Does renewable energy production displace fossil fuel production in the U.S.? A panel data study of fossil fuel-producing U.S. states, 1997-2020

Does renewable energy displace fossil fuels? Recent research finds mixed evidence, highlighting that effects are heterogeneous across contexts. I further explore this question by examining whether renewable energy production displaces fossil fuel production in the 33 fossil fuel-producing states in the U.S. from 1997 to 2020. Using three different approaches (two-way fixed effects regression, half-panel jackknife two-way fixed-effects regression, and the half-panel jackknife test for Granger causality), I find robust evidence that there is not an association between renewable energy production and fossil fuel production at the U.S. state-level. Additional analyses suggest that 96.7% of the variation in fossil fuel production is explained by state fixed effects, indicating that time-invariant state characteristics are much more important to consider.