Speaker 1 [00:00:02] Hi, it’s John here. 2023 is already shaping up to be a critical year in the showdown over semiconductors, which are arguably the most important technology the world has seen in 50 years. They’re the size of your fingernail, and yet they power everything from your coffee machine to kitchen appliances to all those toys you might have seen at Christmas. They also effectively run the Internet through data centers and so much more. To state the obvious. Chips play a central role in the global economy, and we’re just getting going. We’re going to need a lot more chips in the coming years to run everything from electric vehicles to the Internet of Things in your home. And yet, as we’re seeing in the news every day, the factories that build them are largely located in one place, Taiwan. You know, the U.S. in the 1990 accounted for almost 40% of global chip manufacturing. And today that share hovers around 12%. The U.S. has started a kind of space race in the semiconductor world, but it will take more than a few months to change things. In fact, it took 30 years to move a lot of that production from the U.S. and Europe to East Asia. And it may take just as long to move it back. And while all this is going on, Canada is going to have to make some key decisions. Are we going to be a leader in the new supply chain of semiconductors? How can we fit into what the U.S. is doing through the massive CHIPS Act that is going to put hundreds of billions of dollars into semiconductor manufacturing and fabrication on U.S. soil? And what kind of innovative thinking can we bring to the next generation of semiconductors and chips? The question is not just where will chips be made in the decades ahead, but what kind of thinking and innovation is going to go into those tiny little things that power everything in our lives? This is Disruptors. An RBC podcast. I’m John Stackhouse. We’re recording this special episode of Disruptors live in Ottawa, where industry leaders, innovators and policymakers have gathered to figure out what role Canada can play in the semiconductor business of tomorrow. To get a hands on perspective, I’ll be joined later by Jim Keller. He’s the CEO of ten Storefront, a leading Canadian company that makes specialized chips for air applications. The first, I’m joined by Benjamin Bergin Benz, the president of the Council of Canadian Innovators. That’s a group that was set up by Jim Balsillie and John Ruffolo to champion Canadian innovation and all the entrepreneurs who are trying to disrupt everything around us. He’s also the coauthor of a thought provoking op ed that ran recently in The Globe and Mail called The U.S. is seizing the moment on chips and semiconductors. Why can’t Canada? Ben, welcome to Disruptors. Speaker 2 [00:02:56] Thanks so much, John, for having me. Speaker 1 [00:02:58] So, Ben, the U.S. is seizing the moment on chips and semiconductors. Why can’t Canada? Speaker 2 [00:03:03] That’s a great question. And I’m actually currently in Ottawa engaging with the federal government from a civil servant, but also a political side. And I think Canada actually can seize the moment. And so there’s this sort of, you know, cautious optimism that is kind of abound with me right now. And I think why we need to seize the moment is maybe the important piece. You know, this isn’t something where Canada has had capacity in a long time. And I think that’s a number of reasons. I think it’s the way that supply chains were created. I think it’s the way that the geopolitics existed in the eighties, nineties and 2000. But what has happened has been a dramatic transformation in the circumstances in which we find ourselves, where there is obviously concerns about what’s happening in Russia and Ukraine. There’s concerns about what’s happening in China and Taiwan, but also how that plays out with places like Japan and South Korea. And so the markets and capacity that actually produces semiconductors is being upended. And in this moment, in this crisis, there is an opportunity. And I really think that this is an opportunity Canada must seize on, because there is a tremendous amount of value that we can generate as a country for this. There’s an environmental component, right? Building ships that are more energy efficient will help us meet some of our targets in terms of clean technology and things like Paris Agreement, but also defense. And I think that this week has really demonstrated that with, you know, balloons floating across the ocean and us, do we have the capabilities to take them down? And semiconductors are a fundamental component of the economy. They will actually fuel all other areas in the innovation economy. And what I mean by that is that when we look at how we’re going to generate a I like catchy beat that requires a tremendous amount of semiconductor capacity, but also a tremendous amount of energy. Speaker 1 [00:05:04] And I really want to come back to that energy question because I don’t think many people appreciate what the era of chat chips, amongst other emerging technologies is going to do to energy demand literally at our fingertips. But let me start first with the CHIPS Act. We’ve been talking a lot, including on this podcast about the Inflation Reduction Act and probably overlooking its twin, which is equally important, and that’s the Chips and Science Act, which puts $280 billion on the table to in many ways reshore a lot of chip manufacturing, boost American competitiveness, innovation, national security. How on earth does Canada keep pace with that? Speaker 2 [00:05:45] The first step is we’ve got to get organized. We’ve got to figure out what do we have in terms of actual capability and actual capacity in this country. And that’s going to sound like a bit of a cop out of an answer. But here’s the thing. The federal government and provincial governments are actually spending hundreds of millions of dollars in semiconductors, whether that be through research and development or whether that be through other grants and other programs. Let’s take a country like the Netherlands, which has had a real cohesive policy and has made themselves indispensable in the supply chain of semiconductors, so much so that the Americans had to actually go to the Netherlands and back, beg them not to give the technology to China. Here is a small country, you know, smaller than Ontario, having the capacity to be able to say we have real strength in the supply chain. So what we need is a bit of coordination from government. And what we need is thinking about, you know, not right now, but ten years from now, where is let’s use a clean analogy, the puck going and how do we get there? How do we make some bets? And so the piece here is not that we need to match it dollar for dollar, but what we need to do is think about it in a smart way, about where the real value is in the supply chain. Speaker 1 [00:07:00] When I think of what Canada’s superpowers, if I can call them, that might be in the space. Certainly post-secondary education is one of them. We have centers like Toronto, what’s grown out of the University of Toronto that are equivalent to any of the great brain centers in the world? Is it not enough to simply develop the talent and let them loose to to pursue ideas? Or do we need to take a more directional approach to this? Speaker 2 [00:07:28] So on the talent piece of allowing it to flourish? God, no. This actually requires strategic thinking from people thinking about how and where we want to go. The idea of allowing it to just sort of be this organic structure is not going to lead to any actual outcomes. Look at any of the other countries. They have had a strong centralized government which has pulled forward areas where they can be successful. So places like South Korea focused on imaging chips. That is why Samsung is a titan and a giant and you cannot compete with them. If you look at what Japan has done, they have focused on another area. If you look at the Netherlands, it’s another area. So allowing sort of a thousand flowers to bloom is not the right answer here. And if we want to take a more Canadian example of why this policy doesn’t work, I suggest we look at the federal government’s A.I. strategy, which was similar in that node, John, where yes, we’ve got amazing people like Geoffrey Hinton and folks like Yoshio Bengio. And we thought, Let’s just give them money to build talent. Well, fast forward five years from then when that was first struck, we see that 80% of the intellectual property generated out of places like Vector have gone to large foreign multinationals like Microsoft. And so not only have we helped subsidize the R&D of foreign multinationals, but we have shut ourselves out of the future of fundamental intellectual property. And so my real concern here is that if we do that same thing in semiconductors, we’re going to find ourselves in the same situation. So to your point, John, yeah, we’ve got some really smart people. We’ve got some amazing academics. But if we don’t go from IP generation to IP retention to corporation building, we’re going to find ourselves or as the century continues to move forward. Speaker 1 [00:09:25] You suggest. Ben, we’ve got to start with an inventory. Figure out what we have. So beyond the inventory, what do we need to do in the coming months? Speaker 2 [00:09:33] So we are we’re already doing it to some extent, which is the good part. Industry is beginning to call us. And so the meetings we had in Ottawa were that congealing of the ecosystem. And so we brought together 15 really amazing semiconductor companies that are headquartered here in Canada. We’ve had outreach to close to 40. And we’re going to begin to pull together a document and a list of things that we need to begin building on. And it’ll have timelines. It will have a structure to it. And government has committed to participating in this discourse. And so the next step really is to figure out, sure, champions for our supporters and how do we move this forward. And I think one of the things that needs to really be communicated to Ottawa in this strategy is foreign multinationals will have to be somewhat involved in this discourse, but they cannot be at the center of it. So if, let’s say Minister Champagne or Minister Freeland goes out and announces, you know, $500 million in the budget to a foreign multinational to build a plant here, that should be considered an utter failure. What really needs to be focused on is how do you support these domestic firms to figure out where they can play in the supply chain and then give them all of the tools that they need in order to succeed? Because that’s actually how we’re going to build industrial policy in this country. Speaker 1 [00:10:55] But don’t you need those multinationals, a lot of them American companies actively involved in building up the Canadian ecosystem, just as we’ve seen with automotive over the decades? I think of Intel and, you know, the plant it’s trying to build in Ohio. Some estimates say it’s going to be 60 to $100 billion to develop that one plant. Well, it’s hard to imagine a Canadian company doing that. So why not bring intel in or any other company, for that matter, to be Tesla and have them working actively with your members, with Canadian entrepreneurs to build up that cross-border supply chain that we’ve seen fairly successful over the decades and in other sectors? Speaker 2 [00:11:40] So I would say ish. John Right. I mean, you’re talking about the auto sector, which was the tangible economy, not the intangible, where it was about the actual building of things, and it was really less about the intellectual property that went into it. And so my critique or argument is that the reality we are in is very different. This is about data. This is about IP ownership and all that basically doing in terms of bringing in a large foreign multinational to, let’s say, build a stop here will lead to low wage jobs in the semiconductor ecosystem. It is us playing for kind of bottom of the barrel. Speaker 1 [00:12:21] Then we could talk about all sorts of aspects of chips, but one that I do want to focus on that you mentioned off the top is energy efficiency, the way that things are going with Chad GPT. But that’s just one example. It’s going to create a new generation and demand a new generation of chips that are energy hogs on a level that we’ve not seen before. How does Canada help? Not just Canada through that, but the world? As we shift to much more advanced technologies, much more energy intensive technologies? Surely there’s a role there for Canada to to bridge? Speaker 2 [00:12:58] Yeah, no, look, I think that that’s a great question. And I’m not going to sit here and say I’ve got a fully baked up plan, but I’ll maybe throw a couple of trial balloons into the air because balloons are obviously the name of the game right now these days. One in this inventory that we’re going to do as a country, we’re going to find that there are some companies here that are making chips that are energy efficient. So one company that was at the table, zany, they make ships that are about 25% more energy efficient, but they also have higher capacity because of the way that they’re structured. So looking at what are opportunities in terms of energy efficient within our own ships industry, I think will be really, really critical. And how do we support them? How do we actually create those opportunities? So ultimately, it’s this kind of strategic thinking about it from various complex areas is how we, I think, to arrive at that energy component and I think is, you know, truly our responsibility as Canadians. Speaker 1 [00:13:57] Then you’ve laid down a gantlet for the country. I want to wrap up with some inspiration that you draw from your members when you’re with these incredible companies that many people may not have heard of. What inspires you? What are they doing that we can all get behind? Speaker 2 [00:14:14] So hopefully the way I’ve kind of communicated, but this hasn’t been Debbie Downer. I’m actually super excited about all of this and hopefully you can kind of share it in the center of my voice and that excites. It comes from the CEOs and the leaders in this space that I engage with. These are wildly smart people. These are wildly ambitious people. These are people who have decided to stay in Canada. And it’s their sort of continued dedication and excitement that fuels me. And when you hear about the things that they are building and their ability to see into the future of where we are going, not only as a country but as a planet, you get both a sense of urgency, but also a sense of how can we help shape it? Speaker 1 [00:14:56] Then you both challenged us and inspired us. Thanks for being on disruptors. Speaker 2 [00:15:00] Thank you so much for having me. Speaker 1 [00:15:04] That was Benjamin Bergen, president of the Council of Canadian Innovators. Stay with us. In just a moment, I’ll be joined by a global leader in semiconductors to get his take on Canada’s opportunity. Speaker 3 [00:15:20] You’re listening to Disruptors, an RBC podcast. I’m Theresa Do. I’d like to share with you our latest report from RBC Economics and thought Leadership called the next Green Revolution: How Canada can Produce more Food and Fewer Emissions. Global food demand is set to soar as the population rises to 9.7 billion people in 2050. Meanwhile, climate change is slowing the agricultural productivity of many major producers. And geopolitical upheaval from Russia’s invasion of Ukraine has destabilized the world’s food systems. Rarely has speed in the world presented such a daunting challenge. So how can Canada lead the world’s great effort to confront it? To find out, visit RBC Rt.com slash next Green Revolution. Speaker 1 [00:16:13] Welcome back. Today, we’re talking about the race to secure a homegrown supply of semiconductors. Canada used to be a leader. And while that may not be the case today, there’s all sorts of promising prospects out there, including ten store, which is based in Toronto. It’s my pleasure now to introduce the CEO of ten Story, Jim Keller. Jim, welcome to Disruptors. Speaker 2 [00:16:33] Thanks for having me. Speaker 1 [00:16:34] Jim, I want to start with your own background. You’re a well-known name in the semiconductor business. You’ve got an extensive career in processor design, worked on Tesla’s fully self-driving Chip, Apple’s A5 processors and served as senior vice president at Intel for several years. Take us into the ten storied story. How did you first come across the company? Speaker 2 [00:16:55] So the founder is Ljubisa Bajic, and he worked for me at AMD. I was working at Tesla at the time and I was his angel investor, so I gave him the first check that he and a couple of guys did the classic, you know, two years in a garage making that work. I stayed in touch. So we had a lot of conversations about, you know, the direction they’re pursuing, how their engine work, what they thought was great about it. But I wanted to get back in the start startup. And then rather than start an air company, I joined Canstar to work with the media because I thought his approach to it, his team were doing something especially good. Speaker 1 [00:17:30] What are the biggest challenges that you’re up against a ton store? Speaker 2 [00:17:33] The biggest challenges is the fundamental, you know, how do you build an air compiler and how do you build the hardware that works properly? It’s complicated for for some unknown reasons, and then that’s complicated for some novel reasons. The scale of the data that they want to process on is just immense. And then that data, you know, if it was a nice big chunks that you could process through, that would be great. But now it’s spread all over the place. Speaker 1 [00:17:56] And we’ve got chips in pretty much every aspect of our life from the coffee maker that gets us going in the morning to the vehicle that moves us around and way beyond that. The sorts of applications that Tenstorrent is perhaps looking towards. I’m guessing are going to be at the more sophisticated end of the spectrum. Speaker 2 [00:18:15] Well, in the short run, we’re targeting developers who want to write software and get faster and around, especially if they’re building novel models. We want to start aiming at smaller data centers where people own their own applications and they want to co-develop with us. But going forward, I computations going to end up with everything servers, and it’s going to be in phones, it’s going to be in game machines, like you name it, it’s going to be all over the place. It’s going to be ubiquitous. But to get to that point, you know, we need a lot of development. Speaker 1 [00:18:44] Does it matter where the development takes place? There’s a lot of debate about onshoring these days. Speaker 2 [00:18:51] Nothing is co-located in this world. And so the supply chain is so diverse. It’s just amazing. And you can say anything you want about where stuff comes from that comes from everywhere. When I was at Tesla, we had really good supply maps where parts came from, which half the countries in the world and you know, the distance parts move. It’s it’s really remarkable. Speaker 1 [00:19:11] Is that going to continue? Speaker 2 [00:19:12] Probably. There are centers all over the place. What you tend to see is the high end development aggregates. You know, Boston and Silicon Valley were big centers. Toronto is an unusual class because University of Toronto has produced many, many of the top AI researchers, compute researchers. And then I had was a great graphics company center in Toronto. Altera is an FPGA company in Toronto. Intel and a couple other people had HPC programmers there that built high end machines, so that core Tens torrent software team was this interesting mix of AI research, HPC, FPGA and graphics programmers, which actually was it was fairly novel to have such a diverse software set but all different kinds of high performance problems. So you so you see you need critical mass to get going, but rather the software development, the hardware development and the sourcing and supply chain are very different things and they’re spread all over the place. Speaker 1 [00:20:10] What does a country like Canada need to do to keep that advantage and more importantly, build on it? Speaker 2 [00:20:15] Well, it’s interesting. You know, our team is very diverse and Canada opened their arms to people from Eastern Europe, from the Middle East, from India. And so that to build up a big technical pool. But the reason they went there to start was University of Toronto. And way back, if you remember Nortel, there was quite a number of tech companies in the networking space that established. And so you see this kind of multi-generational thing happen, like that technology wave that was big and one generation kind of built the infrastructure that the next generation took over. The Prime is an interesting place, the big metropolitan city. And you know, because of their policies, they attracted like say, an outsized percentage of people looking for a good place to go live and do development work. Speaker 1 [00:21:03] One of the challenges with Canada’s air strategy has been commercialization of a lot of the ideas coming out of places like U of T, And there’s some concern that Canadian businesses aren’t doing enough to tap into that in the air ship world. Does that matter a whole lot or are you just selling to and developing for ambitious companies wherever they may be? Speaker 2 [00:21:26] There’s two answers to this. One is, are you funding the fundamental research capabilities and startup funding so things can get going? That’s separate from picking winners. So you say, well, we need the pixel winners. Well, good luck with that. The marketplace 100 people start to finish helping the supply side. There’s good research institutions. There’s good support for students who want to study at their support for startups or who want to get going. Canada’s support tends to aren’t really well. I know they’ve assisted us in hiring people. They’ve funded universities which source great students. They create an environment where a whole bunch of people want to be. On the whole, we’re pretty happy with our Canada work. Speaker 1 [00:22:09] When you see very significant investments like the CHIPS Act in the US, is it a game changer or is that just more kind of politics around the sector? Speaker 2 [00:22:20] My my guess is it’s a good thing to have a national policy when they start spending large amounts of money. What happens is the companies who have a lot of money and have the ability to lobby for it will get a lot of that money. So there’s never been a revolution in tech or giving money to existing players, did they? There’s no example of it. So having a policy that says, you know, we have the right policy is about immigration, that the right policy is about import export, the right policy about taxation, that that creates the playing field. But, you know, way back when, you know, lots of people were giving IBM money to develop PCs, they contracted out to Microsoft. Right. The start up and so on that one. Speaker 1 [00:23:01] So is that going to be the same in chips as anticipated? Speaker 2 [00:23:04] Well, it’s always complicated because the money goes to the big companies and they hire people and try and do stuff and then they get frustrated and they go quit and they start a company and, you know, who knows the pedigree. Speaker 1 [00:23:17] And you’ve made the point that one of the best investments country and a government can make is in the education system, especially post-secondary education. Speaker 2 [00:23:25] I’m a fan of people who go to college and are so excited about work and they quit a semester early and they want to go do a hands on stuff and coding and all that. You know, speech patterns are good for some people, but they’re a waste of time for a lot of people. So it’s hard to say how that works out. Speaker 1 [00:23:39] Jim, as we move towards close, I want to get your thoughts on the geography of the chips world, because that’s in some ways what’s sparked this episode and the debate about reshoring, semiconductors. If you can think out five or ten years, do you think the chips landscape is going to be fundamentally different now? Speaker 2 [00:23:58] It’s really complicated because there are so many kinds of technology. You know, I talked to a few people about, you know, we need to bring, you know, chips back home so we can manufacture stuff. And I was thinking, are you trying to make more refrigerators or are you trying to make iPhones? Because those are really different technologies. Like, even in a server you look inside or it’s a power supply or power transistors, there’s all different kinds of technology. So you have to think hard about what you’re trying to impact. So I think, you know, the recent, you know, political stuff and funding stuff has made people think hard about it. But I think that’s what a lot of people took away from. This is like diversity of supply chain and actually knowing where your stuff comes from. Yeah, I think that’s going to be really important. Getting it all in the same place, that’s going to be possible. Our supply chain is already global, international, diverse, and that’s partly because there’s there is way more different pieces of technology in everything we do than you think. Even if you buy one chip, there is a thousand companies behind that chip. And so how are you going to bring 2000 companies onshore? Speaker 1 [00:25:03] Jim, I wonder if you can leave our listeners with a sense of where you think chips will take us. Go out five, ten years. What will be the big differences? Speaker 2 [00:25:11] Well, first, you know, in the big data centers and stuff today, it’s like 5 to 10% of the compute that’s going to go to 8090. So that’s a really big change. And whether that’s five years or ten years, it’s hard to say. But directionally, it’s going to happen. There are so many pieces of software you interact with today that are so clunky and painful to use, and there’s going to be a big wave of start ups building all kinds of user experience software that’s actually better. Now, whether it stays better, that’s another question and we’ll see what happens. You’ve already seen the stuff that like the ability to create imagery, the ability to create language, to build it, use it to assist in writing. That’s going to be become pervasive now, just like, you know, there was a point when you finally knew a lot of people who used a word processor to write stuff. Pretty soon you’re going to know a lot of people use A.I. to write. You know, it’s one of those technologies. There’s no going back. Speaker 1 [00:26:04] Jim, thanks for being on disruptors. Speaker 2 [00:26:05] Great to talk to you. Thanks. Speaker 1 [00:26:08] That was Jim Keller of Tenstorrent. I’d also like to thank Ben Bergin, president of the Council of Canadian Innovators, who joined us in the first half. As we’ve heard, semiconductors affect every facet of our lives, and they’re going to play an even greater role in the future. A large majority of them are made far away in a place whose future is, at best uncertain. Building domestic manufacturing facilities may be difficult and it may be expensive, but it’s clearly a race. Canada can’t afford to sit out. We need to make our mark. And today we talk to people building the industry in the hopes of doing just that, putting Canada again on the semiconductor map. Join us next time for a special live on location episode at the C 100 Summit in Half Moon Bay, California. I’ll be in Silicon Valley getting the Canadian perspective on the tech sector’s new reality. Until then, I’m John Stackhouse and this is Disruptors, an RBC podcast. Talk to you soon. Speaker 3 [00:27:10] Disruptors, an RBC Podcast is created by the RBC Thought Leadership Group and does not constitute a recommendation for any organization, product or service. It’s produced and recorded by JAR Audio. For more disruptors content, like or subscribe wherever you get your podcasts and visit RBC dot com slash disruptors.

