Periodic Reporting for period 1 - ENFIN (Energy Transitions and the Rise and Fall of Great Financial Centers)
Periodo di rendicontazione: 2023-07-01 al 2025-12-31
Across history nations have competed for leadership over the world’s great financial centers (GFCs). While several powerful centers can coexist, the Energy Finance (ENFIN) project focuses on the leading center defined by dominance in size such as market capitalization and on its primary rival. Leadership matters because hosts of GFCs cast financial and currency power beyond their borders, concentrate liquidity and credit, and shape accounting and governance standards that influence investment, corporate behavior, and financial stability across the economy. Today this competition overlaps with the race among the UK, EU, China, and US to set the rules of sustainable finance, making it essential to understand how and why leadership in global finance changes.
Despite rich historical narratives, existing explanations struggle to account for the timing and durability of rises and declines in GFC leadership. They rarely explain why some candidates never quite ascend, why leading centers tend to decline slowly rather than abruptly, or why leadership transitions cluster at particular moments. Puzzles remain. Why did New York displace London only in the mid twentieth century? Why did Tokyo, despite late 1980s prominence, fail to secure GFC status? What is the likelihood that Shanghai–Shenzhen becomes the twenty first century leader?
In the ENFIN project, we advance a non traditional hypothesis that energy transitions are the primary drivers behind the rise and fall of GFCs. Because energy shifts require prolonged and capital intensive investment estimated at more than € 200 trillion in cumulative low carbon infrastructure by 2050 and about € 6.9 trillion per year, periods of energy system change create extraordinary and sustained demand for intermediation. Our preliminary analysis of long run market capitalization data and global energy consumption histories indicates a strong relationship between the timing and length of energy transitions and changes in GFC leadership. This insight motivates the project and guides the empirical agenda.
Our objectives are threefold. First, we assemble and integrate new historical datasets on market capitalization, crises, infrastructure, energy consumption, and energy endowments. Second, we develop and test a comparative framework that links energy transitions to financial center dynamics through quantitative modelling and process tracing case studies. Third, we produce indicators and scenarios that improve the forecasting of financial leadership shifts. The expected impact is twofold. Scientifically, we aim to recast the study of global financial leadership by embedding finance within the long run political economy of energy and by releasing data and tools that enable replication and extension. For policymakers, our framework can inform sustainable finance rule setting, and the sequencing of regulatory reforms that stabilize finance during large energy reallocations. ENFIN is inherently interdisciplinary and integrates qualitative and quantitative frameworks from economic history, political economy, and legal institutional analysis with data science. By clarifying when and how energy transitions reorganize financial power, the project seeks to equip decision makers with evidence that supports a resilient and orderly transition.
Despite rich historical narratives, existing explanations struggle to account for the timing and durability of rises and declines in GFC leadership. They rarely explain why some candidates never quite ascend, why leading centers tend to decline slowly rather than abruptly, or why leadership transitions cluster at particular moments. Puzzles remain. Why did New York displace London only in the mid twentieth century? Why did Tokyo, despite late 1980s prominence, fail to secure GFC status? What is the likelihood that Shanghai–Shenzhen becomes the twenty first century leader?
In the ENFIN project, we advance a non traditional hypothesis that energy transitions are the primary drivers behind the rise and fall of GFCs. Because energy shifts require prolonged and capital intensive investment estimated at more than € 200 trillion in cumulative low carbon infrastructure by 2050 and about € 6.9 trillion per year, periods of energy system change create extraordinary and sustained demand for intermediation. Our preliminary analysis of long run market capitalization data and global energy consumption histories indicates a strong relationship between the timing and length of energy transitions and changes in GFC leadership. This insight motivates the project and guides the empirical agenda.
Our objectives are threefold. First, we assemble and integrate new historical datasets on market capitalization, crises, infrastructure, energy consumption, and energy endowments. Second, we develop and test a comparative framework that links energy transitions to financial center dynamics through quantitative modelling and process tracing case studies. Third, we produce indicators and scenarios that improve the forecasting of financial leadership shifts. The expected impact is twofold. Scientifically, we aim to recast the study of global financial leadership by embedding finance within the long run political economy of energy and by releasing data and tools that enable replication and extension. For policymakers, our framework can inform sustainable finance rule setting, and the sequencing of regulatory reforms that stabilize finance during large energy reallocations. ENFIN is inherently interdisciplinary and integrates qualitative and quantitative frameworks from economic history, political economy, and legal institutional analysis with data science. By clarifying when and how energy transitions reorganize financial power, the project seeks to equip decision makers with evidence that supports a resilient and orderly transition.
We have established a robust historical data foundation to explore the interplay between energy transitions and financial dynamics relating to the rise and fall of GFCs. These extensive datasets provide a unique empirical basis for analyzing how shifts in energy use and major financial developments have been interconnected over time, laying the groundwork for our project’s technical investigations. Leveraging these integrated datasets, we have begun to uncover sequential patterns of energy technology transitions and financial dynamics through analysis and simulations. Our preliminary quantitative simulations indicate that key variables related to energy transitions – for example, changes in energy use and the adoption of new fuel sources – possess strong predictive power for the rise and fall of great financial centers. Our data-driven work is complemented by detailed case studies in major financial centers, tracing how past energy transitions, infrastructure financing booms, and capital market developments unfolded in specific contexts. This inductive, theory-building approach has provided concrete examples that deepen our understanding of the mechanisms linking energy and financial transformations.
Our mid-term results show that energy transitions are key drivers of global financial cycles - in terms of rise and fall of great financial centers, challenging the conventional contemporary view that finance leads the green transition. Based on our activities in the reporting period one we are focusing in the second reporting period on publishing the results and starting work on financial systems and applied comparative analyses – including a σ-convergence study of renewable finance standards and a latent growth curve model – to examine how different countries’ financial structures (from market-led to state-driven) support the shift to sustainable energy. These insights will not only advance theory (by identifying energy transitions as a key force shaping financial dynamics) but also inform policy: our framework can guide financial governance strategies for the green transition.