4.1. Discussion of Key Findings
The empirical findings provide robust evidence that increasing renewable energy generation contributes to reducing carbon intensity at the country level, even when controlling for demographic factors and persistence. Across numerous model specifications, total renewable generation and disaggregated renewable technologies like solar, wind, hydropower and geothermal exhibit a significant negative relationship with carbon emissions.
The findings showed a consistent negative relationship between hydropower and carbon intensity across all income groups, with statistically significant results at the 1% level. This suggests that an increase in hydropower generation leads to a decrease in carbon intensity. These results align with the technological innovation theory, indicating that advancements in hydroelectric power technology have improved its efficiency and reduced its environmental impact. This study emphasizes the importance of increasing the use of hydropower to achieve sustainable environmental goals. Moreover, this study revealed a positive relationship between wind energy and carbon intensity, particularly in high-income countries. In addition, the impact of wind energy on carbon intensity decreased after the implementation of global environmental policies, as indicated by the lower coefficients. This suggests that effective environmental regulations have moderated the environmental impact of wind energy and emphasized the importance of eco-friendly policies for sustainable development. However, solar energy showed mixed results, with positive associations in high-income and upper-middle-income countries and a negative relationship in lower-middle-income countries. After the implementation of global environmental policies, solar energy’s impact on carbon intensity became negative. This aligns with the idea that as nations transition to renewable energy sources, the positive link between solar energy and carbon intensity turns negative, in line with the environmental Kuznets hypothesis. Furthermore, geothermal energy exhibited mixed results, with a negative link in high-income, lower-middle-income, and combined panels, but a positive association in upper-middle-income and lower-income panels. The robustness test showed that environmental regulations have effectively decreased the impact of geothermal energy on carbon intensity. It is suggested that policymakers should prioritize this energy source to reduce carbon intensity and promote sustainable development.
This study categorized countries into emerging and developed economies, revealing that the relationship between renewable energy generation and carbon intensity was more pronounced in developed nations. The results indicate that developed economies tend to exhibit higher carbon intensity levels, emphasizing the need for enhanced environmental regulations and policies.
The results strongly align with existing literature highlighting the decarbonization potential of transitioning electricity production to renewable sources. For example, prior studies using country-level data have found that rising renewable penetration in power systems can displace fossil fuel generation and lower carbon dioxide emissions [
36]. Similar emission reduction effects have been observed at the state level in countries like the United States and India as renewable adoption expands [
37,
38].
Critically, the magnitude of the emission impact tends to strengthen over time as countries move along the experience curve and drive down renewable technology costs through innovation and economies of scale [
39]. As solar, wind and other renewables become more cost-competitive, this enhances their ability to substitute for carbon-intensive generation. Modeling studies estimate each doubling of total global renewable electricity capacity could reduce power sector carbon dioxide emissions [
40]. The emission savings are even greater when paired with energy storage to accommodate variable output.
Importantly, the findings here demonstrate the relationship is significant even when accounting for cross-sectional dependence and heterogeneity using panel data models with country fixed effects. The inclusion of lagged dependent variables also helps mitigate reverse causality concerns. This enhances confidence that increasing renewable generation causally reduces carbon intensity versus simply correlating. The results hold across dynamic and static modeling approaches.
Further, the findings are robust to major global policy changes around 2015, including the Paris Agreement, which aimed to strengthen climate change mitigation worldwide. The relationship persists when splitting the sample period before and after 2015. If anything, the adoption of ambitious international emission-reduction targets appears to have accelerated and enhanced renewables’ decarbonization impact. This highlights the vital role of supportive policy environments in realizing climate benefits.
When disaggregating renewable technologies, solar photovoltaic (PV) and wind generation exhibit the most sizable marginal effects in decreasing carbon intensity compared to hydropower and geothermal sources. This aligns with expectations, since solar and wind turbines have minimal direct greenhouse gas emissions during operation. Their high-capacity factors also lend significant abatement potential per MWh generated as they displace fossil fuels in electricity mixes [
41].
In contrast, prior research finds hydropower’s emissions reduction impact can be weaker in certain contexts due to methane release from reservoirs and interannual variability in output [
42]. Geothermal’s mitigation potential may also be constrained relative to wind and solar by geographic limitations, higher upfront costs, and CO
2 releases in some cases [
43]. Hence, the finding highlights the outsized role that variable renewables like solar and wind can play in power sector decarbonization going forward given their scalability, rapidly falling costs, and zero direct emissions [
43].
However, the models also reveal carbon intensity exhibits persistence and path dependence, with the lagged dependent variable remaining highly significant across specifications. This inertia reflects that transitioning to low-carbon systems involves long-term, structural shifts that take time and continued effort [
44]. Renewables expansion alone is likely insufficient without broader transformations in energy infrastructure, institutions, behaviors and business models. Sustaining the renewables transition calls for stable, long-term policies like feed-in tariffs, auctions, tax incentives and transmission upgrades that support scaled-up adoption [
45].
Complementary low-carbon policies also play a vital role. For instance, phasing out fossil fuel subsidies, implementing carbon pricing, tightening emissions standards, and supporting energy efficiency can further amplify renewable energy’s impact while helping overcome persistent carbon lock-in [
46]. Integrated policy mixes that address complementary aspects of energy system change are critical to maximize decarbonization.