Speaker 1 [00:00:01] Hi, it’s John here. And today I’d like to welcome back a special co-host. Naomi Powell is our managing editor of economics and Thought Leadership. She’s at the helm of many of our teams, major research reports. Speaker 2 [00:00:13] Thanks, John. It’s great to be back. Speaker 1 [00:00:15] It’s great to have you. Speaker 2 [00:00:16] So you are just back from the World Economic Forum in Davos, Switzerland. This was the first time the event has been held in-person, at least in a few years, thanks to the pandemic. I’m interested to know what it was like and what were the key moments that you took away with you when you came back to Canada? Speaker 1 [00:00:33] Well, talk about ironies that a couple of thousand people at least flew or traveled by whatever means to this little town in the Alps when we’ve just been through a crash course in doing so much remotely. In fact, I was thinking the last major international conference in some ways was the World Economic Forum in 2020. And then the pandemic hit and everything was supposed to change, including how we approach conferences. Speaker 2 [00:01:00] Yeah, I was thinking the same thing. COVID 19 was supposed to spell the end of conferences like this, and that didn’t happen. You’re right. We’re in more of a hybrid world and we’re still trying to figure out how that works. But I do think there’s a sense still out there, after everything we’ve been through, that if you’re going to hold a big in-person conference like the one you just described with hundreds of people flying in, it has to count. So what was accomplished, do you think, in-person that couldn’t have been accomplished virtually. Why does an in-person Davos still matter? Speaker 1 [00:01:29] I think there is a human interaction that just doesn’t happen on Zoom or whatever your preferred platform is. You do bump into people. You do have more honest conversations in person. And while Davos has this image of being elitist and, you know, in many ways it is it also is impressive how many people from different parts of the world come and get to interact. And I’m not just talking about businesspeople, artists, community leaders, scientists who wouldn’t be on those Zoom calls with CEOs or with government folks. I’d say if there was kind of a major accomplishment at this Davos, it was a reckoning with IRA, the Inflation Reduction Act, the monumental piece of U.S. legislation that has really accelerated a lot of clean tech investing. I didn’t appreciate until I was there just how rattled the Europeans are by this. I mean, this has been an existential challenge. Europe has fought for decades that it is the leader in renewables. And suddenly America, the great champion of fossil fuels in many European minds, is the champion of renewables, while also being the champion of fossil fuels, especially of oil and gas. The commitment to Ukraine was also pretty important. And while a lot of that has advanced through electronic and digital communications, there’s nothing like people being together to really solidify that. And government leaders, especially from North America and Europe, did come together and recommit themselves to Ukraine, not just for the year ahead, but for the years thereafter. One thing that did stand out to me is that all roads lead back to technology, whether it’s the climate crisis, the war, or ensuring the world’s population is being fed and fed sustainably. The development and implementation of technology is always at the core of how we’re going to tackle global challenges. Global problems do require global solutions, and this year’s Davos theme was cooperation in a fragmented world. And from what I saw, cooperation may be more needed, but it’s also more aspirational than ever. This is Disruptors, an RBC podcast. I’m John Stackhouse. Speaker 2 [00:03:55] And I’m Naomi Powell. John, I have a feeling you have a lot to tell us, so let’s get straight into it. Our audience, the disruptors audience is always keen to hear about technology. What can you tell us about the kind of presence that Tech had at Davos this year? Speaker 1 [00:04:15] Well, Davos has been the great champion of the so-called fourth Industrial revolution. This idea that advanced technologies, especially artificial intelligence, are really transforming every sector and a lot of aspects of society around us. And that’s a theme we’ve been engaging with on disruptors for a number of years. That’s coming to a head with a lot of economic realities. Many in the tech world have not lived with high interest rates, and they’re now seeing that. They’re now hearing from investors that they’ve got to operate their businesses differently and they’ve got to think about innovation differently. So that kind of collision of tech ambition and economic reality was really visible in in Davos during the forum. Big tech companies like Microsoft and Amazon announced tens of thousands of layoffs, giving a indication of the mood in the tech world. And yet at the same time, there were scientists and technologists there showcasing how quickly artificial intelligence and chat are moving in all sorts of spheres. And that’s not going to slow down even in a tougher economic environment. The science and technology is that powerful. And if there was a message certainly to business operators and business leaders at Davos, it was do not take your eye off the fourth industrial revolution as you’re perhaps managing a bit more tightly through a recession or near recession because your competitors, rivals or innovators, wherever they may be, are going to be doing some pretty extraordinary things this year. Speaker 2 [00:05:51] So what does that mean? What sorts of tools to leaders have at their disposal to spur that along? Speaker 1 [00:05:57] Well, Chat GPT is the favorite topic, maybe topic du jour, but it is really starting to disrupt fairly basic aspects of lots of businesses call centers, for instance, where chat bots we’ve had for years, but they’re becoming much more sophisticated. And in fact, it’s during economic downturns or tight economic periods where legacy businesses start to look very aggressively at transformative technologies, not just for innovation, but for cost savings. And I suspect we’re going to see more of that in in the year ahead. Speaker 2 [00:06:31] But exciting. So the war in Ukraine, you mentioned it before, it’s still a big global issue and it’s going to continue to be as we enter into the second year of the war. What was your sense of how leaders are looking at this second year? Speaker 1 [00:06:44] Well, it was impressive how resolute certainly European and North American leaders are to stand with Ukraine, a common phrase as for as long as it takes. But there are concerns. There are concerns that, you know, another year of war is not only going to be costly, first and foremost to Ukraine and Ukrainians, but to the many allies who are funding the war and supplying weapons. Can that go on for another year, especially if there is a recession in the West? That question is being asked, how determined will Russia be with the expected spring offensive? Will it be an all-out assault? Will there be weapons that we all have feared might be used? What will Russia throw at us? And I think the Ukrainians are very mindful of that. But their European allies are also starting to think through the consequences of that. One aspect of the Ukrainian war that I didn’t fully appreciate until I was in some conversations at Davos is how sophisticated the fight has been in the cloud. We’ve never had a war on this scale during the cloud computing era, and we’ve got a lot of serious players who are engaged in this kind of cyber warfare, including the United States. It was interesting to hear from companies like Cloudflare, which is a major player in the cloud that has worked with Washington, with American intelligence organizations, as well as with Ukrainians, to both contain what Russia might do in the cloud, to shut down Ukrainian digital operations or the Ukrainian Internet, but also to create space for Russians who want to get beyond the cyber controls of the Kremlin. I witnessed an incredible conversation with Cloudflare’s Matthew Prince. Here’s a clip. Speaker 3 [00:08:34] Yeah. So if we go back to a year ago today, we were starting to see in Derbyshire coming out of the region. That made us very worried that Russia was going to invade. And so we immediately reached out to authorities that we work with, got in contact with the Ukrainian government and provided our services to protect their critical infrastructure from cyber attacks. When the invasion actually happened, we terminated. Any Russian government affiliated customers from using our infrastructure. And then we worked with law enforcement and experts to say, what do we do next? And while there were some calls for us to pull out entirely what we saw when we talked to the U.S. government, when we talked to European governments, was that there was an important need for organizations like Navalny’s group Bellingcat, which is a Cloudflare customer, to be able to still get their message out. And they are themselves constantly under attack from Russian authorities. And so in order to protect them, we had to have some of our infrastructure still running inside of the country. And we made that determination that that was the right thing to do. Speaker 2 [00:09:50] That’s incredible. So a Silicon Valley company was able to tip off the authorities of an invasion. Speaker 1 [00:09:56] Yeah. Welcome to the second battlefield, as many people called it. And this is kind of the war of the future. It’s also the war of the present. It is being fought with artillery and humans, but is also being fought in the cloud. Speaker 2 [00:10:09] So, John, what about energy? We’re in the midst of an energy crisis. You know, Western sanctions against Russian oil and gas has accelerated that. And it’s also complicated, an already tricky transition to greener fuels. So Europe has so far managed to avoid an energy crisis. Can you give us a sense of how it’s managed to pull that off and what’s next? Speaker 1 [00:10:30] Well, a bit of international cooperation, some strategic planning and luck, I would say, is how Europe has pulled this off there. There was a great sigh of relief at Davos that the energy crisis has not expanded or been as acute as many had expected. In fact, gas prices are down to pre-pandemic levels in Europe, and there seem to be enough supplies to see Europe through probably this calendar year. But everyone’s worried about next winter. How did Europe get through this winter? Well, warm weather helped a lot. China being in lockdown was a huge factor because China is a major gas importer and a lot of those supplies were diverted to Europe. And then there was significant cooperation, particularly with the United States, to get not only American gas, but gas from American allies to Europe to ensure that it got through this winter. Can all that happen again? Well, maybe some of those forces can be replicated, but there’s no control over weather. And if Europe is hit by another blistering hot summer or a freezing cold winter next year, it’s going to be a lot more challenging all the more so if China is back in the international energy market. Speaker 2 [00:11:41] So Europe’s talking about doubling its current renewable energy capacity. Speaker 1 [00:11:45] It’s ambitious and it’s interesting to hear the Europeans, led by the Germans saying we are going to be all renewables by, you know, mid 2030s, maybe even 20, 30. But when you talk to, you know, people who have to literally get shovels in the ground, they’re reminding us as well as Europeans, that Europe doesn’t move that quickly, especially on major projects. Europe has a reckoning under way in terms of its approach to regulation, which ironically was one of the reasons Britain pulled out of out of the EU was just the heavy regulation. Well, that’s holding up some some important renewables development. There’s also supply chain challenges, which we keep hearing about, but there isn’t enough skilled labor or basic materials like steel to build new wind farms or LNG import terminals that are needed to help with that transition. But one thing that was absolutely clear from the Europeans is that they are going to spend whatever it takes to keep pace with the United States on renewables. Whether they can change regulations or not is another matter, but the money will be there. And that was said quite clearly by Ursula von der Leyen, the president of the EU Commission. Speaker 4 [00:12:56] That means that together the European and the United States alone. Putting forward almost €1,000,000,000,000 to accelerate the clean energy economy. This has the potential to massively boost the path to climate neutrality. But. It is no secret that certain elements of the design of the Inflation Reduction Act raised a number of concerns in terms of some of the targeted incentives for companies. So this is why we have been working with our United States friends to find solutions, for example, so that EU companies and EU made electric cars can also benefit from the Inflation Reduction Act. Our aim should be. To avoid disruptions in transatlantic trade and investment. We should ensure that our respective incentive programs are fair and mutually reinforcing. And we should also set out how we can jointly benefit from this massive investment, for example, by creating economies of scale across the Atlantic or setting common standards. Speaker 2 [00:14:21] So critical to the eBay’s and the other clean tech that von der Leyen was talking about are semiconductors. And I’m glad you raised supply chains earlier, John, because one of the things that was supposed to have happened by now after the pandemic is there were supposed to be a lot of reshoring, of manufacturing, of these goods. That hasn’t really happened. Speaker 1 [00:14:40] You’re absolutely right. Naomi There is a gap between rhetoric and reality on a number of these files, but supply chains in particular, we have all heard the rhetoric about the need and desire to move chip production from Taiwan, particularly to the United States. Some of that is underway. Big companies like Intel are building facilities in North America and Europe. But even the CEO of Intel said it took decades to move the locus of the supply chain for chips to Asia. It’s going to take decades to get it back to to the west. And of course, the EV revolution is going to accelerate. So where will the chips come from for all these electric vehicles coming onto the market? It’s important to note that the electronic content and the chip content in EVs is significantly higher than in the current generation of automobile. So those chips are going to be critical to the EV supply chain, and the manufacturing of them is not going to be on American soil probably any time soon. So a couple of things are happening. First of all, chip companies are working with kind of the last generation of chip manufacturing, which is more prevalent in in the West and trying to upgrade that and also work with EV parts makers to make them, frankly, a little less demanding in terms of what chips can do. And then in the spirit of ensuring that word, we hear a lot of there’s other countries, India first and foremost, that are really trying to make a move on this change. India is very proud that it has been winning mandates for products like the iPhone and is spending a huge amount to get semiconductor and chip manufacturing to shift to India. So game on. It’ll be interesting to see how the the geopolitics of Chipmaking continue in the years ahead. Speaker 2 [00:16:39] Okay. We’re going to take a quick break. But coming up, more of our conversation with John Stackhouse and his rundown of the World Economic Forum in Davos. You’re listening to Disruptors and RBC podcast, I’m Trinh Theresa Do. I’d like to share with you our latest agriculture report from RBC Economics on Thought leadership, called the Transformative Seven Technologies that Can Drive Canada’s Next Green Revolution. In it, we identify seven key agtech innovations we believe can both meaningfully reduce emissions and present opportunities for Canada to lead. Some, like anaerobic digesters, carbon capture and precision technology, are ready to scale now. Others, like vertical farms, plant science and cellular agriculture, will be key solutions. Speaker 4 [00:17:30] For the future. Speaker 2 [00:17:30] In every case, maximizing their potential will mean building the right platforms for collaboration among not just farmers and entrepreneurs, but also investors, corporates and governments. To learn more, visit RBC E-commerce Transformative seven. Speaker 4 [00:17:48] Stephen King’s manuscript for Carrie was rejected by 30 publishers before selling a million copies in its first year. Lisa Kudrow was told she wasn’t gorgeous enough for television before becoming the highest paid actress on TV. And Breaking Bad was rejected by four major studios before breaking the Guinness World Record for highest rated TV show of all time. On We regret to inform you the Rejection Podcast. We walk you through their incredible journeys, extract the insights and uncouple shame from rejection one story at a time. We regret to inform you the Rejection Podcast. Speaker 2 [00:18:30] Welcome back. John, you had a front row seat at the World Economic Forum in the Alpine village of Davos. I read that China was notably absent this year, or if at least not absent that much more quiet than they have been in the past. That’s a pretty big shift in tone from, you know, pre-pandemic Davos, when Xi Jinping, sort of emboldened by this booming Chinese economy, came out swinging at the West. What can you tell us about that? Speaker 1 [00:18:54] You’re absolutely right. It seems like yesterday, although it was five or six years ago when President Xi was there, saying essentially we will fill the void created by Donald Trump’s America and America first thinking. You can count on China to help the world through the climate transition, to help the world through energy changes. You don’t see that. You don’t hear that in Davos. Certainly not. Not this year. In fact, the leading voice for China was there in some ways to make amends, to reach out to the West and say, we don’t want a trade war. You probably don’t want one either. But it was very interesting to hear a Chinese leader. And in this case, it was Liu Hay, the vice premier, called for a dialing down of the Cold War rhetoric to call for more open trade and investment. And to suggest that China wants to work with the West. Also interesting to hear a number of Western political voices, including from the United States. Republicans and Democrats say, no, we’ve kind of moved on and we don’t want to be as nearly cooperative with China as we were a decade or two ago. Now, some of this is politics that plays well on Main Street in a lot of countries. Business, trade and investment continues to thrive between America and China and Europe and China. So reality and rhetoric may have a bit of a gap there, too. But I think we’re going to see this chill between the West and China for a good while. In fact, one of the warnings I heard repeatedly the West was how China may be a greater security threat to the West than, let’s say, Russia. And those threats are often in cyberspace. And we’ll probably see even more concerns raised this year about what China may be doing. Speaker 2 [00:20:37] What do you think is behind that softening in tone from China? Is it just that their domestic problems are becoming so overwhelming right now that they’re not up for posturing on the world stage? Speaker 1 [00:20:48] We’ve heard the warning that China will grow old before it grows rich. For a number of years, and that is playing out. We’ve seen this intersection of demographics and economic growth. And the Chinese are very worried about that. How are they going to support sustain an older population? How will they keep the economy humming with fewer people? Well, it’s going to take investment. It’s going to take technology and it’s going to require trade. They will need the world’s major economies buying more sophisticated products from them in the years ahead. So that’s going to require a different and more open approach to trade. Speaker 2 [00:21:28] So China, like a lot of countries, is very much focused on tech. China needs the West to buy the technologies that it’s working very quickly to to develop. So do other countries. We need tech to make a lot of things happen for us, the green transition and beyond. But this requires innovation and a lot of it. So who is at the forefront and where does Canada rank in terms of our innovative capacity? Speaker 1 [00:21:53] Well, I think it’s clear that the innovation leader and the planner continues to be the United States. It is firing on all cylinders in a whole range of sectors, fueled, if you will, by that Inflation Reduction Act. It is extraordinary how much investment capital is shifting to the United States. How many people who want to be pioneers in agtech or in building technology or in artificial intelligence are shifting or returning their focus to the United States, because that’s where the greatest opportunities are. As we were discussing earlier, Europe is trying to catch up, and that’s going to be interesting to see, see what it does. And China, you know, it hasn’t shut down its innovation machine, but a couple of years of lockdown have really been a setback. So it’s got slow economic growth. It’s got a society that is no doubt scarred by those marathon lockdowns. And it’s got a whole bunch of customers and trading partners who are not as cooperative. So I suspect we’re not going to see innovation coming out of China like we might have a few years ago. And we’ll see the United States continue to really tower over a lot of a lot of global innovation. What a great opportunity for Canada. We’ve got an open border. We’ve got common cultures and a common language. We have engineers and entrepreneurs who go back and forth. We’ve got Americans investing in Canada and Canadians investing in the United States with a freedom that you don’t see. In many other parts of the world. But Canada, like Europe, is going to have to really come to grips with whether we’re doing enough to play at the level that the United States is playing at. I think we’ll see in the federal budget, presumably in March, a number of commitments that try to up Canada’s game in terms of tax incentives and fiscal spending. But one of the quiet concerns has to be our own regulatory pace. We don’t move as quickly as we need to in terms of approving projects, approving investments, scaling opportunities. There are improvements, but there’s going to have to be a lot more if we’re going to move at pace with where the U.S. is going. Speaker 2 [00:24:17] You know, another issue that the U.S. is going all guns at is food insecurity and cutting emissions in the ag sector. That’s something you’ve looked at a lot on this podcast. What was being said about that in Davos? Speaker 1 [00:24:29] Quite exciting to see agriculture as a point of focus for so many business leaders as well as government leaders. I think one of the Awakenings last year was how fragile food systems can be in many parts of the world, including our own. We all saw shortages on the grocery shelf and don’t want to see a lot of those in the future. At the same time, I think a lot of countries are realizing that producing more food could come with more emissions. So how do we address that? Well, the best way to address it is through agriculture, because soil, it’s the new gold soil is going to be capturing a lot more greenhouse gas emissions in the years ahead than it has in the past. And there’s a lot of innovation going on in Europe and the United States and Canada will be accelerating this, I suspect, in the in the months and years ahead that allow us to see large swaths of land and of soil used for an economic advantage, but also for a climate advantage. Fertilizer was also a big topic of conversation, as we heard from Sven Tori Hall Sutter. He’s the CEO of Yara International, a Norwegian chemical company that produces, distributes and sells nitrogen based mineral fertilizers. Here’s what he had to say. Speaker 3 [00:25:44] What are we really as a fertilizer company? Well, we are replacing nutrients that we removed from the field when we take the crop away. Right. And if there’s no value to nature, well, then you mine the soil of its nutrients and you leave that behind. Then you move on and you destroy nature to get to the nutrient because that’s free. But if it rodders, think about it from a business perspective that we put back, that the nutrients be removed, not more, not less. And think about this more as a soil health perspective, healthy soil, healthy crops. Then we have a very different business model. And so for us, this has been a trigger, but we’ve already been preparing for this. Speaker 2 [00:26:25] Yeah, that’s fascinating. I do think this is one area where Canada has all the assets. It needs to be a leader and a leading voice. So as we come to a close, John, how did Davos leave you feeling about 2023? Speaker 1 [00:26:37] Well, it’s going to be a risky year, starting with the global economy. We may or may not have a recession in many parts of the world, but at the same time, we’re probably going to have higher interest rates for longer than we might have anticipated even a few months ago because of labor shortages, because of these supply chain challenges and because of the determination of central banks not to get it wrong this time in terms of fighting inflation. So that creates a bit of a tenuous economic environment for a lot of investors. But, you know, it’s at times like these where the advantage goes to the brave, to the courageous, to people who are able to look beyond the current year, to the growth that will follow in 2024 and beyond, and be making the changes, the investments, the commitments this year that will put them ahead of their competitors. There’s also geopolitical risks out there, and the one that I kept hearing about that isn’t getting a lot of headlines is Iran. We all know about the protests in Iran and perhaps the the fragility of the regime there. If Iran wobbles more in the coming year, that’s going to have a big disruption on global markets, including oil. It will destabilize the Middle East, maybe for the better, depending on your point of view. But is another risk that we have to sort of factor into how we see the year ahead. Speaker 2 [00:27:57] It’s interesting. So it’s a year to be bold. You published a piece summing up your thinking on Davos on RBC Economics website, where you also describe it as a year to hold your ground. Speaker 1 [00:28:07] Yes, that was a clear message from a lot of business leaders that they may not be bullish about the year ahead, but they are optimistic things will accelerate perhaps in 2024. But that’s why you hold your ground today. Don’t see ground and start to look for those critical investments and opportunities that will allow you to really make a move in the years ahead. Speaker 2 [00:28:28] John, this is such a pleasure. It’s one thing to read about Davos and all the things that go on there. It’s a lot different to talk to somebody who’s been there and can share their impressions firsthand. Thank you for doing that today. Speaker 1 [00:28:39] Absolutely. My pleasure, Naomi. Speaker 2 [00:28:41] And thank you also for inviting me to co-host today. I’m Naomi Powell. Speaker 1 [00:28:45] And I’m John Stackhouse. This is Disruptors, an RBC podcast. Talk to you soon. Speaker 2 [00:28:52] Disruptors, an RBC Podcast is created by the RBC Thought Leadership Group and does not constitute a recommendation for any organization, product or service. It’s produced and recorded by JAR Audio. For more disruptors content, like or subscribe wherever you get your podcasts and visit RBC dot com, slash disruptors.

