Unraveling the Time–Frequency Nexus: The US Path to Net-Zero Emissions

The imperatives of reducing carbon emissions are crucial to combating environmental challenges and achieving sustainable development. This study investigates the relationship between natural gas consumption (NGAS), renewable energy consumption (REC), monetary policy (MP), and trade policy (TP) with carbon dioxide (CO2) emissions in the USA. Utilizing a comprehensive monthly dataset, we employ advanced wavelet analysis (WA) techniques to explore the dynamics and causal effects among the selected variables. The findings from wavelet coherence reveal an adverse co-movement between NGAS and CO2 emissions in the long term, highlighting the substantial role of NGAS in reducing emissions. REC demonstrates effectiveness in lessening CO2 emissions in the short- and medium-term, while MP exhibits a negative influence in both the medium and long terms. Additionally, TP presents mixed associations with CO2 emissions; however, the dominant negative impact remains prevalent across different time scales. These outcomes are further supported by wavelet cohesion and wavelet causality tests. Our results inform actionable policy initiatives—such as incentivizing renewable natural gas production, integrating climate-risk considerations into monetary policy frameworks, implementing border-adjustment carbon pricing, and expanding financial support for renewable energy—thereby providing US policymakers with a clear roadmap to achieve net-zero emissions while enhancing energy security and economic resilience. This research enhances the theoretical discourse on environmental economics by providing novel methodological insights and contributing to the ongoing debate regarding the sustainability of NGAS as a transitional fuel. The study proposes crucial policy actions for achieving net-zero emissions, including incentivizing the production of renewable natural gas through financial support and regulatory incentives, providing robust financial incentives to promote REC, integrating climate concerns into MP frameworks, and implementing a carbon pricing system on imports based on embedded carbon emissions. These actions are vital for achieving net-zero emissions and aligning economic policies with climate objectives, ultimately enabling the USA to build a sustainable economy that effectively reduces CO2 emissions while enhancing energy security and resilience.