Financial development and the U.S. renewable energy transition: A quantile-on-quantile ARDL analysis across geothermal, solar, wind, and biomass consumption

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The global energy transition requires synergy between financial systems and technology specific pathways to achieve sustainable development goals. This study investigates the enabling role of financial development in the United States renewable energy transition by examining impacts on disaggregated consumption patterns. Unlike literature focusing on aggregate metrics, this research evaluates geothermal, solar, wind, and biomass consumption individually. This granularity captures the inherent heterogeneity across energy sectors, essential for informed energy planning and management. Utilizing monthly data from January 1989 to May 2025, the relationship is analyzed through the Quantile on Quantile Autoregressive Distributed Lag (QQARDL) method. This approach allows long run and short run effects of financial development to vary across conditional distributions of both financial depth and energy consumption levels. Empirical results indicate that financial development significantly promotes renewable energy consumption in the long run across all analyzed types, although magnitudes vary considerably. Strongest positive associations are found in solar and wind sectors, suggesting deeper financial markets are vital for expanding these transition critical sources. In the short run, effects remain heterogeneous and state dependent, influenced by specific quantile conditions. Error correction estimates confirm that short term fluctuations gradually converge toward a stable long run equilibrium. These findings suggest that while financial deepening facilitates the green transition, its influence is technology specific. Consequently, policymakers should align financial regulations with specific technological pathways rather than relying on aggregate targets to ensure a resilient energy infrastructure and foster long term environmental sustainability within the U.S. economy.

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