Speaker 1 [00:00:01] Hi, it’s John here. Happy New Year and welcome back. We’ve been warned for years that the point of no return is coming. Sea levels are rising. The Earth is warming. We’ve seen thawing permafrost and large scale die offs in coral reefs. And even parts of the Amazon are experiencing increased episodes of drought. Okay. That’s a lot of despair. But guess what? There’s also hope. We know the problem. And more than ever, we know a lot of the solutions. Critical policies are actually in place and a very key element. Money is on the table to fund innovative technologies that can change our world. The US is making its largest investment ever. The European Commission has pledged to mobilize at least €1,000,000,000,000 in sustainable investments over the next ten years, and Canada is ponying up, signaling the next federal budget, along with commitments from key provinces, could set the course of public spending on climate for years to come. But it’s not enough. Now it’s time for the private sector to put those billions of dollars to work and add many billions more. The future is here. The question is how can we disrupt it before it disrupts us? This is Disruptors. An RBC podcast. I’m John Stackhouse. Today, I’ll be speaking with two people who decide how billions of dollars are invested in green tech. I’ll be joined by Elliot haTO, a managing director at Beyond Net Zero, a global growth equity firm with $73 billion under management. But first, I’d like to introduce Dr. Andrew Steer. Andrew is the president and CEO of the Bezos Earth Fund, created by Jeff Bezos in 2020. It has $10 billion that has to be disbursed as grants to address climate and nature within the current decade. Andrew, welcome to Disruptors. Speaker 2 [00:02:07] Thank you very much, John. Speaker 1 [00:02:08] I want to start with the Bezos Earth Fund. What is it? And maybe give us a sense of the vision behind it? Speaker 2 [00:02:14] Well, Jeff Bezos allocated $10 billion to be spent down this decisive decade on the challenges of climate change and nature. And so it’s an exciting venture. It sounds like a lot of money and it is a lot of money. But actually, compared to the need, of course, it needs to be leveraged so that we can get real change because this is the decade that will determine whether or not we succeed or fail. Speaker 1 [00:02:43] So is it that critical that those sorts of investments, that scale of investment be made this decade? Because if it’s made a decade hence, it’s too late? Speaker 2 [00:02:53] Well, next decade will also be critical. The problem is, if we don’t do it right this decade, it will be impossible to do next decade. So that’s why this decade is is really absolutely critical. We we simply have to get down to net zero. When we talk about climate change and we simply must reduce the incredible loss of nature which is going on at the moment because these two problems multiply themselves and we’re heading to a bad place. We live in this highly paradoxical world, don’t we? We have never had the progress. You know, the average person today lives 20 years longer than when I was born. Poverty has fallen from 80% of the world’s population to less than 10% of the world’s population. Amazing achievements. But the price we’ve paid has simply been too high in terms of losing species, losing natural habitats, polluting the atmosphere. And we can do better. Speaker 1 [00:03:56] And Jeff Bezos, I mean, he’s celebrated widely for a level of thinking and ambition that is all too rare in this world. Can you give us a bit more sense of how that ambition applies to climate work? Speaker 2 [00:04:08] Well, I mean, it is wonderful, isn’t it, that wealthy people decide to give back. And it’s wonderful how a growing number of high net worth individuals are seeing these big problems that are needing to be addressed. And Jeff Bezos himself obviously has a way of thinking. I mean, he is somebody who has taken on problems that at times seem impossible and systematically gone about addressing them so that we now have the ability to do things that we couldn’t do before, having really transformed entire industries. And so bringing that mindset to these incredibly, you could say, wicked problems, solving climate change is the greatest collective action problem, as many have said sort of in the history of the world. It’s got everything that makes it difficult. It’s got into temporal inequities, it’s got current inequities, it’s got deep moral issues, it’s got massive technological issues, it’s got complex financial issues, and it’s got huge political questions that need to be resolved and all of that kind of free rider problems that we know about. And so, my goodness me, we need the best brains as well as the best money to address these issues. Speaker 1 [00:05:27] But I guess in some ways you’re not solving that problem. Jeff isn’t solving that problem. You’re trying to find support, invest in the many folks out there who are developing the ideas and solutions. And I’m curious what kind of mindset you strive to bring to that. You know, I’ve heard the fund described as one that supports ideas and not just projects. That’s got an appeal. Not always easy to invest in ideas on, unfortunately, but it probably takes a different approach than building a company or running a project. Can you give us a bit of insight into what kind of thinking you and your team tries to bring to the challenge? Speaker 2 [00:06:03] Well, we try to identify and monitor the roughly 50 to 70 major transitions that are required this decade and next. You know, the big blocks of we’ve got to totally transform energy. We’ve got to rethink our food system. We’ve got to think about forests. We’ve got to think about our cities. Within each of those, there are five or six transitions, which in and of themselves are pretty major. We’ve got to get. Rid of the internal combustion engine. We’ve got to shift diets towards more plant based. We’ve got to do about 50 things of that level. And what we do is we co-manage with the World Resources Institute and some others something we call the System Change Lab. And what we do with those, we monitor those 50 to 70. And we ask the question, how close are they to tipping points beyond which change becomes irresistible and unstoppable? And what are the barriers to get there? Our job is to be pretty forensic about where we go in using both money and convening power and influence Power. It could be to finance primary research. It could be to finance political advocacy. It depends on the issue, and it depends upon precisely where they are in that trajectory towards a positive tipping point. So when you mentioned we like to address ideas, this is again, is something that Jeff Bezos, you know, will say let’s not allocate funds in our efforts to issues or even to targets. Let’s allocate them to ideas that will get to those targets, that will address those issues. Speaker 1 [00:07:46] And the ethos of the fund, primarily one of technology. That technology can and will solve this. Or do you believe that we also need culture change, behavior change, even social change, and not rely on those magic bullets of technology? Speaker 2 [00:08:02] We absolutely and utterly require cutting edge technology and behavioral change. And indeed, as we move forward towards the end of the 2020s into the 2030s, behavioral change is going to become more important is probable that people in Canada and certainly in the United Kingdom, where I come from originally, we have reduced our greenhouse gases quite a lot. The average citizen has no idea it’s happened because they haven’t had to change their behavior. As we move forward, we are actually going to have to change our behavior. Now, technology is still incredibly important and we couldn’t have a chance of addressing climate change. You know, if you look at the cost of, say, solar energy, I mean, since Jimmy Carter put solar panels on the roof of the White House in 1979, the price of solar has fallen by 99.6%. So there’s actually been a wonderful revolution that’s intellectual and economic. I mean, even ten years ago, the entire economics profession felt that, my goodness me, it would be nice to do something about climate change, but we’re going to have to pay a cost in terms of lost competitiveness, lost economic growth. And now because of cost changes, because of technology changes, because we’ve learned about what policies work. It now turns out that actually smart, strong climate action leads to more economic efficiency. It drives new technologies, it opens new opportunities, it shifts expectations. So there is a much better future. So you get more competitiveness and you can get more growth. Now, we don’t want to be Panglossian about this. It’s not all win win. There are losers. And that’s where politics comes in. Speaker 1 [00:10:00] Well, exactly. This is political and I mean that in a positive way because it’s about collective decision making, which is reflected in in our politics when we do it well. But we don’t do politics very well in many countries. How are you thinking about systems change in the political arena or the collective decision making arena that can perhaps accelerate some of the other investments that you’re making? Speaker 2 [00:10:25] Well, I mean, this is a very difficult issue. We’ve certainly put quite a bit of resources already into communications. Last year, we invested quite a bit here in the United States trying to clarify the narrative about good climate action leads to a good, better economy. And we we invested in targeted messaging through various media, television, social media, basically bringing data, bringing the data and evidence and bringing human stories as to what works. I think generally the environmental movement has been trumped by more sophisticated communications and political skills from the opposition. Speaker 1 [00:11:16] I want to shift to the idea of of of leverage. People will hear that you are investing $1,000,000,000 a year and think that’s a large amount of money. And of course it’s a huge amount of money. But the need out there for the transition is going to be kind of in the 5 to $10 trillion a year range globally. That’s how much capital needs to be invested. So we all need to be thinking more about leverage. And I’m curious what you’re seeing and learning about leverage in your own climate work. Speaker 2 [00:11:45] Well, most philanthropy has been unleveraged, so a dollar into good health gives a dollar of good output. In good health. You know, you build a hospital, you build a school, you build whatever. Unfortunately, because the problems are so great, we need to do better than that. Now, you can leverage in several ways. You can leverage through de-risking private investment. And obviously the Royal Bank of Canada has done incredible work on that. Many investments in sustainable development need some de-risking. One could do that very directly, but one also can, if you like, do the policy side, which is also leverage. I mean, in many ways that’s the most effective leverage of all if one invests in reshaping policy. So what we try and do for every single investment we ask, well, if you like the direct impact and then what’s the second order impact that would encourage others to do it? And another I mean, another form of leverage is simply doing something that is so successful that then through the right kind of communication, it can then become irresistible. So we’re experimenting with all kinds of ways of doing it. So as an example, last year we really wanted to take on the most difficult issue of protection or conservation that exists, which is the Congo Basin, which is, you know, unbelievably precious. It absorbs more carbon than the Amazon Basin and the Southeast Asia tropical forests combined, and yet it’s under massive threat. And obviously there are all kinds of governance issues. So we gave funding to about ten different world class organizations and we said, look, the deal is each of you are very, very good at certain things. Your job is to work on those and be accountable to to us for what you do. But in addition to that, for the first time ever, let’s work as a team together. So if you’ve got the CEOs of ten internationally recognized organizations together with ourselves, then suddenly you get some European governments that say, actually, we’d be like to be part of this. And then you can go and see any head of state in the Congo basin that you want and you start sort of thinking differently about, my goodness me, if we only we could get the the head of the office, the head of the country all the way down and have something joined up, my word, that could be real leverage. Speaker 1 [00:14:20] But that spirit of collaboration is really at the heart of leverage. Leverage isn’t just a financial equation. It’s about bringing together different forces and empowering them, but also using them together to do things that none could do on their own. And it makes me think of the Electric School Bus initiative, which I wanted to ask you about, because that’s a it’s a really neat and ambitious project aimed at decarbonizing the entire U.S. school bus fleet. Curious how you see it as a template for more collaboration, especially between public and philanthropic forces? Speaker 2 [00:14:51] You’re absolutely right what you just said, John. I think I mean, if you look at almost any of the problems that we’re trying to deal with, there’s no one organization. There’s not even one group of organizations. It’s basically a sort of multi-stakeholder solution. And you need governments and you need, you know, NGOs, you need citizen group, corporate sector and so on. And actually the school bus situation in the United States, a very good example of that. There are 480,000 school busses in the United States. If you are a poor child from a poor county going to school in a bus in this country, because remember, schooling is a county level responsibility, you breathe air from diesel fumes. That is basically like being on the street in New Delhi. I mean, it’s really bad for health. So this has a social justice element to it, a health element. And this is one of the very first conversations that I have had with Jeff Bezos and Lauren Sanchez about when I was in my old job. And it was like, wouldn’t it be exciting if we could do something that would have a health benefit? But not only that, it would have a climate benefit, it would have an intergenerational benefit. It would it would actually also help create an industry in this country, because 96% of all the electric busses in the world were built in China. And then on top of that, by the way, during those long, hot summer months while school busses just sit there, they actually don’t sit there if they’re electric because they become a giant battery. And because 480,000 batteries, when you take electricity off the grid, when it’s cheap and plentiful, you put it back on the grid when it’s not, my goodness me, that saves dozens of power plants being built. But you can only then do it if the state level gets engaged, the school districts get engaged, the industrial and financial sector gets engaged. And so what we did, we worked on legislation and now there are, what, $12 billion that’s been put into this, something like that through the new Biden administration. And little by little, you start seeing, my goodness me, we could put this jigsaw puzzle together. Not us. I mean, you said earlier we don’t take any particular credit for this, although I think we’ve played a very good role. We’re part of, if you like, making sure that the pieces of the jigsaw puzzle sort of come together at the right time in the right kind of way. Speaker 1 [00:17:24] This point about multiple benefits from multiple our allies is really critical and often lost on climate policy, where many people, for understandable reasons, see the objective as critical enough on its own to be the only ROI, if you will. That’s important, but that’s not necessarily the case for all sorts of people in society who have multiple needs. And the more that policies and investments can help address those multiple needs rather than be a kind of a single solution oriented one, probably the better we all are. And I’ve been seeing more of this in the biodiversity space, and I raise that because our last episode of 2022 was on biodiversity, and you and I met for the first time at the Montreal Biodiversity Conference and it was there that I got to more deeply appreciate the intersection of climate change and biodiversity and how they both lead to benefits in each realm and are interconnected in all sorts of ways. And I’m curious, Andrew, how you see those two challenges intersecting and how we can do more. Speaker 2 [00:18:28] Well, you’re absolutely right. And by the way, your podcast edition on that was wonderful. I think that conference in Montreal was extremely important and I think combining that with COP26 in Glasgow, which for the first time sort of recognized we can’t solve climate change unless you also protect nature because it’s there’s more than one third of the solution. And the same goes the other way round. You can’t protect nature unless we address climate change, because with the way that climate change is going, we are losing nature at an even more rapid rate. And it’s really been wonderful to see just in the last 18 months culminating in in Montreal, we’ve seen this sort of willingness to think of these two as integrated. And your points about, you know, multiple benefits are incredibly important. You know, they call them co-benefits. And in many parts of the world, you know, if we want to deal with climate change, you know, don’t enter the policy door through the climate change door, enter it through health or entry through nature. Speaker 1 [00:19:32] We’re sort of time, unfortunately. But I also was just reflecting we’re still in the early days of January, and therefore I want to seize on the New Year spirit to ask you, as you look through 2023, what your maybe greatest hope is for the year and also what your greatest fear is. Speaker 2 [00:19:50] Well, look, this is a year where things are going to need to start improving. We got data just today on greenhouse gas emissions in the United States. Greenhouse gas emissions went up last year and things need to change. I am deeply hopeful that actions that may take a year or two to have bite, they are going to start having impact this year. I think some of the decisions made in Glasgow and in Sharm el Sheikh will start to bear fruit in the United States. Obviously with the additional funds that are being put forward. I mean, historically important. We are going to start seeing some progress. But look, we are in a hugely uphill battle. We’re in this paradoxical world where, if you ask two experts say on climate change, you say, how are we doing? And one will say, it’s amazing. You know, costs have come down 99%. We’re doing this. It’s really great. Others who say, you know, we’re a bunch of lemmings going off a cliff the end times and which how could they both be, right? Well, they actually are both right. They are both right. We are doing better and better than we are dog chasing a bus and the dog is going faster and faster. And we are saying we are running so fast is great, but the bus is accelerating away and so the dog can’t keep running faster. The dog has to get its own electric bike. You know, we need a new instrument. And I’ve got a feeling that we’re getting towards the stage where. Will accept that fact. Speaker 1 [00:21:17] What do you think those dogs need to do in 2023, above all else? Speaker 2 [00:21:21] We need once and for all to recognize that no individual government or even government can solve the problem. We need to sit down around the table and we need to get the real decision makers to say, okay, if the issue is electrification of transportation, what do we need to do? How do we how do we have a rational conversation? It can’t simply be preaching. It’s got to be a multi-stakeholder approach. And I hope and pray that we’re heading towards that kind of new it’s really a new governance system. And I think there are signs of hope. But, you know, there’s still a far, far more risks than most people are aware of. Speaker 1 [00:22:08] In a site governance system going to have to come from government or from collectives of government like the U.N., or is it going to come from philanthropists, private actors, business and other coalitions? Speaker 2 [00:22:20] I think it’s already starting to change. I mean, it is quite interesting that if you go to the United Nations General Assembly now, you’ll see a much, much richer approach. You’ll see young people. You see businesspeople. Governments have to accept it. But often governments, you know, don’t always lead. They are responsive. And so the business community, I mean, it’s albeit difficult, it is stunning when you think about it that now $130 trillion of assets under management are now committed to net zero. That would have been unthinkable. Now it’s very, very difficult to implement it. And there’s some rocky things going through right now, but we now need to come through that and say, look, you know, we know it’s difficult, but now let’s really redouble our efforts. And I’ve got a feeling that that’s happening. And, you know, I don’t want to flatter your country, but I do think actually some pretty exciting things going on in Canada right now. Speaker 1 [00:23:20] What excites you most in terms of what’s happening in Canada? Speaker 2 [00:23:22] Well, I think, for example, on the nature side, the announcement that Canada made on massive new protected areas, I think anywhere in history on the first day of the COP and led by First nations, very, very exciting. I mean, talk about multi-stakeholder. I mean, so interesting seeing First Nations seizing and being given authority to manage natural resources, which they are very good at, at managing. That would be just one example. Speaker 1 [00:23:58] It’s those coalitions likely and unlikely that are keeping us moving forward as bumpy as rocky as that road can be. And I’m grateful that the Bezos Earth Fund is leading a lot of those coalitions. Andrew, And that you’re you’re a champion of so many. Thank you so much for being on disruptors. Speaker 2 [00:24:15] Thank you, John. We love listening to your podcasts. Speaker 1 [00:24:19] That was Dr. Andrew Steer, president and CEO of the $10 Billion Bezos Earth Fund. Up next, Ellia haTO will join us to talk about how massive investments in technology are changing the fight against climate change. Speaker 3 [00:24:37] RBC Tech for Nature. Is there a $100 million by 2025 multi-year commitment to accelerate tech based solutions that help preserve the world’s greatest wealth, our natural ecosystem? We work with partners to leverage technology and innovation capabilities to help solve pressing environmental challenges. This program is a key element of how we are delivering on our climate strategy. The RBC Climate Blueprint RBC Tech for Nature is now accepting funding applications until February six. Apply now to partner with us and create a more sustainable future. Visit RBC dot com slash tech furniture for more information. Speaker 1 [00:25:12] Welcome back. Today, we’re talking about how Canada can emulate the most comprehensive climate law in American history, the Inflation Reduction Act, or IRA. Our next guest is Eli Aheto. He’s the managing director of Beyond Net Zero, a global growth equity firm that invests in companies to develop innovative climate solutions. Eli, welcome to Disruptors. Speaker 4 [00:25:34] John Thank you so much for having me. It’s a pleasure to be with you. Speaker 1 [00:25:37] I want to start with Beyond Net Zero, and if you could give our listeners some background on what it is and what it’s all about. Speaker 4 [00:25:44] Sure. Beyond Net Zero is the climate investing team at General Atlantic. I think folks may recognize General Atlantic as a 40 year old global growth equity firm. We’ve been investing in leading businesses in digital sectors for most of our history. And the climate initiative is one that’s fairly new in the last two years. But we recognize it as one of the most consequential opportunities in business today and also one of the most consequential opportunities in society. And so we think that there is a significant need for capital to help drive the growth of businesses that are putting out products and services that help people decarbonize either their operations, their livelihoods. You know, all sorts of activities that need to have reduced greenhouse gas emissions. And so we’re pretty excited about the opportunity ahead of us both, because there’s a real social dimension to what we need to accomplish. But we think it’s a fantastic business opportunity where there are entrepreneurs creating products and services that are saving customers money, which is really exciting, at the same time helping them reduce their greenhouse gas emissions. Speaker 1 [00:26:48] I want to get into some of those examples and opportunities, but wonder first if we can talk a bit about the macro environment. Of course, the Inflation Reduction Act or IRA, is clearly injecting a lot of capital into American opportunities. But at the same time, we’ve got a lot of challenges and headwinds in in markets generally. How are you looking at the macro environment for investing in 2023? Speaker 4 [00:27:14] You know, it continues to be a challenging market as an investor. Obviously, we’ve had markets falling over the last year. In some sectors we still have high valuations, which those two things don’t seem to go together. In the climate sector particularly, we’ve still seen high valuations that haven’t yet reflected where the public markets are. But at the same time, we’re seeing markets that are growing quite dramatically. So if you think about, for example, EV charging infrastructure, that’s a market that Bloomberg thinks will grow 80% year over year, and that’s despite the macro environment. More broadly. If you think about solar, the IEA has just increased its estimate of solar buildout for the next several years by 20% globally. That’s a pretty big step up in one year. Part of that is an adjustment that is a consequence of the IRA. Part of that is an adjustment that’s a consequence of energy security in Europe. And part of that’s a consequence of the decreased cost of renewable power. And so there are a lot of tailwinds that are driving forward the climate opportunity, despite what is still a volatile and in some ways rough macroeconomic environment. Speaker 1 [00:28:22] Well, it has been a pretty rough year that maybe now in the rearview mirror a bit longer than that than a year. And for some that brings back memories of earlier clean tech wrote Wonder in your mind what makes this time different? Speaker 4 [00:28:36] I think there are numerous differences between clean tech 1.0 and where we are today. We have now ecosystems of entrepreneurs, financiers, scientists, academics, policymakers who have experience in climate. We didn’t have that last time around. We have now technologies that very importantly are mature and are cost effective. We have now entrepreneurs focused on business models where they are delivering a cost savings to consumers. We have now financial markets that are ready, willing and able to finance businesses that have demonstrated they can be profitable at scale. And we have obviously a desire for consumers to decarbonize and mandate from corporates to decarbonize their supply chains. We have a political support that we didn’t have in the first clean tech investing boom. And so it’s a it’s a radically different environment. Speaker 1 [00:29:34] Did IRA change your fundamental outlook? Did you wake up in August, September, whenever it hit the headlines and think, Wow, I’ve got to rethink my portfolio and my allocations? Or is it more kind of a marginal benefit than that? Speaker 4 [00:29:47] There’s no describing the IRA as being marginal. It clearly was an overdue substantial statement around what the U.S. was going to commit to relative to climate change, and it created the incentives in several different sectors, some of which were already active. And so I mentioned distributed generation. You know, we’ve been very keenly looking at transportation, electrification. So it will create great tailwinds for those sectors. But those sectors were already moving forward. I think in things like hydrogen and carbon capture, it has changed the game. So anywhere from a 60 to 70% reduction in the levelized cost or the, you know, the cost for those technologies. And so you’re seeing right away companies announcing large scale manufacturing facilities, new hydrogen facilities. You’re seeing people announce new battery facilities, you’re seeing folks announce new lithium mining operations. And so I think the IRA has very successfully catalyzed those harder to abate longer duration and somewhat less mature technologies to make them economic and help them scale. The IRA was a game changer in a lot of ways. Now for our portfolio, I don’t think it changed what we’re doing. Mostly we are focused on mature technologies, businesses that are scaling, and so these were businesses that were successful pre IRA, but there definitively is a wind at their back with the IRA. Speaker 1 [00:31:16] But as you look at options, as all investors are doing and will continue to do, what do you see as the needs for Canada to become a greater pull for investors like you? Speaker 4 [00:31:28] The key for us is is business models with scale. And so obviously relative to the US, Canada has a smaller population and a smaller economy by the numbers, but it’s still a very large country and the very clear regulatory frameworks and there are a fairly sizable and very attractive sort of income levels in Canada. So we would expect that those things will yield. Businesses that are serving customers decarbonize in attractive way. You could see easily businesses that are focused on electrification of automobiles being relevant in Canada. You could see easily businesses that are financing consumers to decarbonize, being relevant in Canada. And so I don’t I don’t think that there is any business that exists in the US that couldn’t exist in Canada. It’s just a question for us to go out and find those entrepreneurs and figure out how to convince them to partner with us. Speaker 1 [00:32:20] And that’s a great message for entrepreneurs who may be listening that the world of capital is watching and ready to move and move very quickly in in this environment. Ali, as we move towards close, I wonder if you can give us a perspective on General Atlantic for our listeners who may not be familiar with it. It is one of the great names in investing and has been for decades. What excites you most About 2023? Speaker 4 [00:32:46] I wouldn’t have guessed that we would have the tailwinds we have today. It’s the IRA is a big tailwind. Unfortunately, energy security as a as a concept is a big tailwind. The cost of these technologies keeps coming down. And every day I meet an entrepreneur who is, I think, cracking the code around how to bring decarbonization to markets in a way that’s attractive for the customer and for the investor. It is a sea change from what climate 1.0 was. But when you see that it’s possible to both bring your customer value, your investor value and society value, that that I think is a really attractive proposition. Speaker 1 [00:33:29] That’s a great message to wrap up with Ali and a great message to begin the year with that there’s a lot of people out there cracking the code. Thank you for being on disruptors. Speaker 4 [00:33:39] It was my great pleasure. Thank you so much for having us. Speaker 1 [00:33:42] That was Eli Aheto, managing director at Beyond Net Zero. And before that, Dr. Andrew Steer, president and CEO of the Bezos Earth Fund. We’re at a critical juncture as a country with so much money being put into the advancement of renewable energy and electric vehicles, Canada is bound to feel the effects. It’s up to all of us not to sit back and watch from the sidelines, but rather take bold action, show courage and in the global race to net zero, even take the lead, it’s Canada’s opportunity. Join us next time for a special live on location episode from Davos, Switzerland. I’ll be there along with business and political leaders from across the globe for the World Economic Forum. And you can bet the climate crisis will be one of the hot topics. Until then. I’m John Stackhouse and this is Disruptors, an RBC podcast. Talk to you soon. Speaker 3 [00:34:39] Disruptors, an RBC podcast is created by the RBC Thought Leadership Group and does not constitute a recommendation for any organization, product or service. It’s produced and recorded by JAR Audio. For more disruptors content, like or subscribe wherever you get your podcasts and visit our RBC.com slash disruptors.

