Unclean consequences of clean energy? The impact of renewable electricity generation on carbon dioxide emissions

• Not all forms of renewable generation reduce fossil fuel demand. • Solar generation reduces coal demand but raises natural gas demand. • Biomass generation reduces natural gas demand but increases coal demand. • Renewables-induced interfuel substitution has heterogeneous effects on CO2 emissions. • Biomass generation may unexpectedly increase net CO2 emissions. Despite the important role of renewable energy for energy security and emission mitigation, few studies have examined how different types of renewable energy sources affect energy mix and emission outcomes. This study fills this gap by analyzing how renewable electricity generation influences fossil fuel demand and resulting CO2 emissions. Employing a differential fuel allocation model that reflects renewables-induced interfuel substitution, we investigate electricity generation in the U.S. electric power sector over the period between 1995 and 2023. Our results show that this sector is not very responsive to fossil fuel price changes and demonstrates substitutable relationships among coal, natural gas, and petroleum. With respect to renewables-induced interfuel substitution, hydroelectric and biomass generation are associated with a reduction in natural gas demand, while solar generation reduces coal demand. Conversely, biomass generation is linked to a rise in coal demand, while solar generation increases reliance on natural gas. From a cost-minimization perspective, the simulation results for CO2 emissions show that solar generation contributes to further reductions in net emissions, whereas the mitigation potential of biomass energy may be weakened or even reversed due to renewables-induced interfuel substitution.