The European Central Bank published a working paper examining how environmental policy uncertainty affects US cleantech greenfield investment. Based on quarterly project-level data from the first quarter of 2007 through the first quarter of 2019, the paper finds that a one-standard-deviation increase in uncertainty offsets about 75% of the positive effect of environmental policy on the number of projects and about 50% of its effect on capital expenditure. The deterrent effect is stronger for foreign investors than for domestic investors and persists for at least two years after an uncertainty shock. Country- and firm-level analyses find that uncertainty offsets about 55% and 40%, respectively, of the policy-induced increase in project numbers, although the capital expenditure results are less robust at these levels. The findings indicate that stable and predictable policy frameworks are important for translating environmental incentives into clean investment.
2026-08-31European Central Bank
European Central Bank working paper finds policy uncertainty erodes US cleantech investment incentives by up to 75%
A European Central Bank working paper finds that environmental policy uncertainty offsets about 75% of the policy-induced increase in US cleantech projects and about 50% of the increase in capital expenditure. The effect is stronger for foreign investors and persists for at least two years, while disaggregated capital expenditure results are less robust.