Speaker 1 [00:00:01] Hi. Is John here. I’ve been in Montreal this week talking and learning a lot about biodiversity and how we can protect far more of nature than we ever have. It’s going to take billions of dollars and new technologies to fundamentally change our relationship with nature. This was at the forefront of the United Nations Convention on Biological Diversity in Montreal, also known as COP15, which is wrapping up as we speak. You may have heard about COP27. That was the one that took place in Egypt last month. It was focused on climate, but the world is also convening to talk about biodiversity, not just nature, but the diversity of nature and how all of us depend on it. And this year’s conference comes at a critical time with the world’s biodiversity crisis more urgent than ever. In 2011, just a decade ago, 20 targets were set at the Convention on Biological Diversity. And a study done nine years later showed that by 2020, the world had failed to achieve a single one. This is not an opportunity we can afford to waste again. In Montreal, cop fifteens main focus was to have every country involved sign on to the post 2020 Global Biodiversity Framework. Both a global and Canadian goal is to protect 30% of land and sea environments by 2030. That won’t be easy. Where do we even start? Here in Canada, where our country stretches over 15 million square kilometers. It’s going to take a lot of finance and a lot of technology and a lot of data because what gets measured gets managed. But perhaps Canada can show the world how we can change and enhance our relationship with nature. Where will those new models come from? Where will the disruption come from? That’s what we’re going to explore today. This is Disruptors. An RBC podcast. I’m your host, John Stackhouse. Today on the show, we’re talking about biodiversity, what it is, and how to protect it, using the power of finance and economics. It’s a topic that is near and dear to one of Canada’s most prominent environmental groups. Speaker 2 [00:02:16] I am Catherine Grenier, president, CEO of the Nature Conservancy of Canada. Often referred to as NCC or the largest non-governmental private land conservation organization in Canada. We take action at a large scale and we deliver permanent conservation across the landscape, from coast to coast to coast. One place for us right now where we’re investing lots of time and effort is on the data side through technology, using technology not only to identify where and how we work, but also measuring the impact of the work that we do. So beyond actor, right, being able to measure quality of habitat, species, quality of water, because those are all metrics that ultimately we could turn and monetize as a service. Because right now, carbon is really the one data that everybody could understand. There’s a market for it. It’s great, but carbon alone won’t get us all the access to private capital we need in order to accelerate conservation. Speaker 1 [00:03:13] They’re doing important work and RBC is proud to partner with the NCC as part of our Tech for Nature program. That’s a $100 million, multi-year commitment to preserving the world’s greatest wealth, our natural ecosystem. Since 2019, more than 550 organizations have benefited. Another group were inspired to work with is Wildlife Conservation Society Canada. It’s a Toronto based charitable organization that uses science based data to save wildlife and wild places. Dr. Justin Ouray is the group’s president and senior scientist and our first guest on today’s episode. Justina, welcome to Disruptors. Speaker 3 [00:03:49] Thank you so much for inviting me. Speaker 1 [00:03:51] I want to start with the term biodiversity. How do you describe it? Speaker 3 [00:03:56] Really, in a nutshell, it’s life on earth. It’s the variety of life on earth. And the diversity part of biodiversity acknowledges that we need a variety that sustains life on earth, which includes us. So it’s composed of species, ecosystems, but also genetic variety within species. So those are sort of the broad components, but there’s so much life underneath that. Speaker 1 [00:04:18] One of the issues I wrestle with is how the pandemic made us arguably more tech dependent. Locked away in zoom land and perhaps more isolated from each other. I’m curious, as you reflect on the last couple of years, what you’ve learned about ourselves as a species and our relationship with nature that can be applied to biodiversity? Speaker 3 [00:04:38] Well, one thing that was incredible at the beginning when everybody stopped moving, quite a lot of animals who were quite constrained in their movements by either noise or traffic or just the everyday. But hustle and bustle of people sort of came out from the shadows at weird times of the day. And there were all sorts of stories about large animals walking down the streets or birds singing in ways that people hadn’t heard before. You know, there were so many stories about that. And that unfortunately lasted just a pretty short time, relatively speaking. But it did for us biologists to study animals that provided a really good window into seeing just sort of how animals are constrained by us. And then when they’re not that they can sort of recover behaviorally, at least it did not change any of the trajectories that we’ve been seeing fundamentally, because those would take years of recovery to do. But a lot of people who felt so penned in themselves found that one of the only things they could do was go out in nature. Speaker 1 [00:05:38] It’s interesting to reflect back on those existential moments, and a lot of people were asking this question Maybe we should be looking at this as an opportunity to reorient ourselves as a as a collective or even as as a species. Some saw that as a throwback to a more kind of naturalist era references to Walden Pond and the like. Yes, all the evidences were kind of reverting to the norm pretty quickly. Why do you think that is? Speaker 3 [00:06:01] This is not the first time that’s happened. We’ve had lots of moments where, for example, during recessions you see a lot of the conversation in the media and so forth going into that reflection mode that maybe, you know, we’ve done too much of this for a while and we should we should re-orient ourselves or hang back. And then in all times we come back even more fiercely. And it is a huge disappointment, to be quite honest. And, you know, I. I don’t have a great explanation for that, except that we have to keep trying. I do think that each time it happens, we have more pause than before and more people are converted and more people are talking about it. So even though it’s not enough change, there is change that is happening. I’m quite sure of that. Speaker 1 [00:06:42] In a report out of the UK known as the Dasgupta Review, looking at the economics of biodiversity. It showed how much we are depleting nature even over the past generation from 1992 to 2014. So not a long span of time in the grand scheme of things. The world both doubled what we produce per capita. So that’s arguably good, lifted a lot of people out of poverty, but we lost 40% of our natural capital per person. That’s the cost of in some ways of that growth. It’s extraordinary. The report said this really jumped out at me, that we literally need another planet to accommodate the growth on the trajectory that we’re on. When you pause and reflect, what stands out most to you. Speaker 3 [00:07:24] Well, that particular report, what stands out to me is when economists get on the bandwagon and see it because it’s, you know, difficult for somebody like me who’s trained as a biologist to talk in economic terms because worth is different for me. But when I read the Dasgupta report and he and his colleagues explained, you know, how the term GDP needs to change to bring in and bake in much more consideration of depreciation of natural assets. It was a very powerful set of statements. But going back to also what you said and you know, scientists have been ringing bells for years and years and they are getting more and more bold in doing so. And there has been report after report after report that show that, you know, we have widespread species declines, we have huge ecosystem degradation and widespread systematic conversion of productive areas. These trends that you see are not as a parent, as climate like climate can express itself in drastic events that we all see play out. But biodiversity decline is much more of a hidden crisis, and it’s a slow moving one. It’s something that won’t be perceptively different from one day to the next. But when measured in, you know, years and decades, it’s out there. We think we might be satisfied with seeing trees. But actually what is occurring out in suburban areas where even though we have parks, is that these are becoming more homogenized. It’s the same species that are taking over and appearing. And diversity of life is declining. Speaker 1 [00:08:54] It’s really interesting the way you lay it out. And it gets me thinking we have come to value diversity in all sorts of walks of life and we’ve even attached an economic quotient to it and are able to measure organizations, businesses that perform better with more diversity. There’s almost no argument about that now, but we haven’t found a way to attach the same value to diversity in nature as not just diversity for its own sake, which may be sufficient, but also that asset value, that nature is a more robust, resilient, stronger economic asset as well as natural asset with that diversity. There’s been great advances in the economics of climate and through instruments like carbon pricing, which is a financial tool that sees climate as an asset, that you need to attach a value to measure literally price. And then that leads to all sorts of economic behaviors. I wonder if there’s the same opportunity for biodiversity. Speaker 3 [00:09:51] As a segue way to answering your question, I want to go back to an earlier point you made about how people don’t appreciate the diversity. And I think a lot of it is because biodiversity is so complex as a as an entity and you know, it species, ecosystems and genetic diversity as well. They’re not that many people who can go out and tell, you know, the variety of birds and grasses and grasshoppers. It’s amazing that when people do start to learn how to identify life and get introduced to it, the appreciation is unbelievable, right? So then you can imagine the reverse where people really don’t appreciate the diversity in how they see a tree as a tree is a tree. Right. The Segway then to your other question, is very important there because you have to measure the value in order to have it enter into, you know, instruments like that. And, you know, a credit, for example, a biodiversity credit is a thing in the sense that it’s a concept that, you know, people are talking about and thinking about. But its efficacy is all dependent on whether or not you’re able to measure that currency and then you can use it for something to offset damage. And it’s the same principle as climate. But measuring and monitoring is incredibly complex, and it also relies on restoration. And we’re not that great at restoration yet. We can restore a pond and we can restore an area to sort of grow back green. But bringing back the diversity that was there before, not only is that very difficult, if not impossible to do in many cases, but we won’t know success for many, many years. And so all those elements make it extremely difficult to bring that kind of market based instrument into the biodiversity realm. But people are trying. And the good news is that whereas many companies, when you looked at their ESG records and so forth, environment only equaled climate. Now, increasingly, there are efforts to bring biodiversity into that, but we have a long way to go until that actually becomes something that is actually going to be effective. I mean, all those stats that you said at the beginning about how we need another planet. Planet is because we have unbridled consumption and with that comes unbridled production. And these instruments will not help with that problem. Speaker 1 [00:12:05] Is it possible to maintain progress as we know it and protect biodiversity? Speaker 3 [00:12:10] Right now, our progress is very compromised by what we’re doing for the planet. So no matter what, if you say growth is one thing, but progress is something else which includes quality of life and so on. And there’s a lot of people on the planet who are suffering their quality of life, are suffering because of what we’re doing to the planet. So I would say that we’re not going to be able to make progress under business as usual anyway. So rethinking our relationship with nature and how we want to use it and value it would probably go a long way in maybe a different kind of progress, but certainly because of our relationship with nature and because we understand so well the tie between the state of nature and human well-being, that we have no choice but to do something different than we are right now. Speaker 1 [00:12:59] I want to go back to a point you were, I think, touching on earlier, which is essentially homogeneity versus heterogeneity in nature and whether we are undervaluing diversity. And I think of the example of trees. So there are ambitions, let’s say, in Canada to plant 2 billion trees. No one talks about which trees exactly the diversity of trees is a better time of 2 billion trees, or would it be better to have 500 million with more diversity? Those sorts of calculations don’t really get made, and maybe they shouldn’t. Maybe we just need to focus first on quantity and then get to quality. Is it okay to kind of push ahead with these bold quantitative ambitions without reflecting on the quality or such as diversity? Or do we need to step back and assess quality first? Speaker 3 [00:13:48] In terms of sequence, I don’t know, but I think quantities absolutely have to come with quality. And luckily the push that you’re talking about generally, that is where the conversation goes. I mean, an analogous one is is protecting 30% of lands and waters. It matters which ones you protect. And that is absolutely the plan is, is that you you need to have that protection happen in areas that are important for biodiversity, areas that are connecting nature, areas that are if effectively managed and so on and so forth. And then lastly, the restoration is only going to get you so far. There lots of ecosystems, for example, peatlands that naturally have store enormous amounts of carbon that you do not want to interrupt as you’re pursuing development goals, because that can exacerbate the climate crisis worse than you had it to begin with. So those are all the kind of things that you have to think about when you’re considering, you know, these so-called solutions that are nature based. Speaker 1 [00:14:43] All of this is going to cost money. I think the Dasgupta review put the gap at $700 billion globally. It’s a big, big gap, as you know. I think it’s like it’s huge. Speaker 3 [00:14:53] Yeah. Speaker 1 [00:14:54] Of all the capital invested last year in climate related activities, I think it’s something like only 2% went into what could be categorized as conservation. 2%? Speaker 3 [00:15:05] Absolutely. Speaker 1 [00:15:05] How do you change that ratio or that equation? Speaker 3 [00:15:07] So I’ll look to you know, that’s a really tough question. And again, I do think that the entire ecosystem of financial investment needs to be looked at. It wants to see if some things can be diverted, especially things that are harmful, where financial investments actually make the problem worse. So, for example, building roads into areas that will then induce growth or making it easier for companies to follow certain pathways that the public purse would pay for and so on. So if those are undermining some of the biodiversity goals, then you might want to want to rethink those at the same time. So Indigenous led conservation in this country has become hugely important and increasing. So and there is enormous value in the stewardship, monitoring, protection that communities confer on these homelands, many of which are the most intact areas on the planet. So you can see, look at that track record and say, well, that’s got to have some value. And to many people, it’s starting to. Speaker 1 [00:16:05] I’m so glad you raised that, because what we’re seeing in all sorts of indigenous communities around Canada is what I might call conservation 3.0, conservation 1.0, being that kind of centuries old ring fencing of nature, going back to the tragedy of the commons where people decided, Boy, we better literally build fences around nature to protect it. 2.0 Starting to find financing for it, charging people admission to see nature or engage with nature, national parks and the like. But 3.0 is really leveraging nature as an asset, but stewarding it as an asset. Any asset owner knows that you’ve got to invest in the asset, you’ve got to protect it. You don’t deplete it. That’s bad ownership. It’s bad stewardship. And maybe we shouldn’t be surprised that it’s indigenous communities that are bringing us to 3.0, although maybe that was the original 1.0 and I’ve mixed messed up the sequencing. But how realistic is it to assume that those 3.0 approaches, as I’m describing them, will be sort of. Efficient to close that enormous gap that we were just speaking to. Speaker 3 [00:17:07] I can’t speak about realism because it’s just it’s too important to be pragmatic or too pragmatic. But I think the progress that we’ve made in the last number of years is significant. And the Prime Minister announced an investment of $850 million over seven years for enormous Indigenous led projects that also have private capital coming in. This is something to watch out for this kind of model and something that we would not necessarily have predicted even a year ago. So there’s been enormous progress and rethinking and reimagining how this is going to happen. I think there’s a lot of understanding that business as usual cannot keep that way. So if you have that understanding and you can let go of business as usual, then it is possible to imagine this. And the last point is that it again, it has to come with a package. I mean, we as human beings have an enormous amount of production and consumption, and that has a big bearing on where we find ourselves today. And so holding back on some of that at the same time as investing in the right things that have different kinds of value are probably a part of the recipe for success. Speaker 1 [00:18:16] Just as we move towards clothes. I wonder what you think. We need to keep really front of mind as we come out of the Montreal conference and look to the challenges as well as opportunities of the next few years. Speaker 3 [00:18:31] So all the nations of the world that have signed on to the Convention on Biological Diversity, which is most of them have been gathered here in Montreal. There’s been a ton of attention on this and the matter of biodiversity. And in the process, there’s also been increasing appreciation, even by members of the public, that the climate and biodiversity crises are interlinked and then must be resolved together. So I think the best case scenarios is for people to understand we have no choice but to really resolve it and not continue on with business as usual. Speaker 1 [00:19:01] That’s a great message that this is really on all of us. Our guest today has been Dr. Justina Ray from Wildlife Conservation Society Canada. Justina, thanks so much for being a part of disruptors. Speaker 3 [00:19:12] Thank you so much for inviting me. Speaker 2 [00:19:18] RBC Tech for Nature is our $100 million by 2025 multiyear commitment to accelerate tech based solutions that help preserve the world’s greatest wealth, our natural ecosystem. We work with partners to leverage technology and innovation capabilities to help solve pressing environmental challenges. This program is a key element of how we are delivering on our climate strategy. The RBC Climate Blueprint RBC Tech for Nature is now accepting funding applications until February six. Apply now to partner with us and create a more sustainable future. Visit RBC dot com slash tech furniture for more information. Speaker 1 [00:19:53] Welcome back. WTF. Where’s the finance? That was a hot topic of debate at the big UN climate conference in Egypt and it was on the table again at Montreal in the talks over biodiversity. We’re talking today about biodiversity, but also about the financing and technology needed to conserve it. Our next guest is here to address that. Hadley Archer is executive director of Nature United. Welcome to Disruptors. Yeah, thanks, John. As we think about ways for the private sector, for investors, be they individuals or firms or funds, we all know of revenue streams that exist from nature be as simple as campsite permits. But we’re also seeing more sophisticated tools, offsets and inserts, for instance, or green bonds. I’m curious how you’re thinking about that revenue and financial opportunity as a way of attracting more private capital to invest in nature, be it fields, farmlands or forests or oceans. Nature is the greatest asset. Natural capital provides everything that humanity needs in the food we eat, the air we breathe, the water we drink, and indeed runs our economy. So absolutely right that we have to value nature. And if we do so properly, there can be incredible investment opportunities. The challenges, of course, are that we’re not properly valuing nature. Carbon is trading that 15 or $20 a tonne in forests, and some recent studies have placed a value closer to $600 a tonne. If you think about that, the carbon sink value that forests provide globally. So that’s the first thing is to get the values right and to really understand the benefits that whether it’s carbon sequestration or pollination for food or water filtration. The second issue is timelines, right? So if we think about investments all too often we think about short term paybacks and short term horizons. But if we really value what nature can provide us and continue to provide, we have to think about longer time horizons and see these as longer term investments. Indeed, indigenous communities look at seven generations, not the next quarter necessarily. So that’s another important piece that we have to get right and we have to address the underlying. On that note, issue of rights and title. So lots of things to work through. But indeed, when we do, we can see that there are very significant investment opportunities that emerge in the Great Bear rainforest where the last 15 years more than 5 million acres of temperate rainforest have been protected. A big part of that was protecting old growth forests that store tremendous amounts of carbon that has created an opportunity for credible, high quality carbon offsets, which create an opportunity for companies who want to purchase offsets to help address part of their climate footprint and in doing so, provide critical new revenue streams to indigenous communities and land managers on the ground to steward these places. Yeah, I’m so glad you mentioned the Great Bear Rainforest because it is a great Canadian success story. The forest would probably be given the Order of Canada if that were allowed. Yeah. I mean, it is such a great example, John, and in fact a global example of how we can protect and sustainably manage an incredible ecosystem that still supports viable coastal economies and resource sectors, but at the same time recognizes the value and the importance of these critical ecosystems and puts, in the case of great bear indigenous peoples at the at the center of that. It’s exactly what we need to do is learn from these successes where we’ve found solutions that work for not just the environment and the people living there, but also for the economy. It’s exactly how we’re thinking about agriculture, for example, is how do we support farmers to continue what they’re doing and to farm responsibly, but to accelerate the pace of adoption of some of these approaches to farming that we know the evidence shows that can benefit climate change, can benefit the environment, restore soil health, do that in a way that provides economic incentives for farmers to adopt those. And they help us understand the growing role of technology in biodiversity. Yeah, it’s incredibly important, John, because for a bunch of reasons. One obvious reason is just especially in a country like Canada, to be able to sort of assess the landscape and understand the state of nature and state of our forests, for example, or the, you know, the state of our natural ecosystems. And so satellite technology has been a game changer in that regard. So we can really understand with very impressive precision, what is the state of play with? One thing to say, we have to, but the real value on ecosystem services. But many of these are very hard to measure. Take soil carbon, for example. It’s very complicated. It varies across the landscape. Technology is going to be critical to being able to quantify value and validate and then in many cases figure out how we can use that to generate new revenue streams. And I hope we can do this again in a year’s time and measure the progress that we’ve made. Thank you for being on this episode of Disruptors. Thanks, John. It’s been a real pleasure. Look forward to being back. Near. Our guests today were Dr. Justina Ray from Wildlife Conservation Society Canada and Hadley Archer from Nature United. Thanks also to Catherine Grenier from the Nature Conservancy of Canada. For more on my takeaways from COP15, you can go to our BBC.com. Thought Leadership. That’s a wrap for disruptors for 2020 to join us early in the new year when we’ll take a look at the US Inflation Reduction Act and what 2023 may hold for our country’s clean tech sector. From all of us to disruptors, we wish you a safe and happy holiday. Thanks so much for listening this past year. And join us again in 2023. I’m John Stackhouse, and this is Disruptors, an RBC podcast. Talk to you soon. Speaker 2 [00:25:40] Disruptors, an RBC podcast is created by the RBC Thought Leadership Group and does not constitute a recommendation for any organization, product or service. It’s produced and recorded by JAR Audio. For more disruptors content, like or subscribe wherever you get your podcasts and visit RBC dot com, slash disruptors.

