00:00No single company or government can finance all the AI infrastructure or energy needs.
00:05Our capital markets in Europe are fragmented.
00:07Getting to cleaner energy is a dial and not a switch.
00:17Hello, I'm Angela Barnes and welcome to this episode of The Big Question from Davos in
00:22Switzerland. Well, on The Big Question, we speak to some of the most influential people in the
00:28world of business. And today I'm joined by Francesco Ducato, the CEO of Barclays Europe.
00:35Francesco, it's a pleasure to have you on the show.
00:38Pleasure to be here with you.
00:39Thank you very much. So what a lot to talk about. But first of all,
00:44from your conversations that you've been having and what you've been seeing,
00:47what are the most significant economic trends or risks this year? And how do you see
00:53them impacting the European financial sector?
00:57So the theme this year at Davos is collaboration in a digital age. And clearly what that aims to
01:04get behind is how can we harness the power of technology to ultimately reignite growth
01:11without ultimately having an inflationary problem that comes back. And AI, in our view,
01:19is going to be something that we need to embrace. But it comes with a lot of different
01:25follow on components, including needing a lot of energy. And so energy provision
01:32and energy security is an important theme here as well.
01:42I want to talk to you about Barclays AI report, which has just been released.
01:46Can you just summarize for me some of the key findings in that report?
01:51Yes. So I think it's important to tie it together with the report that we published
01:56roughly this time last year, which was about the impact that AI can have to boost productivity,
02:05in particular support aging populations who are perhaps becoming less productive and to aid them
02:10in ultimately creating better economic outcomes. This year, what we're focused on is how do you
02:18actually think about the energy needs of the AI investment that we're going to have to make?
02:23Because no single company or government can finance all the AI infrastructure or energy needs.
02:29We need to see a large investment in energy to support the AI infrastructure. Why is that?
02:35Because every application of AI requires lots of computing power. The latest
02:43colossus AI supercomputer that Elon Musk is investing in has 200,000 GPUs. That requires
02:50a huge amount of energy. And we are seeing more and more GPUs added as the use cases in the
02:58applications of AI become more and more sophisticated and wide ranging. And what
03:03the report says is that energy demands are going to go up massively between now and 2030.
03:10And we see the potential for real infrastructure investment needed. I mean, just to give you
03:18one metric, the IEA is projecting that 1000 terawatts hour are going to be needed for all
03:27the data centers in the world. And of course, it's data centers that can perform these AI calculations.
03:34And therefore, you know, our view is that we need to understand that energy infrastructure
03:41is critical to supporting the AI, which tying it back to last year's report is critical to
03:47productivity. Francesco, there is a lot to take in there. But do you think Europe is prepared
03:52for that? Or is it a case of it's now getting prepared for the enormity of what's needed to
03:58invest in this AI infrastructure? I think it's important that we prepare for it. AI is one way,
04:06one technology that can help us and resolve some of our problems. But it needs investment. And it
04:13can't all be coming from governments because they're fiscally constrained. In many cases,
04:18it can come from the capital markets, but our capital markets in Europe are fragmented.
04:24And therefore, we need to reform them. And we need to do that quickly. And this is something
04:28that President von der Leyen talked about. It needs to happen with less red tape and with more,
04:34if you like, straight through processing of the type of project that can bring real economic
04:40advantage. I just wanted to ask you about sustainability and digital transformation.
04:44How do you envision these influencing Barclays strategy for Europe when it comes to sustainability
04:51and digital transformation? So I think with sustainability, our strategy revolves around
04:57the transition. And what's important is to recognize that getting to cleaner energy is
05:05a dial and not a switch. And that means that we have to keep supporting our clients who are
05:11wanting to transition. And we can support them with advice, with financing, and with facilitation
05:16of financing through the capital markets. So that's the first piece. The second piece is to
05:22know that from our perspective, our target of 1 trillion of sustainable and transition finance
05:28by 2030 is still something that we as Barclays Europe want to continue to contribute very
05:35meaningfully to. And that's what we have been doing. And the third component of our strategy
05:41is to continue to support companies at the early stage in the clean tech business that can
05:49continue to drive technological change that can help the energy transition itself. Those would
05:54include, for example, our investment into a company that does solar energy, but not through typical
06:01solar cells, but through solar tubes. We are invested in an insulation company. We are invested
06:08in a green hydrogen company. And these are all examples of that specific strategy to invest the
06:14group's balance sheet to ultimately support the transition. And Francesco, more widely,
06:20what role do you see European banks playing in addressing global challenges like climate change
06:26and digital innovation? Just on the climate change side, many banks have analogous strategies to
06:31ours. So I think we've covered that to some extent. With digital innovation and digitalization,
06:37I think it's important to realize that in Europe, our digital infrastructure needs modernization.
06:43Once it's been modernized to really be contributing to the economy, it needs power. It needs energy.
06:50And we'll come to that in a moment. But again, our objective here is to be a supportive partner
06:58for not just companies, but also governments or indeed individuals to have the right advice to
07:05be able to navigate these changes and to be able to draw the financing. It may be from our balance
07:10sheet. It may be from the capital markets. We can facilitate that and always to give the best
07:15advice we can. Brilliant. Francesco, thank you very much for all of your insights. It's great
07:20to have you on The Big Question. And thank you very much all for watching this episode of the
07:25show from Davos in Switzerland. Don't forget, you can catch all our shows on the Euronews YouTube
07:30channel. And you can also go to the Euronews website, the business section and catch all our
07:35Big Question episodes there. Thank you very much.
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