Drivers of natural gas and renewable energy utilization in the USA: How about household energy efficiency-energy expenditure and retail electricity prices?

Abstract

Besides the substantial investments in renewable energy development across various economies, natural gas is being widely considered as a transitional fuel to advance global efforts towards achieving carbon neutrality. The study utilizes a dataset spanning the period from 1970 to 2022 and employs recently developed and appropriate econometric methodologies, primarily centered around Fourier functions. Additionally, the analysis includes controls for economic growth and energy expenditure per household to yield findings that are both relevant and actionable for policymakers. Crucially, the bootstrap Fourier quantile causality analysis has revealed several noteworthy findings. Firstly, it indicates that retail electricity prices exert a negative influence on renewable energy consumption, particularly in the upper quantiles, signifying a stronger impact when renewable energy usage is already high. Secondly, household energy efficiency is associated with a reduction in renewable energy consumption, predominantly observed in the first quantile. Thirdly, both energy expenditure per household and economic growth contribute to a notable increase in renewable energy consumption, particularly in the initial three quantiles. Likewise, concerning natural gas consumption, household energy efficiency and retail electricity prices exhibit a dampening effect, albeit in different quantiles–household energy efficiency impacting in the upper quantiles and retail electricity prices affecting the lower quantiles.