Speaker 1 [00:00:01] Hi, it’s John here on this show. We’ll be talking about artificial intelligence or AI. But first, I want you to meet someone. Or should I say something? Hi. It’s an AI version of John here. It’s remarkable how much I sound like the real thing. Another remarkable thing I can do is write podcast episode titles. For example, our friends at the University of Toronto were kind enough to feed the interview you are about to hear through GPT three. Hi, it’s the real John again. GPT three stands for Generative Pre-Trained Transformer and it was created by Open AI, an organization founded in San Francisco in 2015 by Elon Musk and Y Combinator. Sam Altman. Elias Suzuki over there. Chief Scientist is Canadian. He’s a U of T alumna. He’s also a former grad student of A.I. pioneer Geoffrey Hinton, who we’ll hear about a few times in this episode. GPT three uses deep learning to produce text that read like it was written by a human and their daily to app is making headlines for its ability to turn text descriptions into hyper realistic images. We wanted to test this tech marvel, so we took the interview that you’re about to hear and gave it to GPT three and came up with a clever title. AI. We weren’t as prepared as we thought. No kidding. Hi, it’s me again. A.I. John. A.I. has proven itself capable of many things, like reading and delivering a podcast, introduction and writing great titles. But has it proven to be the game changer many thought and promised it would be? I would say no, or at least not yet. Thanks for that Amy. GPT three also generated concise summaries of the interview you’re about to hear. One in particular reads A.I. is not going to figure out the complexities of health care. It’s a matter of time for organizations to experiment with A.I. to figure out how best to use it. A.I. is a prediction tool to help organizations optimize against an objective function. But you decide. See if you agree with GPT. Three Thoughts on the topic. This is Disruptors, an RBC podcast. I’m your host, John Stackhouse. Today’s guest is one of the many people who sees the potential but knows we still have a long way to go. AJ Agarwal is a professor at the University of Toronto’s Rotman School of Management, a global center of research and teaching excellence at the heart of Canada’s commercial capital. AJ was named to the Order of Canada this year for his contributions to enhance Canada’s productivity, competitiveness and prosperity through innovation and entrepreneurship. Looking back, AJ admits that when he wrote his 2018 bestseller Prediction Machines, he overestimated how quickly A.I. led changes would come. This was the impetus for power and prediction. His latest book that looks at the economics of the systems in which technology operates. AJ may also be a familiar voice to our listeners as he was a guest on our special two part series called The Creativity Economy, which we produced last year. We recently got back together to talk about how Canada can stay at the forefront of air developments and how businesses of all sizes can stay ahead of the curve. Here’s our conversation. AJ, Welcome to Disruptors. Speaker 2 [00:03:29] Thanks very much, John. Happy to be here. Speaker 1 [00:03:31] You’re the founder of the Creative Destruction Lab. For those listeners who may not be familiar with Kdl, can you give us a quick sense of what it is and what motivated you to launch it? Speaker 2 [00:03:41] Sure. So Creative Destruction Lab is a not for profit program found at the University of Toronto at Rotman School. And the mission is to enhance the commercialization of science for the betterment of humankind. So my Ph.D. dissertation was on the economics of commercializing early stage science, and I spent a few years at MIT, and my first faculty job was at Queen’s. So I moved back to Canada. This had become a topical issue in Ottawa that Canada was doing a good job on the science side, but not a great job at commercializing the science given my topic area. I started getting invited to various policy meetings and white papers and roundtables and so on, and I thought that was great. And after about ten years of doing that, I realized, Wait a minute, I’ve been doing this for ten years, and everyone’s still talking about exactly the same thing as when I first arrived in Ontario. And so that point, I decided I was never going to do another roundtable or breakfast meeting. I wanted to focus on actually doing something. And so when we launched Creative Destruction Lab, it was very small. There were 25 companies that came into the program today. There’s this year we took in 650 startups around the world, but when we started, it was 25 companies. And the idea was that there was a missing market for what we call judgment. Judgment is simply when an entrepreneur wakes up in the morning, they have a thousand things they could be doing and they think they don’t have the bandwidth, do all those thousand things. And so let’s say they can do three things. How do they pick from the list? Thus, judgment. You can’t go down to Bay Street and buy five units of judgment. It’s not for sale. And so that’s what in economics we call a market failure, where there’s willing buyers and willing sellers, but somehow there’s a friction that prevents the market from clearing. And so Creative Destruction Lab was designed to address that market failure that we bring together the inventors who need the judgment and the people who have the judgment. Speaker 1 [00:05:31] Is that a natural extension from that into AI, which Sidel has become fairly well-known for, and what will get into more deeply in this conversation? Speaker 2 [00:05:40] Yeah, so that was our first introduction to the modern incarnation of AI, which is through machine learning, is that some graduate students of Jeff Hinton, who’s a well-known professor, pioneer in deep learning. They came in 2012 into the first year of Creative Destruction Lab, and they introduced us to this new technique. In the beginning, we didn’t fully appreciate it, but they came to Creative Destruction Lab as a way to help them turn their scientific innovation into a business. In fact, the first one was a student named API Fitz, and he had come up with a way of using this new technique, using A.I. to predict which molecule would most effectively bind with which protein. And created a company called Atom Wise. So he brought that into Creative Destruction Lab and in the process introduced us to what would become a revolution in artificial intelligence. Speaker 1 [00:06:29] I suppose there are. Just ask for your definition of A.I. artificial intelligence. Speaker 2 [00:06:35] Sure. In terms of the characterization, this was the definition that we had in our first book, from an economics perspective, is we characterize a rise in A.I. as a drop in the cost of prediction. And so effectively, it’s the technology that makes prediction cheap. In economics, we do that with all technology. So we strip away the technical parts of a technology. And in economics we always ask the same question about every technology is what does this reduce the cost of? So semiconductors reduces the cost of arithmetic makes a metric cheap Internet reduces the cost of search costs, digital distribution of goods and services and AI reduces the cost of prediction over the. Speaker 1 [00:07:21] Past ten years, there have been incredible advances in A.I., but it’s also not played out in the ways that many of us thought it might. AJ What over the last five years of AI’s development has surprised you most. Speaker 2 [00:07:37] On the negative side? I would have thought that it would be far more prevalent, but it hasn’t transformed the world the way that we thought we would be further along in that transformation. When we wrote that book in 2018, on the positive side, there are some things like, for example, the large language models, Darley and and the various other permutations where you can type in a sentence describing a scene and it creates the picture and GPT three where you type in a prompt and it writes a paragraph or a page or multiple pages and it’s like autofill, except it’s rather than just filling in the rest of the sentence, it fills in the rest of the story. And so those things are, I would say, better than what I would had expected by this time. But from an impact on the economy perspective, it’s been significantly less than we expect and that’s really motivated the second book. Speaker 1 [00:08:32] You have some really startling statistics in the book. One is that only 11% of corporations that are invested in AI have achieved success in scaling AI applications only 11%. These are big companies with lots of really smart people and capital and data to work with, and most of them are failing. Why is that? Speaker 2 [00:08:54] Yes, that’s really the motivating question. The puzzle in the book is what happened as we poked and prodded and met with lots of people in industry who are working with AI. We came to the conclusion that we had severely underestimated the importance of all the other parts of the system that need to change above and beyond the actual prediction tool created by the AI. And in my view, this is really the key insight here from the book. We make this example comparison to electricity and how electricity took so long to take off. And the original value proposition for electricity was this was will save energy. And so let’s say you have a factory. It didn’t make any economic sense to tear out your existing infrastructure and replace it with distributed electricity. But as new factories came online and some people were willing to experiment with this new electricity, they started to discover benefits from the electricity above and beyond fuel savings. So, for example, in order to actually transmit the power to the machines in the factory, it would come into the building via a big steel shaft that would turn and power machine. And that thing was very heavy. And so it required a lot of bracing and quite a significant structural requirements to the building. As soon as you remove that. Buildings could be constructed much lighter. And so it just lowered the capital costs of building a factory. Secondly, because they wanted to keep those heavy shafts as short as possible, they would put all the machines as close as they could to the wall and they would build vertically. Once you remove that constraint, they realized it could make single storey buildings again, much cheaper for construction. And then perhaps the biggest advantage they discovered is that before they would power everything off a single shaft so that when one machine went down, the entire factory came to a halt. With this new distributor, electricity, each machine had its own power source. And so when one machine went down, the others could keep operating. And that made the whole thing a lot more productive. And so when you start adding up all those benefits, it became much greater than the energy savings. And so what they realized was the key benefit was not so much energy saving, which was the original value proposition, but instead it was decoupling the machine from the power source. But that was the real value proposition. Speaker 1 [00:11:24] So the challenge really is the organization. It’s the systems, it’s not the task. And one of the other examples I’ve been reflecting on a lot from your book is IBM Watson. Does everyone remember IBM Watson It was kind of supposed to change everything just because it won Jeopardy. But there was a sense that health care particularly would be where IBM Watson would make the most profound change, as we all know, the inefficiencies of health care. Wouldn’t it be great if AI rooted and driven technologies could get us better? Health care for less money really happened because of the complexities, the systems of health care. Is that a forever thing with a complex system like health care, or is that just a matter of time for AI to figure out the complexities? Speaker 2 [00:12:11] Well, A.I. is definitely going to pick out those complexities, in other words. So, John, about three weeks ago, my coauthors, Avi Goldfarb, Joshua Gans, as well as one of our colleagues at MIT named Kathryn Tucker. The four of us organized a conference in Toronto. Some of the top economists in the world focused on AI. And the second day, Watson focused entirely on A.I. and health. Since you raised the issue of health and if I were to characterize that day, I would say it was a mix of both elation and depression. The elation was all the experiments that people were reporting in of eyes that were performing really miraculously in health care applications. So superhuman, better than doctors in all kinds of, for example, diagnostic capabilities, being able to read medical images, pathology slides and eyes that are better able to predict mental health crises, attempted suicides than mental health experts, you know, all kinds of things that would make health care cheaper, faster and more accessible, especially to lower income environments. So that’s on the positive side. On the negative side, the reason it was depressing was because so few of these things have been demonstrated in any kind of application setting outside of the research labs because there are so many barriers to deploying them, these system frictions that they are not aligned with the incentives of hospitals or the fixes are not aligned with the incentives of doctors, of insurers. There’s all kinds of frictions that basically require an entire system level overhaul. And these people who have been working in this area, you know, see the benefits. They’ve measured how effective they can be. And yet they’re seeing them being dismissed in terms of application. And so, you know, the question is, what’s it going to take for a system overhaul? People were asking, what maybe, maybe in some other countries, maybe in lower income countries where there’s less regulatory barriers and people can try things more easily? We don’t know. Speaker 1 [00:14:09] You also make the point in the book that AI’s success often requires experimentation. That’s probably true for all technologies, but especially for data based technologies and software. That’s harder to do in business and harder to do in business. That involves people even harder to do in a regulated business where human safety or privacy or other legitimate concerns are at play. Do we just have to give this more time than we may have thought five years ago? Or are there greater challenges then than time? Speaker 2 [00:14:40] Well, certainly time is one. And also a disposition and willingness to experiment. I think a number of things need to come together in terms of leadership, whether it’s of a hospital or a health system and the capital and the willingness to experiment. And I suspect there’ll be some kind of catalyzing event where somewhere in one of the OECD countries, somebody will really push the boundaries, then they’ll demonstrate the benefits, and then others will follow. Speaker 1 [00:15:11] If I’m running an organization, big or small, in any sector, if I’m listening to this and thinking about how this might affect whatever it is I do, how can I move faster without having to wait for that catalytic event or a crisis? Speaker 2 [00:15:26] I think, you know, creating a an environment with a very purposeful process for running experiments. I think in most corporations there is not a culture of experiments, experiments with a purpose. In other words, we’re running this experiment to test this particular hypothesis. Once we learn the outcome of that, that reduces the risk for scaling it to this next step and then this next step. So in other words, there is a North Star that we are pursuing. Let me give you an example. Imagine going to the doctor and you go for a checkup and the doctor does their annual checkup and then says, you know, I think you’re going to get really sick in about three years. So, you know, thank you for coming in and we’ll see you next checkup. He would say, wait, wait, wait a minute. What do you mean? I’m going to get sick in three years? Aren’t you going to tell me what’s the matter with me? And aren’t you going to give me some kind of treatment plan? And imagine, Doctor said no, but you would think that’s crazy. It doesn’t make any sense. But that’s what the insurance industry does all the time. Let’s say you and I both want health insurance and let’s say my premiums are 25% more than yours. That’s because the the insurance company has made some prediction that I’m more likely to file a claim than you. And their capabilities today are so much greater than they were before. Now they’re able to make predictions down at the sub peril level. So in other words, like the likelihood that you’re going to have a leaky pipe that would cause a basement flood or an electrical fire, that they’re down at that level of precision in their predictive capability. And given that they’ve got that kind of predictive capability, they could figure out whether it’s worth it for, let’s say, you or me to buy a $500 device to do early detection of a leaky pipe or a device that you can plug in to your wall that gives you early detection of electrical fire. So those devices exist. You and I might see them advertised on late night TV, and we don’t know whether it’s worth it for us to buy that. But they know, Hey, I know what the risk is. I’m pricing your risk. John It wouldn’t be worth it for you to pay the $500, but. AJ It would be worth it for you because you’re at a higher risk for that kind of a of a peril. So they have that kind of information. And yet for the most part, the insurance industry does not do risk mitigation. And part of that is that the agents who sell us insurance, it’s not in their interest to offer us things that will lower our premiums. That’s going to change. So it means changing the cost structure. It means investing in risk mitigation solutions or partnering with risk mitigation solution companies and so on. It’s a different business model, but I suspect these will be senior leadership teams at large corporations, financial services like banking, insurance, automobiles. And it’s just hard to imagine a world, John, where like that we won’t ultimately go there. It will likely take time because of all the system changes that are required to get there. But the guys are laying the foundation for value propositions that are very different than what they were in the absence they are. Speaker 1 [00:18:42] In just a moment, Professor Agarwal will give us his thoughts on how Ottawa is regulating and stimulating the innovation economy and how businesses can make the most of the power of AI predictions. Back in a minute. Speaker 3 [00:18:59] You’re listening to Disruptors, an RBC podcast. I’m from Theresa Doerr. I’d like to share with you our latest agriculture report from RBC Economics on thought leadership called The Transformative Seven Technologies That Can Drive Canada’s Next Green Revolution. In it, we identify seven key agtech innovations we believe can both meaningfully reduce emissions and present opportunities for Canada to lead. Some, like anaerobic digesters, carbon capture and precision technology, are ready to scale now. Others, like vertical farms, plant science and cellular agriculture, will be key solutions for the future. In every case, maximizing their potential will mean building the right platforms for collaboration among not just farmers and entrepreneurs, but also investors, corporates and governments. To learn more, visit RBC E-commerce Thought Leadership. Speaker 1 [00:19:57] Welcome back. Today on Disruptors, we’re speaking with Professor AJ Agarwal on the success and failures of AI and how industries can make the most of this powerful technology. One of the takeaways for me from the book is the need to focus on value rather than cost. And too much focus was on cost rather than value creation. And I’m wondering how that changes in a post-pandemic reality, where resilience is as important for many organizations as, say, efficiency is. How do you think about the power of AI in that kind of complex economy? Speaker 2 [00:20:36] I’m interpreting your question as resilience is more important today because we just went through COVID than it was pre-COVID, but we care about it more because it’s just more salient for us. And so that’s a change compared to five years ago. There’s an increased emphasis on resilience today than there was, let’s say, five years ago. And so what role does A.I. play in that? And I would say that think of AI as a prediction tool to help you optimize against things like an objective function. And so no matter what you put in the objective function, AI’s job is to make predictions to optimize against that thing. So in other words, you’re asking it to trade off, say, hey, you know, now resilience is more important to me. I’m willing to trade offs and speed or trade offs something else in order to get more resilience. And so the idea says, okay, I’m going to optimize for that now. His job is not to decide what’s the objective. That’s our job. But once we set the objective, then AI’s job is to do the the statistical calculations to make its predictions accordingly. Speaker 1 [00:21:37] This can also be really helpful in terms of how we think about jobs and the evolution of work. You mentioned early on in the conversation the great Geoffrey Hinton, one of the godfathers of modern AI. I still remember something he said that I think was wrong maybe five years ago, and this was to do with radiologists. And he said declaratively, we should stop training radiologists right now. They will not be needed. And you have a fascinating chart in the book of all the tasks that a professional radiologists is required to do. I think it was 30, and of the 30 only one that machine learning could replace the rest involved humans. So we’re actually going to need radiologists for a very long time. How are you thinking differently about A.I. in its impact on the workforce? Speaker 2 [00:22:27] The reason why it was reasonable for Professor Hinton to make his comment was that while the radiologist has these 30 different tasks and image recognition, that’s one that that where there’s been a lot of advance. That’s one where as a radiology student, you spend the majority of your time training on that task. That’s kind of the defining one of the field. So that’s, I think, why he said it. Yes, the computer scientist is not a manager or I don’t think he would claim he has any expertize in change management. And I think what we all underestimated was how hard that is. And so if you were to take away the image recognition requirement from radiologists, you probably cut out several years of schooling. And maybe ultimately that job could be done by someone who has more basic medical training. But what his remark severely underestimated is the system change in order to do that. He was imagining that everything will change at the pace of the AI’s predictive capabilities. So his thing was, I bet you we can train AI’s to be as good at image recognition as a human within five years. He’s probably right. But he fully underestimated, as I suspect, many people, including the three authors of our book, of how hard it is to change the system. Speaker 1 [00:23:44] There’s been a lot said over the last five, ten years about what AI is going to do to society, particularly how it may fuel discrimination and lead to other negative social outcomes. You make an intriguing argument towards the end of the book about how I may actually turn that tide and may already be reducing discrimination. Yeah. Speaker 2 [00:24:05] So I think the two basic elements to reducing discrimination are step one, detecting it and then step to fixing it. So, for example, Amazon had an item it was using for, for h.R. And it, it was trained on human data and it became very biased in favor of males. So much so that if you were a male applicant but even mentioned the word woman on your CV like said that you are the coach of a women’s soccer team, it would disqualify. And so that became a very high profile, disastrous case of applying A.I. and amplifying bias. But I think once we push harder on this, we’ll find there’s already been quite a bit of evidence for this that I can be much more screwed about than humans, because we can ask it’s so many questions. And then once we find evidence of bias, we can fix it in a much more effective way than we can fix. Once you find evidence of bias, you can go in and fix it. Whereas with humans, it is. Not at all obvious that we can do that. You know, there’s been a lot of effort at various training for so-called unconscious, systematic bias. And the evidence is very mixed of whether that works at all. Speaker 1 [00:25:20] Are we wrong, then, to try to regulate A.I.? Speaker 2 [00:25:23] No, not at all. I think I can be very dangerous like these samples we’ve seen. Speaker 1 [00:25:28] But those were corrected without regulation. And technology can also self-correct. One might argue that too much regulation is going to stymie the innovation that you’ve been making the case for. Speaker 2 [00:25:39] I think that obviously you never want to overregulate, but I do think that some regulation would be not just good for society and, for example, protecting people that might be discriminated against, but actually good for innovation. Because I think once we set the guardrails, it will spur more innovation and more use of A.I. And probably the greatest example of that is the FDA. Before the FDA, nobody would invest the types of of of money that was required to create drugs, which is why that industry before the FDA was really snake oil salespeople, because a citizen, if you got sick, you had no way of evaluating whether something was real or snake oil. And so everyone just assumed, you know, there’s a 50% chance, whatever I get, it’s going to be snake oil. So once the FDA came along, that regulation, well, many people think of it as stifling innovation because it’s so burdensome. It also created the incentive for people to make very significant investments in pharmaceuticals, because they knew that once we clear that, that there’s a third party verification that this thing works. Speaker 1 [00:26:42] AJ As we move towards close, I’d love to get your perspective on how Canada is doing in a I. It’s been roughly five years now since the launch of a national A.I. strategy. The government, federal government has invested hundreds of millions of dollars and committed more to two, five, five years is a very short period of time with which to assess any policy impact. But generally, how do you think we’re doing? Speaker 2 [00:27:07] I think we’re still doing very well on the research side, and I think the government deserves a lot of credit for that. In other words, we had some early successes in this field with you already mentioned Jeff in Toronto, Joshua Benjamin of Montreal, Rich Sutton, University of Alberta, and then a whole host of others that both faculty and graduate students. And then the development of various research centers. Vector in Toronto, Milan, Montreal, similar. Amy in Alberta We’ve done very well punching above our weight in terms of attracting students to Canada to develop expertize in applied statistics and machine learning and so on. It’s more mixed on the industrial side, on the application side. So part of that is that we don’t own a lot of the infrastructure that needs to be embedded into. That’s a challenge. If I were to say, you know, which are the the billion dollar businesses that have been created in Canada that predicated on our expertize. And I you know, there are some but it’s not a huge number. VeriFone is one would me might have been the first one out of the gates to really achieve a significant valuation and acquired acquired by Nasdaq. And then there’s a handful of others across the country now, but there’s not a huge number. You know, I think we’re still in the early innings, but we probably have a fair amount of improvement we could make in terms of leaning hard on the application side into in Canada. Speaker 1 [00:28:32] What do you think would be the single best thing we could do? Speaker 2 [00:28:35] The single best thing we could do, I think, is develop a muscle for experimenting. And it’s not like, you know, a large organization should have one or two experiments, they should have dozens, and they should really be leaning hard into saying, okay, this is not just business as usual. We need to rethink our R&D budget, which is probably this is a bad time right now for companies to be rethinking their R&D budget, given that many are trying to cut costs. But now is the time, because in every industry someone’s going to do it. Speaker 1 [00:29:09] In fact, it’s probably the best time to do that because your competitors may be tightening up and this is where you can really make some moves, at least for the daring. What a great inspirational call to action. AJ Let the age of experimentation begin. Thank you for being on Disruptors. Speaker 2 [00:29:24] My pleasure, John. Thanks for having me and thanks for your interest in our new book. Speaker 1 [00:29:29] My guest today was Ajay Agarwal, professor at the University of Toronto’s Rotman School of Management and the Jeffrey Tambor chair in Entrepreneurship and Innovation. His latest book is called Power and Prediction The Disruptive Economics of Artificial Intelligence, which he co-wrote with fellow Rotman profs, Joshua Gans and Avi Goldfarb. If you’d like to read GPT three full episode summaries which are actually quite good, please visit rbc dot com slash Disruptors. And to be fair, since the. I took hours to learn my voice. Why not let it close out the show? Thanks, John. I’m John Stackhouse. And this is Disruptors, an RBC podcast. Talk to you soon. Speaker 3 [00:30:13] Disruptors, an RBC podcast is created by the RBC Thought Leadership Group and does not constitute a recommendation for any organization, product or service. It’s produced and recorded by JAR Audio. For more disruptors content like or subscribe wherever you get your podcasts and visit our rbc.com slash disruptors.

