Energy Resources, Discovery, and Green Transformation: Evidence from the Post-Soviet Space

Abstract

This paper examines whether giant oil and gas discoveries hinder the green transformation in post-Soviet space. Post-Soviet countries share a similar historical background but have pursued drastically different energy strategies, providing an ideal field to observe the influence of resource discoveries by minimizing the unobservable variables. Treating giant resource discoveries as natural experiments, it evaluates both short-term and long-term causal effects on the green transformation measured in four dimensions: total energy supply (TES), energy mix, energy efficiency, and international investment in renewables. The findings reveal that giant discoveries lead to a short-term decline in TES, fossil energy supply, and renewable energy supply; better (political) institutions deepen this short-term decline, while stronger economic institutions increase TES and renewable energy (excluding biofuels). However, these effects are short-lived. In the long term, discoveries result in increased TES and fossil energy supply, reduced renewable energy supply, and worsening energy efficiency. These results support the resource curse theory, showing that institutional quality moderates short-term disruptions but cannot prevent long-term fossil fuel dependence. The thesis contributes to the limited literature on the direct impact of resource discoveries on energy transition in post-Soviet countries and highlights the need for institutional strengthening and targeted international support in renewables in countries with recent resource shocks.