Captives of Capital? Exploring economic models as recursive and performative agents

The financial sector could play a more significant and transformative role in supporting the energy transition. Portraying techno-economic models, upon which the sector depends for the support of its investment decisions, as performative or self-fulfilling agents which serve only to entrench the hegemony of the present incumbents, undermines the potential for using these approaches to accelerate the energy transition. In this article, we outline the role of capital markets in the energy transition and show how techno-economic modelling has attracted a growing interest from authors within the renewable energy sector. We summarise the concerns of social scientists about economic modelling, neatly captured by its depiction as a calculative agency intent on its self-replication. We argue that there is a need to align the two perspectives, especially as a means of strengthening the support of the financial sector for the energy transition, and suggest several ways in which this alignment could be achieved. Important research questions include further exploration of the recursive and performative relationship between economic models and the economy, the inclusion of externalities in modelling studies, the use of economic models as agents of change rather than recalcitrance, and finally strengthening capital markets in the Global South.