Speaker 1 [00:00:01] Hi. It’s John here. And today I’ve got a special co-host with me. Naomi Powell is our managing editor of economics and Thought Leadership, who leads many of our team’s major research projects. Hi, John. It’s a pleasure to be sitting in for Teresa today. It’s great to have you here on this special edition of Disruptors. Thanks. And you’ve had an exciting week. You just got back from COP 27, which is the United Nations Climate Change Conference this year. It was in Sharm el Sheikh, which is in Egypt’s remote Sinai Peninsula. Welcome back. You can’t imagine a more surreal, even bizarre place for a climate conference. I mean, Sharm el Sheikh is the ultimate in artificial places, is a beach resort the Israelis actually built during their occupation of the Sinai in the 1970s. Still a big attraction for beach goers from Europe, the Middle East and elsewhere. But for the last two weeks, 3000 people arrived for the major U.N. climate conference known as COP 27. So, John, after last year’s major conference in Glasgow, this cop was supposed to be a minor one. I thought it was meant to be this place where we could turn all those commitments countries made last year into action. Can you give us a sense of what the overall scene was like? The cop cycle tends to put a lot of weight on the big conferences every five years, like Paris and Glasgow, and people may remember Copenhagen. And then you have these smaller ones, although with 30,000 people who’s calling it small, that do a lot of the procedural work, which is actually really important to policies and collective action. That’s a real need. This is 2022 and the world changed a lot, starting with Russia’s invasion of Ukraine, record inflation, devastating droughts and floods around the world, and a looming energy crisis. I mean, this has all challenged a lot of assumptions about climate, about energy security and about public policy. Fascinating to watch. And it’s been fascinating over the last year to watch all of these plans that countries had kind of go off the rail as all these pressures sort of closed in. And it’ll be interesting to see where we get in the year ahead, but we can talk all about that now, I guess. Well, I certainly learned a ton in the last couple of weeks and also was fortunate to meet a lot of interesting people and thought it would be worthwhile capturing some of their voices, which we’re going to share on this special episode of Disruptors. And I’d love to start with someone who we’ve had on disruptors before. Katharine Hayhoe. She is the chief scientist for the Nature Conservancy. What inspired me at COP was all the thousands of faces of people from all around the world who are all here because they care about the same thing climate change, and they’re doing everything they can to fix it. I love that optimism, but did everyone walk away with the same sense of accomplishment? Let’s dig into the successes and the failures of COP 27. This is Disruptors. An RBC podcast. I’m John Stackhouse. And I’m Naomi Powell. On this episode, John, you get to be the guest. You had a front row seat in Sharm el Sheikh. So we’re doing a special episode on Canada’s Place at the Table in COP 27. A lot to discuss. So let’s jump right into it. Can you set the scene for us? What was it like? So the conference was built in an extended conference center that felt a lot like a military encampment. I felt like I was in the middle of the of the Green Zone in Baghdad at moments wandering between buildings, having no sense of where the geography was outside the conference. And part of that was for security reasons. The Egyptians are very sensitive to security. And you may remember the horrific terrorist attacks on Sharm el-Sheikh in 2003, which is still present in the minds of many Egyptians. So one has to understand their need for that kind of security. But within the protected zone of the conference, it was a logistics challenge. On day one, the Egyptians and of course, all the conference goers quickly discovered there wasn’t enough food and water, which made a lot of people kind of cranky at the beginning of COP 27. So, John, the Paris Agreement had a goal. It was to cap global temperature rise to 1.5 degrees Celsius. Is that still happening? Is that still alive or. Yeah, you may recall the great slogan of COP26 in Glasgow when this was really pushed by Boris Johnson, the British Prime Minister at the time, which was keep 1.5 alive. And that’s been really challenged by the energy crisis and other challenges, including inflation. No one likes to see this publicly, but it was striking how many conversations in the corridors with a range of delegates and observers focused on the challenges of 1.5 and the growing perception, perhaps reality, that 1.5 may not be alive. Some people are starting to say, you know, maybe we should be more realistic and focus on containing global temperature increases to, let’s say, no more than two degrees rather than being more stringent with 1.5. That debate is going to continue. The final document does still commit to the threshold of 1.5 degrees, but emissions are growing. I mean, the blunt reality is global emissions last year increased. 1% would have been higher if China hadn’t been in lockdown for much of the year. And the UN is projecting that if we don’t do more, we could see emissions grow 10% this this decade when they need to come down by 50%. So year by year, we have to come to grips with the fact that the math is not working out towards net zero and we’ve got to start to do things differently. I connected on this with Johan Rockström. He’s the director of the Potsdam Institute for Climate Research, a leading climate site who is very passionate about the commitment to 1.5. Speaker 2 [00:05:52] All the evidence that 1.5 degrees Celsius is not a goal. It’s not something you can compromise with. It’s a physical limits go beyond that, and we’re likely to cross tipping points that irreversibly make the planet less unless you’re above all future generations. So we’re providing the sciences across from the risk analysis all the way to the solutions space for support to accelerate the pathway towards a, you know, a safe and equitable and a planetary aligned climate transition. Speaker 1 [00:06:23] So, the U.S. obviously has a lot of power to push the drive toward 1.5. Joe Biden showed up in Sharm el Sheikh at least for a few hours. He gave a speech. And the U.S. quite bullish on the IRA, the Inflation Reduction Act. I’m curious to know, though, what reaction did the IRA get from the corporations and the policymakers that were there? Biden was not only bullish on the IRA, the Inflation Reduction Act. He really stressed how confident the US is in meeting that 50% reduction in commitment said flat out we will make this commitment. I think that meant a lot to the world who have watched the US with some concern and some hope over the decades make commitments and then pull away from them. And as the US goes, frankly, so will go the world’s prospects on climate change. And to see a confident us, to see a US government that’s saying we’re going to invest hundreds of billions of dollars in the technologies and the opportunities to get to net zero. I think that gave a lot of people confidence even when China didn’t really show up at this cop. Even when Russia, which is a serious player in all these conversations, is absent due to the war and may be absent for many more years. To see this kind of U.S. leadership actually does matter quite, quite a bit. On IRA, it’s also really created a lot of enthusiasm among investors who are seeing opportunities, whether it’s in carbon capture or hydrogen or renewable natural gas in the agriculture sector. Investors, Americans particularly, but investors from other continents are seeing pretty big opportunities right now in the US and then maybe looking at opportunities to to scale that globally. Now just trying to reconcile that with all of the pressures that countries are facing right now, including the U.S.. So, you know, how were high interest rates, high inflation and the need for really extraordinarily expensive climate investments all addressed, particularly with the developing countries that were present. There’s a number of things missing from COP, and one of the missing ingredients, frankly, is economists. Because you’re spot on, what’s happening in the real world with real money, with interest rates, is going to have significant impact on climate action. It already is interest rates at the levels there are and maybe going is deterring significantly investments in things like renewable energy in riskier markets in Africa, for instance, or the the Middle East, but also in more stable parts of the world. What’s happening in currency markets is also drawing a lot of capital back to the United States. So we’re seeing success, breeding success in the U.S. but that’s also bleeding. Possible successor opportunities in other parts of the world. That didn’t get a lot of attention at COP. And I thought that was unfortunate because we’re at a bit of a hinge point in in economic history. How can we adjust policy to address that, though, to address those factors like currency, like inflation? What governments are starting to do when you see the Canadian government starting to do this, is to put more capital on the table for the front end of the risk curve. So you’ve got major projects could be hydrogen or carbon capture that are going to require billions of dollars. And investors saying, yeah, in this kind of rate environment, in this kind of recessionary environment as well, maybe we’re even looking at stagflation. I’m not sure I want to put a billion or $10 billion down on a project that may not have the same returns as we could have forecasted even 12 or 24 months ago. In that kind of environment, having governments step in and say, okay, we’ll put the first billion down or we’ll cover, let’s say, the first the first series of losses. That gives enough comfort to investors to bring them off the sidelines, which is where a lot of capital is going, or to pull them back from less riskier opportunities, let’s say, in the US, where it is even more appealing with all this IRA money. This has become a much more competitive policy environment that makes certain governments nervous. Understandably so. But competition is what is presented to you often is not what you get to create. So we may be in a reactive period of policymaking when the countries, Canada included, need to read and react what’s going on in major economies. The U.S., which I keep citing, but also Western Europe and maybe to a degree is the East Asia. Yeah, it’s going to be interesting to see the different courses Europe in the U.S. take to this. In every conference, some issues get more buzz than others in this one and COP 27 where there’s some issues that have more weight than others compared to previous cops. Believe it or not, it’s been 27 cops. And this is the first one where agriculture has been front and center. There was an agriculture day, but more than that kind of notion of a dedicated day, there are serious policy conversations going on to determine better ways to get capital in the hands of farmers and food producers, to develop net zero ag practices or to scale net zero ag practices that are already out there. Here’s one of those farmers who I got to speak to at the conference. My name is Elizabeth for my daughters and my young farmer from Uganda and the president of the Eastern Africa Farmers Federation. This is our regional network of farmers organizations in the 22nd countries. We have a membership of 24 national farmers and my efficiency of presenting over 25 million smallholder farmers. So I’m here to represent the farmers voice in the different sessions where I will be speaking, but also to bring in this discussion. They are priorities for 27, which is our own increase, the funding for adaptation, but also loss and damage financing. This is one of the serendipity of a conference. I did not expect to meet Elizabeth and just bumped into her and got into what I found to be an inspiring conversation and it reminded me of the importance of small scale farmers. Because so much of what we talk about in agriculture, including Naomi, what you and I’ve been working on at RBC, tends to index towards large scale farming operations, even the notion of industrial farming. And we need to remind ourselves and Elizabeth in that clip reminds us that 70%. Of the world’s farmers are small scale farmers. And if we’re going to see net zero agriculture and we’re not going to see a net zero zero world without net zero agriculture, we’re going to rely on those millions and millions of small scale farmers who have the ingenuity. Many of them have the technology, they don’t have the scale, but in ways, their smallness can be their greatness. Yeah. And when there’s that many small farmers, I mean, they are fragmented across the agriculture sector, it means you have to shape specific approaches to how you help them lower emissions from their operations. But Elizabeth, the president of the Eastern Africa Farmers Federation, who was just in your last clip, she mentioned loss and damages. And I know that was a hotly anticipated negotiation going into COP. What was the outcome of it? Yeah, sadly, not much. Loss and damage was the great hope for the host country, Egypt, and for a lot of developing countries, for Africans particularly. These countries feel rightly so that they bear the brunt of the impact of climate change through no doing of their own and are least able to pardon the expression weather the storm. The classic example, which was front and center at COP is the floods this year in Pakistan. Pakistan claims it has suffered $30 billion of economic damage because of flooding that has been caused by early snowmelt in the mountains, which is caused by global warming that Pakistan has had very little to do with. So Pakistan showed up and said, hey, world, especially industrialized world, you put all the carbon into the atmosphere that’s causing the snowmelt to flood our plains. Maybe you’d like to consider paying for some of the damages. There was a pretty cold response to that, particularly from the Americans who understand the litigious nature of this discussion better than most. They don’t want unlimited liability. If Pakistan is going to claim 30 billion, what’s after that? What’s after that? And then how do you divide up responsibility? How do you assign responsibility? It’s really challenging. And the world’s going to have to spend a lot more time, I think, on this issue in the years ahead to to find more progress than we saw at Egypt, because there was certainly a respectful nod to the concerns. There were nice words. There’s commitments, of course, of money. And we know that only a fraction of that money will ever be paid up. The world is going to have to do better than that, unfortunately, and we’ll probably have to see more situations like we’ve seen in Pakistan to get us there. I’ll be interesting to see which of the economic powers sort of assumes leadership on that issue. We’re going to take a quick break. But coming up, more of our conversation with John Stackhouse and his rundown of COP 27. You’re listening to Disruptors, an RBC podcast. I’m Theresa Do. If you’re interested in all things Climate and COP 27, I’d like to tell you about the latest piece from RBC Economics and thought leadership called Reality Bites. This year’s COP 27 took on a whole new weight with troubling events like Russia’s invasion of Ukraine, devastating droughts and floods around the world, and a looming energy crisis as the backdrop. This truly was a wild year for the annual United Nations Climate Change Conference. Luckily, our own John Stackhouse was on the ground in Sharm el-Sheikh, Egypt, and has published his biggest takeaways. To read them visit RBC dot com slash thought leadership. Welcome back, John. You had a front row seat at the UN climate conference in Egypt and it sounds like Canada’s nuclear reactors were getting some attention from the delegates. Can you fill us in? Nuclear power, especially small nuclear power, is really popular these days and it’s gaining momentum. We’ve talked on this podcast about small modular nuclear reactors, and Canada is actually in the lead on this. We’re seeing important and interesting developments with Ontario Power Generation OPG, what it’s doing in terms of developing these so-called assemblers, we’ll see Saskatchewan probably trying to take on more of these. And what this means in turn is that Canada may become a nuclear provider again for the world. Heather Chalmers is the president and CEO of GE Canada, one of the big players in the nuclear business. And here’s what she had to say. What I’ve been so impressed with and I expected it coming in, but to see it demonstrated here is been remarkable. And that is Canada is leading in the energy transition, not just in terms of our pace, but we have an opportunity to share with the rest of the world some of our first of a kind technologies. And one of those examples that is very near and dear to us is small modular nuclear reactors. Well, that’s exciting. I mean, that’s a bright spot for us. And we’ve been talking about this a lot in the office lately. I think the potential for that technology is just fascinating. But we can’t forget that oil and gas remain major players for the moment. Did you hear anything from that sector or what was their reaction? Yeah, of course. There was a lot of talk about oil and gas, as there should be at at a climate conference. And it was more acute given the location both in Africa, but also kind of in the Middle East. And it was interesting to see the Saudis and the United Arab Emirates particularly really being ambitious on the stage at Sharm el-Sheikh, saying we are proud to be oil and gas producers and we think we can be net-zero oil and gas producers through things like carbon capture. And we’re going to spend billions of dollars on this to get it right and we’re going to continue to preserve oil, whether you like it or not. They were pretty blunt about that. The Saudis said we will be producing oil in the year 2100 and they’re very confident in that. This is a big challenge to a lot of people at court, but also to the whole court process, which is really designed to help engineer a decline over time of oil and gas production and consumption. So lots of tensions in the hallways over this, but lots of discussion as well about the opportunities that can come through technologies as well as the challenges of behavior change. Because none of this is going to happen until all of us are really come to grips with our own behaviors as consumers. Okay. So at the end of the day, at the end of the week, how would you say Canada performed on the global stage? How were we perceived? Canadians need to constantly remind ourselves that the world is growing faster than we are and the world is changing in many ways faster than we are as well. We still have incredible natural advantages. We are the energy and food producer to much of the world and we produce pretty much all types of energy and we do it with efficiency and sustainability. Of course, there may be exceptions, but we really are leaders in most aspects of energy production. The world respects that. The world is looking for more of that, but it’s also a divided world. And you really saw this I court unpack is going its own way. As I said, the Saudis are going to be very aggressive in their oil policy regardless of what the West thinks. Europe is becoming less influential with the rest of the world. America is still America, and that is perhaps part of Canada’s value to the world as being both an ally to America, but also an ally to many parts of the world and a connector with America. But I think we need to think about our place both in the world and in this divided world a little bit differently as we get deeper into the 2020s and get deeper into some of these challenges, how can we be a energy technology leader? How can we be an agtech leader harnessing what’s going on in the United States, but also using Canadian ideas and ingenuity to our own advantage? How do we sell more to the world? How do we help feed and fuel the world more sustainably, knowing it’s going to be a bigger world, going from 8 billion people to ten, maybe 11 billion, and it’s going to be a more divided world. Old alliances are going to require a bit more deft management and also thinking about our own transition and understanding that the world is watching us and the world is looking to us to lead by example, whether it’s in the energy transition, whether it’s in the agriculture transition, whether it’s in the built sector and housing sectors. These are areas where the world truly respects and admires Canada, where the world is going to buy whatever Canada develops, both in technology and processes. But you know what? There’s something that every Canadian knows is obvious but is truly special in the world. About Canada. That was reflected in the Canadian Pavilion. This is the first time the Canadian government has had a pavilion at COP in a number of years. That’s a shame because I think it’s really important for a country to to show its stuff to to the world. And a lot of other countries put on a real show and tell of technology’s real razzle dazzle. And the Canadian Pavilion, of course, reflected a bit of that classic Canadian modesty, but also became the venue of truly inclusive conversations that you would hear good debate and disagreement, respectful disagreement on some important challenges, but you’d also hear voices from all parts of society. Indigenous leaders were there, social activists were there, mayors were there talking about what they are doing, what their challenges are, but also where they’re finding success. And in many ways, that is Canada’s gift to the world, that we are an open, inclusive society, and we all like to talk about the inclusive and just transition. Well, you’re not going to have an inclusive or just transition if you don’t have all of society working on it together. And I thought that was really well reflected in the Canadian Pavilion. Next year’s COP 28, John, is being held in the UAE, which should be interesting. What do you think the biggest issues will be for that conference? Well, who knows where the world will be a year from now. But to think of a climate conference in Dubai in the year 2023 is fascinating. I spent a bit of time at the UAE Pavilion talking to Arab entrepreneurs as well as policymakers about what they’re looking for. And they are making huge bets on technology. It was eye opening to see how ambitious not just the UAE, but other Persian Gulf states are. And Saudi Arabia is on. Technologies like carbon capture, on technologies like solar, on hydrogen, looking to be world leaders and doing that at home first, but also exporting it to other parts of the Middle East, Asia, Africa, and who knows where they’ll take it from there. We’re going to see this tension between innovation and regulation on center stage. You’re going to have the host country and others saying we can innovate our way through this. We can engineer our way to net zero. And you’ve got a lot of other people saying, bring it on. We want all the innovation and technology you can create. But that alone is not going to get us anywhere near net zero in time. We also have to think about regulation and constraints. This is the war that’s going on in the bosom of the climate community and is going to rage perhaps in Dubai and really challenge the world to think about how we balance innovation and human ingenuity and the desire for progress and growth, and perhaps the need for constraint or at least management of certain parts of the economy that have become unsustainable. I think Rick Smith summed it up really well. Rick is the president of the Canadian Climate Institute. Here’s what he had to say. Speaker 2 [00:25:37] This cop was billed as the implementation cop, and obviously there’s a lot of work to do in that regard. But there’s been some really big announcements and some things happening in parallel to this meeting that that are going to propel implementation, be the announcement by the government of Cameron just a few days ago was a good step forward, formalizing a very significant methane commitment and there are working with our international colleagues. There are many other exciting announcements happening there, but haven’t got a lot of press but deserve to. We work with colleagues in South Africa, for instance, who are finalizing the details of the package, have directed aides to expedite the energy transition in South Africa. I think this cop is going to drive implementation forward. Speaker 1 [00:26:26] So what will be the main focus of the UN climate conference in five years time, do you think, John? In five years time we’re going to have a much clearer sense of whether we’ve turned the corner on the journey to net zero. I hope in five years we’re going to have some real success stories, not just episodic ones, but demonstrations across sectors of how to transition to. Net zero. We’re starting to see glimmers of this in sectors like aviation and steel. That’s really exciting to watch. And a few years from now, we may see those sectors a lot closer to net zero. That then becomes a model for other sectors. They want to get there but may not know the pathway to take and they can follow the lead that others are showing. That’s really exciting and encouraging to hear because I think the sense that there is that we’re running out of time. That’s the overall feeling of the ticking clock. And it sounds like there’s an awful lot of work still left to do. We are running out of time. And there was a very sobering clock in the middle of the conference that showed, you know, we are under seven years now to 2030. This is within eyesight and we know we have not done enough. So we have to be doing more today than we did yesterday and more tomorrow than we’re doing today. That’s just the hard thing about it. Climate change is borderless and it demands cooperation. Disruptors recently took an in-depth look at how Canada can reduce emissions and waste in the agricultural sector. It’s a special three part series called The Growing Challenge, and our other episodes can be found at our BBC.com. I thought leadership. Well, thank you for inviting me today to co-host John. I’m Naomi Powell. And I’m John Stackhouse. This is Disruptors, an RBC podcast. Talk to you soon. Disruptors, an RBC podcast is created by the RBC Thought Leadership Group and does not constitute a recommendation for any organization, product or service. It’s produced and recorded by JAR Audio. For more disruptors content, like or subscribe wherever you get your podcasts and visit rbc dot com, slash disruptors.

