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 Switzerland.
00:23Well, on The Big Question we speak to some of the most influential people in the world of business.
00:29And 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.
00:42But first of all, from 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
00:52and how do you see them impacting the European financial sector?
00:57So, the theme this year at Davos is collaboration in a digital age.
01:02And clearly what that aims to get behind is how can we harness the power of technology
01:09to ultimately reignite growth without ultimately having an inflationary problem that comes back.
01:16And AI, in our view, is going to be something that we need to embrace,
01:22but it comes with a lot of different follow-on components, including needing a lot of energy.
01:30And so energy provision and 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 roughly this time last year,
01:59which was about the impact that AI can have to boost productivity,
02:05in particular support aging populations who are perhaps becoming less productive
02:10and to aid them in ultimately creating better economic outcomes.
02:15This year what we're focused on is how do you actually think about the energy needs of the AI investment
02:22that we're going to have to make, because 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.
02:34Why is that? Because every application of AI requires lots of computing power.
02:42The latest colossus AI supercomputer that Elon Musk is investing in has 200,000 GPUs.
02:49That requires a huge amount of energy.
02:52And we are seeing more and more GPUs added as the use cases in the applications of AI
02:59become more and more sophisticated and wide ranging.
03:03And what the 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.
03:16I mean, just to give you one metric, the IEA is projecting that 1,000 terawatts hour are going to be needed
03:26for all the data centers in the world.
03:29And 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 is critical to supporting the AI,
03:43which, tying it back to last year's report, is critical to productivity.
03:48Francesco, there is a lot to take in there, but do you think Europe is prepared for that?
03:52Or is it a case of it's now getting prepared for the enormity of what's needed to invest in this AI infrastructure?
04:00I think it's important that we prepare for it.
04:04AI is one way, one technology that can help us and resolve some of our problems.
04:10But it needs investment and it can't all be coming from governments because they are 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.
04:27And this is something that President von der Leyen talked about.
04:30It needs to happen with less red tape and with more, if you like,
04:35straight-through processing of the type of project that can bring real economic advantage.
04:40I just wanted to ask you about sustainability and digital transformation.
04:44How do you envision these influencing Barclay's strategy for Europe
04:49when it comes to sustainability and digital transformation?
04:53So I think with sustainability our strategy revolves around the transition
04:59and what's important is to recognize that getting to cleaner energy is a dial and not a switch.
05:07And that means that we have to keep supporting our clients who are wanting to transition
05:12and we can support them with advice, with financing and with facilitation of financing through the capital markets.
05:19So that's the first piece.
05:20The second piece is to know that from our perspective
05:24our target of one trillion of sustainable and transition finance by 2030
05:30is still something that we as Barclay's Europe want to continue to contribute very meaningfully to
05:36and that's what we have been doing.
05:38And the third component of our strategy is to continue to support companies at the early stage
05:45in the clean tech business that can continue to drive technological change
05:51that can help the energy transition itself.
05:54Those would include, for example, our investment into a company that does solar energy
06:00but not through typical solar cells but through solar tubes.
06:04We are invested in an insulation company, we are invested in a green hydrogen company
06:09and these are all examples of that specific strategy to invest the group's balance sheet
06:15to ultimately support the transition.
06:18And Francesco, more widely, what role do you see European banks playing
06:23in addressing global challenges like climate change and digital innovation?
06:27Just on the climate change side, many banks have analogous strategies to ours
06:32so I think we've covered that to some extent.
06:35With digital innovation and digitalization I think it's important to realize
06:39that in Europe our digital infrastructure needs modernization.
06:43Once it's been modernized to really be contributing to the economy
06:48it needs power, it needs energy and we'll come to that in a moment
06:52but again our objective here is to be a supportive partner
06:57for not just companies but also governments or indeed individuals
07:03to have the right advice to be able to navigate these changes
07:07and to be able to draw the financing.
07:09It may be from our balance sheet, it may be from the capital markets,
07:12we can facilitate that and always to give the best advice we can.
07:16Brilliant. Francesco, thank you very much for all of your insights.
07:19It's great to have you on The Big Question
07:21and thank you very much all for watching this episode of the show from Davos in Switzerland.
07:27Don't forget you can catch all our shows on the Euronews YouTube channel
07:30and you can also go to the Euronews website for business section
07:34and catch all our Big Question episodes there.
07:37Thank you very much.
