Managing uncertainty in the energy transition: Comparative effects of ESG-related and economic policy uncertainty on renewable energy investment

Managing uncertainty is central to the energy transition because renewable energy investment depends on long-term policy credibility, financing conditions, and governance stability. Yet empirical evidence remains limited on whether uncertainty tied to sustainability governance (ESG-related uncertainty) constrains renewable energy investment more strongly than broader macroeconomic policy uncertainty does. We hypothesise that ESG-related uncertainty exerts a larger and more persistent negative effect on US renewable energy investment than economic policy uncertainty, particularly over medium- to long horizons and in adverse market states. Using quarterly US data from 2002Q4–2024Q4, we apply multivariate wavelet quantile regression (with GDP as a control) to estimate distribution- and horizon-specific effects, complemented by wavelet quantile regression as a robustness check. The results show that ESG-related uncertainty has a stronger, more persistent, and predominantly negative association with renewable energy investment, most pronounced at medium and long horizons and at lower quantiles. In contrast, economic policy uncertainty is weaker, less stable, and mainly short-term. These findings imply that stabilising sustainability governance, through credible, transparent, and durable ESG/climate policy and disclosure frameworks, is critical to reducing investment delays and accelerating the energy transition.