Speaker 1 [00:00:00] Hi. It’s John here. Speaker 2 [00:00:02] And it’s Theresa. Speaker 1 [00:00:03] Theresa, I wonder if you could close your eyes for a moment and picture a farm. For a lot of people listening, the scene probably hasn’t changed too much over the years or decades. There’s a red barn, black and white cow, a tractor, even wheat waving in the wind. Speaker 2 [00:00:22] It’s an iconic Canadian image, but when you zoom in on that image these days, it’s changing fast. Speaker 1 [00:00:28] I know you spent a lot of time over the last number of months visiting farms and ag facilities as part of our research into emerging Agtech. So take us there. Speaker 2 [00:00:39] I visited a dairy farm outside of London, Ontario, where milk production has gone fully digital, with an automated system controlling flows from one step to the next. It was really high tech, and this place was also installing an anaerobic digester, which is this massive facility that turns manure. And there’s a lot of manure into biogas. Another place I visited was a vertical farm in Guangzhou, where I saw stacks on stacks and stacks of imagined seedlings that are tagged with radio frequency, ideas that are growing under LED lights and controlled air flows. There was automated robotic machinery everywhere I looked, and the farmers, they weren’t wearing overalls, but lab coats. It was all super eye opening. John And I’m sure you felt the same way when you had a chance to tour some facilities in B.C. and Alberta earlier this year. Speaker 1 [00:01:28] Yeah, some of the best high tech operations in the country are in agriculture. In fact, the best blockchain conversations I get exposed to tend to be with farmers and ag producers. They are racing ahead in the data economy. I was reminded of this on a visit earlier this year to Lethbridge in southern Alberta, where there are massive feedlots largely serving the US market and big operations like McDonald’s. And the farm operators there explained to me how data and blockchain is helping them better market their beef in the US and elsewhere. And in many ways that’s the future of agriculture. Speaker 2 [00:02:07] As we mentioned on the last episode, meat and dairy production between both burps and manure account for a large part of Canada’s agriculture emissions. So this is a big area of focus. Speaker 1 [00:02:17] There’s also huge financial stakes. Dairy production alone contributes almost $20 billion to Canada’s GDP, and beef production accounts for nearly $22 billion. These are really important strategic industries, especially at a time when countries around the world are knocking on Canada’s door, looking to us to help feed their growing populations. Speaker 2 [00:02:39] And so if we’re going to tackle this challenge in a serious way, both in Canada and around the world, a critical puzzle that we need to solve is how to maximize agriculture’s potential as a climate solution, and specifically how to make the meat and dairy sectors climate friendlier, as we’ve both seen firsthand on innovation is going to be a huge driver of that. Speaker 1 [00:02:59] Absolutely. We’ve heard this from farmers and techies around the country. Agtech is already playing a huge role in boosting productivity while reducing emissions from the meat and dairy industry. There are a number of fascinating tech revolutions underway, which is exactly where we’re going to go today. This is Disruptors an RBC podcast. I’m John Stackhouse. Speaker 2 [00:03:29] And I’m Theresa Do. This is the second in a special three part series on Disrupters that we’re calling The Growing Challenge. We’re exploring how Canada, using cutting edge technology, data, systems and smart thinking, can help feed a growing world and how we can do it sustainably. Last week we talked about what will it take for Canada to assume that leadership role? And we heard from some of the farmers who are already using technology to produce more food, more sustainably. Green farmer Kristjan Heibert told us how technology used on his farm supports both his production goals and Canada’s climate targets. Speaker 3 [00:04:13] I got weather stations with four foot soil probes that are reporting to my phone every 15 minutes now of how the water is moving through the soil. All the roots are moving through the soil. Kind of what? The yield algorithm is off of that and then correlating all the stations together, just the speed of which we can collect data and use AI to start to learn more and more than we currently know. I think the changes you’re going to see in the next decade will make what happened in the last decade small. Speaker 1 [00:04:37] So there’s clearly innovation in grain farming, and the changes on Canada’s dairy and beef farms are no less dramatic. Productivity is up, way up. If you look at a typical dairy farm, each cow produces more than two and a half times as much milk as it did in the 1960s. Speaker 2 [00:04:53] And a lot of that is thanks to the work of animal health experts who have mined the data to help transform how we raise and feed livestock. To get into this, I first want to introduce Calvin Booker, who’s witnessed Canada’s barnyard evolution firsthand. Speaker 3 [00:05:10] I’m Calvin Booker. I’m a veterinarian and work at Tulsa Agriculture and Consumer Goods, where I’m the general manager on the Animal Health Team in charge of services and research. I grew up on a farm in Saskatchewan. Our farm was located about 35 miles southeast of Saskatoon, and we had both purebred simmental cattle and a thousand or 1500 acres of grain land. Speaker 1 [00:05:33] Calvin was in the Forage Club for 11 years. He knew early on that he wanted to work with animals, but in a more scientific way, which is what drove him to attend veterinary school and then grad school. And he took a particular interest in how technology and data systems can be used to improve animal health and boost sustainability. Speaker 3 [00:05:52] When I was going to vet school, it was lots of talk about herd health programs and how veterinarians could work very closely with producers and provide consultative information and data insights and analysis that would help them make better decisions. But there weren’t that many people doing it in practice in any of the animal production species. There were some innovators in each of the species in the feedlot industry. Dr. Keith Jim was one of those innovators. Speaker 2 [00:06:18] So, John, as you know, a key Jim is the founder of Feedlot Health, the company Calvin joined in 1982, which was bought by Tell US Agriculture in 2020. Tell us realized the potential of this data driven approach, which helps calf grower and feedlot clients across North America to collect animal data. Because ultimately access to data has the potential to do three main things in Canada’s meat and dairy industry boost overall animal health, drive product efficiencies, and promote sustainable outcomes like emissions reduction and monitoring. Speaker 1 [00:06:50] Right. And for anyone who might be wondering what’s so important about feedlots, why not just keep the cows in fields? Calvin has an answer. Speaker 3 [00:06:58] In Canada, because we’re in a very temperate climate where we have winter. The majority of the beef cows calve in the first five or six months of the year and in the fall of the year we’ve got winter coming again. And so most of those calves get weaned because they’re no longer be out grazing on grasslands and need to be fed, stored feeds. So we’ve got a whole bunch of our production system that’s stacked up at once, but yet we want to have beef coming through the production system and available to go into stores for consumers 365 days a year. So we spend the rest of the time spreading that production cycle out so that we’ve got animals that are ready to come to slaughter throughout the year. I think the emphasis on the feedlot side comes because as we put animals together in bigger groups of animals and put them into these fattening operations, it gives us more opportunities to use technology. It gives us greater control over what happens. Speaker 2 [00:07:52] By the way, John, we should note that there has been a lot of discussion about whether field raised cows are better for the planet. Speaker 1 [00:07:58] Not such a straightforward question. As it turns out, it’s complicated. Speaker 2 [00:08:02] Several past studies have actually found lower greenhouse gas emissions associated with the feedlot system. And one reason is that grass fed cows gain weight more slowly so they produce more methane, mostly in the form of burps over their longer lifespans. But then again, there are other dimensions to consider soil health, carbon and landscape health, for instance. Pro pastoralists argue that grazing cattle can help restore grasslands and soil sequestering massive amounts of CO2 in the process. But how well this works really depends on the number of cows, the size of the fields and the conditions. For instance, if it’s too wet, carbon uptake is impeded. Speaker 1 [00:08:40] One thing’s for sure the reality on the ground, and we learned this from Kalvin, is that Canada has a startling geographic concentration of feedlots. Over 70% of all feedlot production takes place in Alberta, most of it in southern Alberta. Speaker 2 [00:08:54] And these are big operations. Calvin says, Telus the smallest customers in Canada hold about 500 animals at a time, while the largest can hold about 70,000 animals at once. A lot of cows in one place means a lot of methane, which makes the role of data and tech all the more important. Farmers and veterinarians need tools to get a lens onto what’s really going on with animal health and emissions. Speaker 1 [00:09:18] Today, digital tools allow Telus Agriculture to connect with feedlots across Canada, the US and Mexico. This helps their team of vets and scientists understand what’s really happening inside those operations to make them more efficient and more sustainable. But as Calvin tells it, if you go back 30 years, it was a very different story. Speaker 3 [00:09:38] I remember the first computers that we put should side in feedlots in western Canada in 1985 because $13,000 per machine and they had 64 kilobytes of RAM. So if you had a big feedlot that had more than one handling facility, animals were in one computer or the other, but you certainly couldn’t get them to talk to one another. Any information or reports that we were going to generate at that time, we had to run it off that computer where the animals records were located. So it’s come a long way today. All the systems that we work with overnight sync with our office and update all the newest data to our servers in the cloud in our office. And as veterinarians or the animal scientists, nutritionists, we can access that data anywhere in the world to help producers, anywhere in the world make decisions and understand what’s happening in their operations. Speaker 1 [00:10:27] It sounds a bit like telehealth for cows. It’s kind of similar to the growing online health care options for humans. Speaker 2 [00:10:34] And you might be wondering what cow health has to do with emissions reduction. Well, for starters, more access to remote care means less jetting around and fewer greenhouse gases. It’s a better use of the time and precious resources needed to feed these cattle and operate these farms so it becomes a more sustainable operation all around. Speaker 1 [00:10:52] But, you know, where is this all going? What’s the end goal for the meat and dairy industries? Here’s Calvin again. Speaker 3 [00:10:59] As I look to the future, I think there’s all sorts of possibilities. Technology gives us a whole bunch of different options that we didn’t have before. The ability to have technical experts, whether those are veterinarians or nutritionists, and the animal scientists connected with producers of all sizes, not just large producers, but small producers, kind of on demand on a daily basis. That excites me because that allows the expertize to connect with the farmers and ranchers that are on the ground doing things and helping them make better decisions on a daily basis. That’s got to be more efficient and more sustainable in the long run than meeting with someone once or twice a year and set them up for the best of things, and then pat them on the back and saying, Well, good luck. We’ll talk to you in six months and see how it went. Going forward, I think we have a bright new future to be able to have better outcomes. Speaker 1 [00:11:49] You know, Theresa, the sort of tech optimism that Calvin Booker has is something you hear again and again the more you talk to people in Canadian agriculture. Sure, there are a lot of farmers toiling away in their fields, but more and more of them recognize that technology can make their jobs easier, more efficient and more sustainable, reducing greenhouse gas emissions and even opening up exciting new revenue streams in some of the least glamorous aspects of their operations. Speaker 2 [00:12:14] I assume you’re talking about biogas, and we do need to talk about it because methane capture is so critical to greenhouse gas reduction. There are some cool new technologies harnessing the power of anaerobic bacteria. These little digesters that are helping us solve the big climate issues in agriculture and their Canadian businesses are at the forefront of doing this. Speaker 3 [00:12:36] So I’m Jamil Lichtenstein from Dallas. Biogas. We’ve been involved in the biogas industry since 2010. I own the company with my brother and sister, and that’s been an exciting time in the industry. Speaker 1 [00:12:47] So while Calvin Booker and tell us are very much focused on the inputs for. Wired to feed cattle and keep them healthy. John van Liechtenstein has his eyes firmly focused on, well, the outputs. Manure, to be precise. He’s literally turning it into fuel. John’s parents bought what was originally a dairy milking equipment business back in 1990. But John and his two siblings transformed it with the creation of DHL’s Biogas. Speaker 3 [00:13:13] So we are doing manure management equipment. We’re actually starting to do a scraper. As I collected the manure, brought it to the back of the barn. Then we started to get involved, the pumps, to kind of move that manure around. We were already dealing with all the pumps and the material and everything, so we started doing biogas, which was kind of like a natural fit there. Speaker 2 [00:13:31] It’s really remarkable to see how some of these agricultural operations are reinventing themselves, John. So much innovation. And it’s worth noting the farms that Dairy Lane Systems works with are not the only ones investigating the whole biogas thing. According to RBC Economics, Canada currently has 279 biogas projects capturing methane from agricultural and community waste, and they now generate enough energy to replace nine large hydro dams. Speaker 1 [00:14:00] On the other hand, I read that only 13% of available biogas energy production is actually being tapped in Canada, at least so far. So there is definitely room to grow and that growth is starting to happen. Speaker 3 [00:14:12] I would say in the last two years there has been such an uptake in discussions around putting biogas plants on farms. We are constantly getting calls, probably one per week of somebody that’s asking us to at least help them explore the feasibility of putting a biogas plant on their facility. Speaker 1 [00:14:34] It’s exciting, and for some farms it’s a clear opportunity to develop an income stream that otherwise wouldn’t exist, especially in the supply managed world of Canadian dairy. Speaker 3 [00:14:44] We talk about that next generation coming on and some of these farms are not big enough to have two kids or three kids join the family farm and split that income three ways. Biogas represents another opportunity for them to grow and keep expanding their operations so they can bring and keep another family member on the operation. So I think there’s several factors, but I do think that part of it is definitely seeing if they can help with that GHG reduction target. Speaker 1 [00:15:10] I find this so interesting, his idea of essentially running a biogas power plant on farms, which is an entirely different line of business from traditional farming. And it brings up other questions like what’s the return on investment for something like this? And how long would it take for farms to realize benefits from adding this kind of tech to their operations? Speaker 2 [00:15:29] Right. Well, I know it takes a few years for a digester to be installed. They’re huge. And then for profitability to be realized. I’ve actually visited a farm that’s installing this, and the profitability equation is critical. If the economics don’t work or if, say, government subsidies disappear, farmers will not be incentivized to undertake this. Speaker 1 [00:15:49] It really speaks to the need to invest in Canadian farms and farming communities as they grapple with these kinds of changes. It’s to everyone’s benefit and the planets. If we can reduce greenhouse gas emissions in the process. Speaker 2 [00:16:01] Something to keep talking about and keep an eye on for sure. I also think our listeners would appreciate some clarification on the actual mechanics of this technology. Speaker 1 [00:16:11] Yeah, me as well. So I asked John about that. Here’s how he explained it. Speaker 3 [00:16:15] The way I describe it is it’s basically acting like a stomach. You have a concrete tank, or it could be a steel tank that’s inserted, let’s say, between the farm and their long term storage for their manure. And that manure ends up funneling in from the barn into that digester. In that concrete tank, it’s heated up to 38 degrees, which is roughly body temperature. It’s agitated to keep it homogenized and keep stuff from settling out while you’re heating it up. You have a dome over top of this concrete tank that collects the gas that’s generated and you extract that gas, you clean it, and you can either run it through an engine. And if you run through an engine, you’re running it straight, biogas, which is about 60% methane. Or you can clean it up with biogas, upgrader to around 98% methane, which scrubs some of the impurities and then brings it up to a natural gas quality. And then you inject it into the natural gas pipeline. Simple. Speaker 1 [00:17:16] Clear as something, right? I actually learned a lot about this from John. Once the gas is extracted. They take the leftover liquid, what he calls digestate. And that either goes into storage or gets applied to the land on your farm, or in some instances, remaining fibers from the liquid are separated out and turned into bedding for the farm’s animals. Speaker 2 [00:17:36] That is very cool. But the thing I still wonder about this is the cost of the digester technology. Based on my research, it makes enough sense for operations with 500 plus milking cows, but it’s pretty hard to stomach. So to speak, for those with less than 100 animals. Speaker 1 [00:17:54] That’s true. But John thinks there is a solution, a kind of co-op model for smaller dairy farmers who want to use the digester technology, which in Canada, where the average dairy farm has only about 85 milking cows. That means most farmers. Speaker 3 [00:18:08] Yes, it’s 100% a function of scale. There’s those fixed costs that don’t change enough with volume reductions or gas volume reductions that kind of make it more difficult to help the needs of the smaller or the average sized Canadian farm. I really think it comes down to community based digesters. So having six local farms bringing their manure in. But there’s economic challenges to that as well because trucking manure is not super appealing from an economic standpoint. Speaker 1 [00:18:40] Once again, it comes down to data management, transportation and funding infrastructure. John told us a lot of the technologies in the sector right now are focused on efficiency rather than reducing emissions per se. But he thinks there is an opportunity to shift the needle with the right incentives. Speaker 3 [00:18:57] I think for any of these things to really take off, there is a certain sector of the population that will always just do it because that’s what they believe in and they think that’s the right thing to do. But I think there has to be a financial penalty or a benefit to implementing that technology. In our sector, some milk pricing based on the technology that you have on your farm or like some variable different pricing, if you did something like that, you would not see how fast people would run to implement it. Right. And same with there was like a premium product and you could opt into producing that premium product. And there is an incentive to doing that. I think you’d see a lot of uptake. Speaker 1 [00:19:38] Again, you can hear John’s ingenuity and his optimism. Speaker 2 [00:19:42] One of the most fascinating things John told us was his family’s story. His parents emigrated from the Netherlands. Speaker 3 [00:19:48] My parents, they came over from Holland in the early eighties. They kind of originally were from farming backgrounds in Holland. Not that they were necessarily farmers, but they were always involved in the industry. They came over, got some jobs. My dad started working for a dairy equipment company in 1987. The guy was kind of ready to retire, so he kind of facilitated the transition of the business to my parents. Speaker 1 [00:20:14] The Dutch are famous for doing more with less. They’re perhaps some of the most productive and hardest working farmers in the Western world. Speaker 3 [00:20:21] A lot of it’s like that immigrant mentality. A lot of them don’t have established connections here, so they really put their efforts and their life into their work when they’re first establishing themselves. So you can definitely see the really hard work ethic when these immigrant families come over to Canada. They really have something to prove to establish themselves. Speaker 1 [00:20:41] We are, after all, a nation of immigrants which has made us stronger and more innovative over the years. Coming up, we’ll speak with an Alberta based tech innovator, someone passionate about the future of Canadian livestock who also takes inspiration from the old country. So stay right there. Speaker 2 [00:21:02] You’re listening to Disruptors an RBC podcast. I’m Theresa Do. I’d like to share with you our latest second share report from RBC Economics and thought leadership called “the next Green Revolution: How Canada can produce more food and fewer emissions.” Global food demand is set to soar as the population rises to 9.7 billion people in 2050. Meanwhile, climate change is slowing the agricultural productivity of many major producers. And geopolitical upheaval