abstract

Environmental problems have been attracting the interest of all relevant parties because of the increasing negative effects on humanity. At this point, further clean, especially nuclear, energy consumption (EC) is seen as a strategic option to combat environmental deterioration (ED). Because clean energy, nuclear energy-related R&D investments (NRD), energy security risk (ESR), as well as increasing economic policy uncertainty (EPU) and trade policy uncertainty (TPU) in recent times have the potential to affect clean EC, this research uncovers the contribution of nuclear EC (NEC) in combating ED by considering also gross domestic product (GDP) and renewable EC (REC) along with the interaction terms of NEC with NRD, ESR, EPU, and TPU. In this vein, the study focuses on the USA case as the biggest economy and leading country in NEC, applies the kernel regularized least squares (KRLS) approach on data from 1974 through 2022, and uses carbon dioxide (CO2) emissions in the main analysis and ecological footprint (EFP) in checking robustness as an ED indicator. The empirical results show that (i) NEC (REC & EPU) is completely ineffective (beneficial) to reduce CO2 emissions; (ii) GDP, ESR, and TPU is almost completely unhelpful to decline CO2 emissions; (iii) the interaction of NRD and EPU with NEC provide a decrease in CO2 emissions; (iv) KRLS approach successfully estimates variations in CO2 emissions around 95%; (v) some variables (e.g., GDP & TPU) have a varying effect across percentiles, whereas others don't. Thus, the study reveals the efficiency of certain factors (e.g., REC, EPU, interaction of NEC with NRD & EPU) on CO2 emissions, whereas GDP, NEC, ESR, & TPU can't be helpful to protect the environment. Accordingly, the study argues policy implications (e.g., allocating free/low cost land, ensuring low cost financing support, removing customs-related barriers to import relevant components to install new clean EC capacity in short term, trying to nationally produce clean EC components in long term, ensuring long-term security of rare earth minerals, as well as preventing the displacement between REC and NEC through simultaneously supporting both REC and NEC to appropriately allocating incentives) for USA policymakers.