The “Carbon Curse” theory suggests that fossil fuel richness leads countries to have more carbon intensive development trajectories than they would otherwise. Using causal inference for cross-country panel data spanning 1950-2018, we globally estimate the effect of giant oil and gas discoveries on carbon emissions. Our findings show that the effect is sizable and persistent. Our results show a substantial and persistent impact: countries that experience giant oil and gas discoveries emit approximately 40\% more $CO_{2}$ post-discovery compared to their resource-poor counterparts. This effect is particularly pronounced in developing economies and emerges immediately after the first discovery, reinforcing the notion that fossil fuel wealth induces long-term path dependencies. These findings highlight the significant barriers that fossil fuel-rich nations face in aligning with decarbonization goals, posing substantial challenges for meeting the Paris Agreement targets.
By exploiting the randomness of the timing of discoveries, we provide the first plausibly-causal evidence in support of the "Carbon Curse".