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Energy Transition and the Infrastructure Opportunity

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The march toward net zero by 2050 and the great energy transition will be as much about building the infrastructure of the new world as it will be about sourcing clean and secure sources of renewable energy, BMO Capital Markets Chief Executive Officer Dan Barclay told the Bloomberg Canada Capital
Markets Forum in Toronto.

Just one example is the infrastructure that will be required to convert gas stations into charging stations, said Barclay. In Ontario alone, “Think about the economics of that … the amount of money that needs to be spent on the existing grid, just to move to electric, is an enormous discussion.”

The transition to a low-carbon economy is of a scale not seen in previous economic revolutions, likely requiring some $150 trillion in investment globally between now and 2050 as the world invests in bringing on new sources of renewable energy and reducing emissions through new technologies like carbon capture.

“I think of that infrastructure layer as enormous,” Barclay told the Bloomberg panel, where he shared the stage with Roman Dubczak, Managing Director and Head of Global Investment Banking at Canadian Imperial Bank of Commerce.

The complexities of the energy transition are compounded with a global economy that is contending with an exit from pandemic, soaring inflation and the war in Ukraine, forcing a pivot away from systems that have been developed over the past 30 years, like the dependence on a China supply chain.

“Just think about the scale and uncertainty around that,” said Barclay, noting that security of supply, whether it be on energy sources, new and old, services and goods including even basic foods, are now top of mind, underscored with Russia’s invasion of Ukraine.

Changes in food production, and the dramatic shortage of calories around the world that is going happen post Ukraine, Barclay said, “will create shifts and very interesting opportunities to invest in terms of where you see food production, where you have secure supply.”

Canada’s AI Opportunity

In closing the panel, Barclay pointed to a unique opportunity for Canada to capitalize in the energy transition on its expertise in the area of artificial intelligence (AI).

“On the new technology side, I think one of the most powerful things that Canadians are grasping, is we have probably two or three of the world’s leading AI centers in the world, whether it’s here in Toronto, whether it’s in Montreal or in Waterloo,” he said, noting how significant digital technology is in the energy transition.

“All of this stuff we are talking about around green is going to come with a digital future and digital application,” he said. “I’m seeing enormous opportunities that are being created around this, new companies, new ideas, new ways of thinking, new partnerships … new sources of capital.”

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Dan Barclay Chief Executive Officer, BMO Capital Markets

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