Abstract The coffee sector generates vast amounts of residues along its value chain. Crop residues, like coffee stems, are burned in the field, used for domestic cooking or coffee drying in processing plants having significant environmental and health implication to rural communities. This research investigated the environmental impacts of replacing current practices with modern bioenergy applications in the Colombian coffee sector. A biomass gasification system to produce decentralised energy from coffee stems was considered, and the environmental impacts of such bioenergy implementation were evaluated. A lifecycle assessment was conducted to quantify the environmental performance of this bioenergy system and compare it to current residues uses and energy needs that feature small-to large-scale coffee farms. The results show that deploying modern bioenergy could result in reductions in 48–86% greenhouse gas (GHG) emissions and up to 98% less particulate matter formation when current practices and fossil-based energy are replaced. However, negative impacts should be considered as substituting grid electricity, largely generated from hydro-electricity, could increase GHGs by 68% and fossil fuel consumption by 73%. The results also show the relevance of understanding the environmental performance of bioenergy systems compared to reference scenarios; this allowed to evaluate and identify environmental trade-offs from modern bioenergy implementations. To maximise benefits and minimise the limitations of these systems, it is important to conduct whole-system assessments that inform on the wider environmental impacts of using agri-residues for bioenergy generation in a region- and system-specific context.