The spatial analysis provides indication that global environmental policies in 2015 coincided with visual intensification of emissions intensity declines across countries. While not definitive causal evidence, the geographic mapping offers context aligning with the statistical finding that rising renewable generation interacted with strengthened global climate initiatives to accelerate falling carbon intensity after 2015.
Overall, the mixed-methods analysis highlights renewable power’s vital role within a broader policy mix needed to decarbonize energy systems globally. The findings contribute robust empirical evidence and new insights into renewable energy’s emission reduction efficacy using recent panel data techniques. However, limitations remain in fully identifying causal mechanisms over time. Data constraints also prevented including some potentially relevant controls at the country level like trade openness and electricity imports/exports.
This study provides timely evidence to inform power sector planning and climate policy debates. Demonstrating renewable energy’s carbon-intensity-lowering impact can motivate further deployment and grid integration efforts needed to meet decarbonization goals. However, scaling renewables requires taking a holistic perspective encompassing technical, economic, political, social and cultural dimensions that shape transition processes. Further interdisciplinary analysis building on these findings can help identify pathways to accelerate the renewable energy transition equitably and sustainably worldwide.
4.3. Differential Impacts of Renewable Energy Technologies
While this study demonstrates that all forms of renewable energy can contribute to national decarbonization, the size and even the direction of these impacts vary markedly across income groups and regions—an observation consistent with [
5]’s findings on technology-specific heterogeneity in renewable–CO
2 relationships. In their panel analysis of 15 major renewable-energy-consuming countries, the authors of ref. [
5] report that the effect of renewable energy consumption on CO
2 emissions is not uniform: in some cases, higher renewable use actually correlates with increased emissions, especially in countries where renewable infrastructures remain nascent or where energy markets depend heavily on fossil backup during intermittency [
5]. This “mixed” sign emerges when they disaggregate by technology and control for income levels: for instance, wind and solar installations sometimes coincide with short-run upticks in CO
2 because of ancillary emissions from grid balancing and lifecycle supply-chain effects.
The results echo and extend these insights in three key ways. First, the authors of ref. [
5] found that in upper-middle-income countries (e.g., China and Brazil), accelerating renewable deployment did not immediately lower carbon emissions because grid modernization lagged behind capacity additions, forcing continued reliance on coal- or gas-fired peaker plants to ensure reliability. Similarly, the Panel B (upper-middle-income) and Panel E (all countries combined) regressions show a positive and significant coefficient on lnWE (wind) of 0.172 (
p < 0.01) and 0.351 (
p < 0.10), respectively, before global climate policy shifts in 2015 (
Table 4). This pattern underscores that simply building turbines is insufficient: without concomitant grid and storage upgrades, intermittent renewables can paradoxically spur net emissions in the short run [
5,
15]. By demonstrating this effect across 184 countries (versus their 15 economies), we confirm that the [
5] heterogeneity holds at a truly global scale, reinforcing the call for integrated system investments rather than piecemeal technology rollouts.
Second, ref. [
5] emphasizes that regulatory quality and institutional capacity mediate how quickly renewables displace fossil fuels. In their VECM Granger-causality tests, higher regulatory quality accelerated the long-run feedback loop whereby renewable adoption and emissions reduction reinforce one another. In contrast, countries with weaker governance saw smaller—or even counterintuitive—renewable-to-CO
2 effects. The manuscript goes further by explicitly interacting disaggregated renewable generation (lnWE, lnSE, lnHP, lnGE) with the World Bank’s Regulatory Quality index (lnER). We find that, post-2015 (when many nations ratified more stringent climate policies), the once-positive wind coefficient in high-income panels turns negative or insignificant (
Table 5), suggesting that stronger environmental regulation has indeed helped overcome early “back-stop” emissions from balancing reserves and supply-chain manufacture. This directly builds on [
5] central thesis—reinforcing that governance not only matters, but can convert renewables from net-emissions drivers into genuine decarbonization tools.
Third, ref. [
5] shows that hydropower consistently lowers CO
2 emissions in advanced economies with mature grid systems, but yields a weaker or insignificant effect where hydrological and institutional constraints reduce capacity factors. The findings similarly record statistically significant negative lnHP coefficients across all income cohorts (ranging from −0.093 in high-income to −0.046 in low-income panels,
p < 0.01 everywhere;
Table 4). Because we examined 184 countries (versus their 15), this study further reveals that hydropower’s decarbonizing potency is robust even where grid access and topography vary widely. In doing so, we extend [
5]’s inference by highlighting that hydro’s consistency as a carbon-reducer holds not just in a subset of major consumers but globally—underscoring hydropower’s unique position as a reliable, low-carbon generation source.
By weaving in [
5]’s evidence, we underscore the manuscript’s three primary contributions:
Global scope: Whereas [
5] focuses on 15 major renewable-consuming countries, we validate their heterogeneous, technology-specific findings across 184 nations spanning all income levels (2000–2020).
Regulatory moderation: We explicitly model the interaction between renewable types and a continuous Regulatory Quality index, showing how post-2015 policy shifts invert or strengthen renewable–CO
2 relationships—extending [
5]’s governance insights into a dynamic panel framework.
Policy implications: Building on their policy recommendations for PPPs and technology transfer, we offer an empirically grounded argument that large-scale renewables deployment must be paired with grid modernization, energy storage, and regulatory reforms to eliminate the short-run “environmental costs” that [
5] documents.