from Russia’s invasion of Ukraine has destabilized the world’s food systems. Rarely has speed in the world presented such a daunting challenge. So how can Canada lead the worldwide effort to confront it? To find out, visit RBC dot com Slash Next Green Revolution. Welcome back to part two of our special series on the future of Canadian Agriculture. The Growing Challenge We’re Taking into how Canada’s beef and dairy industries can help feed a growing world and do it more sustainably. A minute ago, we heard from John Van Logtenstein, the co-owner of Dairy Lane Systems, and DLS Biogas, who is helping dairy farmers turn manure into biogas. This keeps harmful emissions out of the atmosphere and creates a whole new revenue stream in the process. John also shared the story of his parents who started drilling. They were immigrants from the Netherlands. And according to our next guest, Canada has a lot to learn from the Dutch as we look to boost our agricultural productivity. Speaker 4 [00:22:35] Hi, I’m Alison Sunstrum, general partner of The 51 Food and AgTech Fund. I grew up in Saskatchewan, so everyone is connected to agriculture in Saskatchewan. But I started life as an accountant and very quickly found computers, technology, and was really fascinated by what they could do for agriculture. Speaker 2 [00:22:57] Alison thinks that Canada has the potential to be a world leader in agricultural production and produce more valuable agribusiness products. If it invests in cutting edge technologies. Speaker 4 [00:23:08] It should be easier to grow in Agtech Company in Canada because we definitely have access to primary production here. If we take a look at the number two exporter of agri business goods in the world is Holland. And Holland has a landmass the size of Bass National Park. So if we look at ourselves as the number five producer of agricultural products and goods, why can’t we convert those products into more valuable agribusiness products? Holland can do it. What are the limiting factors here? And I would say we have to just really addressing the fact that we are an agricultural nation, that we have much to learn from the Dutch experience, and we also have the potential to be a more sustainable producer of goods and agribusiness value goods in the world. Speaker 1 [00:24:01] Canadian Agtech companies have a lot to learn from Alison, too. She’s lent her expertise to many startups, serving as both a venture partner and investment adviser. She’s also founder and CEO of Conserve-X, a Canadian company researching and applying emerging technology in agriculture. And just over two decades ago, she invested in a Calgary based startup called Grow, Save and turn it into a global leader in the Agtech space. Speaker 4 [00:24:26] In 1999, I met an amazing engineer who was reimagining how you could monitor and work with animals. And I invested and joined the company. And in 1999, we were the first people who had used RFID to tag production livestock. Speaker 1 [00:24:47] Just to interject, for those who don’t know, RFID stands for Radio Frequency Identification, which allows digital data to be transmitted wirelessly, say, between an animal’s tag and a nearby reader. Speaker 4 [00:25:00] And over the next 20 years, we built our company measuring animals, monitoring animals and really looking at three characteristics How could we use technology to improve profitability on farm, to improve animal welfare? And we were already looking at how we could reduce the environmental impact of livestock production. And basically what we built is a high speed or high volume data acquisition and analytics platform that measured the R side, which identified animals and also measured multiple biometric and environmental sensors. And with that data we developed, along with researchers using our technology, we developed a way to determine through a genetic selection method how efficient animals and livestock were. And the end result, after 20 years of research, really was, we determined which animals were more efficient in their gain and conversion at sea. And that resulted in a couple of things that improved the cost of feed for livestock producers, but it also reduced manure and methane. Speaker 2 [00:26:15] This is so, so key. What Gro Save has done with data is essentially optimize animal welfare, including diet and digestion, and that’s optimized farm costs and beautifully reduced emissions from livestock. This is the kind of technology we need to scale to meet our net zero challenge, those that improve food production and minimize their impact on the environment. Speaker 1 [00:26:37] If every dairy or cattle operation ran with this kind of connected technology to reduce methane, we could go a long way to addressing our net zero goals. Speaker 2 [00:26:47] The real time monitoring and analysis is something that Alison, in presentations she’s given over the years, calls. The Internet of livestock things. But while this kind of connectivity sounds simple enough, the reality is that many parts of this country, especially rural Canada, don’t have access to the kind of high speed Internet that city folk take for granted. Speaker 4 [00:27:07] I think the Internet has shifted, and our ability to connect to technology has shifted. Our availability, number one, education on far from, but also number two, that we can really exploit and explode our opportunities on farm with every device and every sensor and everything we can connect to the Internet can reasonably occur. It seems odd in this day and age that so many parts of rural Canada are still not connected. And I think that’s where we’re going to explode. If we can get full connectivity across the country and we think about not just connecting people to the Internet, but also connecting sensors and things that really can measure where we can make management change. So from my perspective, the smart phone and the ability to connect sensors and then therefore through automation is what will really drive our productivity change and our sustainability change in Canada. Speaker 1 [00:28:10] Alison is also looking beyond sensors and automation and is enthusiastic about the potential of a slew of cutting edge technologies, including blockchain and artificial intelligence. That’s a lot of what she focuses on in her daily work with Conserve. Still, I was curious about the limits to all this tech innovation and wondering, Alison, how much gain is still out there to be had given all the progress that we’ve seen over the last couple of decades? Speaker 4 [00:28:39] I think that’s a great question, John, because if you look at how we’ve improved our productivity from the sixties until now, we’ve actually doubled food production. And with the increasing number of population, by 2060, we’re going to have at least another 2 billion more people on the planet. I think we have to double food production again. So if we look at the amazing strides that we made from the sixties to now, and if we look at where we have to go to earn the future, we have to really take a look at how we impacted the planet and how we’re going to have to do things a little bit differently. So I think we can do two times as much or we will have to, but we need to do so sustainably. Speaker 1 [00:29:26] What are the one or two things that you think are essential for Canada to get done in the next few years if we’re going to achieve net zero agriculture? Speaker 4 [00:29:36] I think that we have to start investing in net zero. And by that I mean that if our products reach net zero, we as consumers must buy them, we must demand them. And we also must ensure that farmers are not where we place the burden of our emission reduction. So as consumers, we have a responsibility, but as a government and as policymakers, I think that we have a responsibility to really backstop our farmers in a way that they can become net zero producers. Speaker 2 [00:30:13] So, John, I feel like through these conversations, I’ve learned a lot about the technologies that could improve production and transform farming operations across Canada. We just heard from Alison Sunstrum, who obviously sees the potential for Agtech. She’s investing in a big way in a variety of technologies, from blockchain to A.I. that she thinks will revolutionize the sector and make us a world leader in sustainable agriculture. And she talks about how we need to support the farmers who are working towards net zero with our buying power, our wallets. Speaker 1 [00:30:44] We also heard from Calvin Booker about how tell us agriculture is using technology to monitor feedlots and provide virtual health care that reduces the amount of physical travel for vets and helps us gather more data to study the connection between animal health, productivity and sustainability. Speaker 2 [00:31:01] John Van Logtenstein explained how his new biogas business is helping to reduce emissions on dairy farms while creating a new revenue stream for farmers. Speaker 1 [00:31:09] And Theresa, I’m trying back to something that grain farmer Christian Heber told us in our last episode about where he sees technology going in his operation. Speaker 3 [00:31:18] I always joke that within a decade or two, I think I could run my farm from three or four computer screens anywhere in the world because we’ll literally have a technology dashboard that’s pulling in all the data. I need to make a decision. And I mean, lots of our equipment now can adjust itself on the fly. And operators are still really important. But at the same time, we can just do such a better job than we used to. Speaker 2 [00:31:36] Well, that’s automation taken to its natural conclusion in agriculture, I guess. Speaker 1 [00:31:41] The remote control farm. I love it. Speaker 2 But don’t forget about the low tech practices like cover cropping or other regenerative farming techniques that have stood the test of time or in the case of livestock, simply changing up their diet. There’s research out there, John, that suggests adding seaweed, of all things, to the diet of dairy cows to reduce emissions by up to 82%. Speaker 1 [00:33:23] And maybe we should lean into things like cellular agriculture, which Evan Fraser from the University of Guelph mentioned in the last episode that involves producing agricultural products from cell cultures, including meat and dairy products, basically lab grown food. The sci-fi possibilities are endless. Speaker 2 [00:33:44] Sadly, we are out of time for today. Big thanks to our guests and thanks to you for listening. Please join us next time for the third and final episode of The Growing Challenge. We’re going to look at the important role that consumers, producers, grocers and restaurants play in reducing waste in the food system. A big source of emissions across Canada. Until then, I’m Theresa Do. Speaker 1 [00:34:07] And I’m John Stackhouse. This is Disruptors, an RBC podcast. Talk to you soon. Speaker 4 [00:34:16] Disruptors, an RBC Podcast is created by the RBC Thought Leadership Group and does not constitute a recommendation for any organization, product or service. It’s produced and recorded by JAR Audio. For more disruptors content, like or subscribe wherever you get your podcasts and visit RBC dot com, slash disruptors.

Speaker 1 [00:00:02] Hi. It’s John here. Speaker 2 [00:00:03] And it’s Theresa. Speaker 1 [00:00:04] Theresa? If I were to ask you to name one of the top challenges facing the world today, one of them would have to be climate change, right? Speaker 2 [00:00:11] Oh, without a doubt. Mother Nature is sending us some serious warning signs, John. Speaker 1 [00:00:17] Pretty hard to ignore wherever you are on the planet. But how often do you sit down to dinner and consider the climate impact of the actual food on your plate? Speaker 2 [00:00:27] Yeah, that’s a good point. Probably not often enough. I think sometimes it’s hard to remember what’s good or not good for the environment amidst the day to day stresses of life. But I know that beef is by far the most carbon intensive food to produce, followed by seafood, pork, chicken. And I also know that plant based foods are the least carbon intensive things like tofu, beans and nuts. Speaker 1 [00:00:50] And let’s not forget that a lot of the stuff we grow or produce doesn’t even make it to our stomachs. It expires or goes bad or gets left on the table and thrown out. Yeah. Speaker 2 [00:01:00] I really hate food. Waste the silent shame of our kitchens. The fact is that the food we produce and the food we consume comprises 10% of our country’s total greenhouse gas emissions. And to reach our larger carbon reduction goals, we’re up against a ticking clock. Speaker 1 [00:01:16] The other consideration, Theresa, is that we’re going to need to produce a lot more food in the coming years. Just think about the conflict in Ukraine. It’s laid bare, how fragile the world’s food systems can be. Or remember back to the depths of COVID and lockdowns how precarious food supplies became. That will be a growing challenge, as we say in the title of this podcast series. As the global population grows and that means more mouths to feed, which comes with added costs, both financial and environmental. Speaker 2 [00:01:45] Yeah, and it’s a huge challenge, John, one that we’ve been spending a lot of time thinking about lately here at RBC. Speaker 1 [00:01:51] At this moment, Canada has a unique opportunity. We have a huge supply of arable land and water. Our farmers already produce $75 billion worth of food each year. We’re top exporters of wheat, canola and beef. And we’re also a land overflowing with innovation. Speaker 2 [00:02:09] RBC Economics predicts that Canada will need to spend about $2 trillion in the next three decades to transition to a net zero economy. So, yes, on the one hand, we need to feed more people almost 10 billion by 2050. But at the same time, we have to reduce our current emissions levels while also producing more food in order to meet our net zero goals for the sector. So how do we do it? Speaker 1 [00:02:33] That’s the $10 billion question. Or maybe you’d like to call it the 10 billion person question that we’re going to try to tackle in the coming weeks. This is Disruptors and our VC podcast. I’m John Stackhouse. Speaker 2 [00:02:51] And I’m Trinh Theresa Do. It’s my pleasure to welcome you to the first in a special series we’re calling “The Growing Challenge”. Over the next three episodes, we’re going to explore how Canada can lead the world in clean, green agriculture using cutting edge technology, data systems and smart thinking to increase yields while reducing the environmental impact. In other words, more food with fewer emissions in line with our nation’s net zero goals. Speaker 1 [00:03:23] Here at RBC, we’ve embarked on a signature research project in partnership with Barclays Center for Canada’s Future and the Aral Food Institute at the University of Guelph. Sonja, who is a managing director and partner in BCG, is Washington, D.C. office and a global expert on agriculture. She says the magnitude of the challenge cannot be understated. Speaker 2 [00:03:46] Agriculture accounts for over 10% of emissions in Canada, and at the same time we expect global demand for food to increase by 26% by 2050. And to be honest, Canada is in a great position to address that demand. But at the same time, it needs to do so in a way that isn’t going to also increase the emissions, given the challenge that we have in the world. Speaker 1 [00:04:14] We’ll hear more from Sonja a bit later in the series. Canadians right across the country have an opportunity to be leaders in food innovation and help people working up and down the supply chain improve their efficiency. To do that, we need to attract a new generation of farmers, innovators and scientists to the field or fields. And one of the people leading the charge, Ogwell, is this man. Speaker 3 [00:04:37] My name’s Evan Fraser. I’m director of Arrell Food Institute at the University of Guelph. Speaker 1 [00:04:42] Evan is one of Canada’s top social scientists working on food and sustainability. I started out by asking him our central question How can Canada help feed the world sustainably? Speaker 3 [00:04:52] I think the answer to that question is good policy and technological innovation, and I think those two things are the reasons that I remain optimistic. So we know we have to increase production. Some people think we need to increase production by 70% by 2050. And The Economist ran an article a few years ago on this topic, and the stand out pull quote from that article was that the farmers of this planet need to produce more food over the next generation than all farmers have ever in the last 10,000 years cumulatively. The scale of the production challenge is huge, and at the same time we have to not only take greenhouse gas emissions out of agriculture, we actually have to turn the arrow around and make agriculture absorb greenhouse gases. So we’re not trying to reduce emissions in agriculture. We’re trying to make agriculture a net sink for greenhouse gases. Those are formidable challenges. At the same time, of course, water is scarce in many parts of the world and likely to become scarcer. At the same time, weather patterns are less stable and less predictable, and at the same time, soil erosion is real and major parts of the world are experiencing a degradation. Speaker 1 [00:05:53] So against that backdrop, I asked Evan where the opportunities for improvement lie. Speaker 3 [00:05:58] First of all, we have a leaky food system. We produce enough calories right now for everybody to eat. If you use the United statistics and you take all the world’s food and you divide it by all the world’s people, there’s about 2700 calories produced per person per day, which is actually more than enough. Second, we waste a lot of food. About a third of the world’s food is wasted. So we’ve got gargantuan rooms for efficiency gains in the current system. Speaker 2 [00:06:20] By the way, we’re going to talk a lot about food waste in the third episode of the series. But like Evan, we’re also focused on the technological solutions. Speaker 3 [00:06:28] We have only just started to apply digital technologies to agriculture. So the same tech that produced the Internet, the same tech that transforms medicine in the last ten years, the same technologies that that allowed us to go from no idea about coronavirus to four or five or six vaccines in 18 months. Those same technologies are only now being applied to food production, distribution, food processing. And so not only do we have a system that’s actually quite leaky or inefficient to begin with in terms of waste and surplus calories and things like that. We’ve also got an area where we haven’t done a lot of technological innovation. Much of the world’s farming community still uses sometimes 19th century and certainly 20th century technologies, let alone 21st century technologies. So I think there’s some very, very big vistas of productivity to be gained by artificial intelligence and satellites and genomics. And we can get into very specific, granular examples of cool technologies. But I think overall, agriculture is ripe for a wave of innovation to come crashing down on it. Waves of innovation can be highly disruptive, and they can dislocate rural communities and they can disenfranchize people so that they’re not all good. But I think the potential to boost production while shrinking environmental impact with technology is very real. Speaker 1 [00:07:48] Evan has spent a ton of time thinking about out there tech solutions to the world’s food problems. In fact, he just co-wrote a book called Dinner on Mars The Technologies That Will Feed the Red Planet and Transform Agriculture on Earth. He thinks growing food on Mars is a good thought experiment for us here on Earth. Speaker 2 [00:08:06] And it makes sense, right? Because resources are scarce on Mars, which means you have to make the most of what you have. In other words, you have to perfects the idea of a circular economy where waste from one section feeds into another. What he’s basically saying, I think, is that we could actually survive on Mars, at least when it comes to growing food. Speaker 1 [00:08:25] But I pressed him to explain how this Martian thought experiment could be applied here on Earth. I wanted to know how close we are really to replicating a system like this. Speaker 3 [00:08:34] We don’t have all the technologies, but let’s just take something like cellular agriculture, the ability to produce livestock proteins from laboratory settings. We’re close. We’re really close on a number of key areas. I think properly designed. A lot of those bioreactors that produce those, those livestock proteins, ultimately they’ll be fed on wasted organics. So you think of all the spent grains from a brewery, for instance? Well, those should go into bioreactors to produce higher value proteins. Or you take the Canadian prairies and we start thinking about Canada’s role in this fractured global food system. The Canadian prairies are unbelievably efficient at producing peas and plant based proteins. But once you take that pea and you fractionated out the water and the. Starches and the proteins, and you used the proteins as a food substance. You’ve got a lot of starches. Well, those starches could go into a fermentation bioreactor, reproduce other kinds of protein. And so I think starting with the idea of the circular economies of Mars and moving forward, we actually start imagining a vision for our country’s agri food future and our position on the global stage. Speaker 2 [00:09:39] Of course, a lot of farmers are already laser focused on building the tools we need to eat far more sustainably today, right here on planet Earth, and we’ll need their expertize. We know that Canada will need to grow more food without adding substantially more farmland. If we want to reach net zero. For many farmers, faced with expensive real estate, labor shortages and other existential challenges. Doing more with less is not a recent imperative. For some, it’s actually the animating focus that’s driven their farms for generations. Speaker 4 [00:10:15] I am a Kristjan Hebert. I farm at Moose in Saskatchewan, right in the southeast corner of the province. Most of it’s kind of the halfway point between Brandon, Manitoba and Regina, Saskatchewan. It’s only about 30 miles past the Manitoba border, and agriculture is really large in this area. So we spent about 3500 people, but within a 80 kilometer radius, two trains with about 70,000. Speaker 1 [00:10:37] Kristjan, you’ve got a really big farm. Can you describe it for us? Speaker 4 [00:10:41] We currently operate around 30,000 acres and obviously for for listeners that don’t know and acres about eight feet wide and a mile long. So a few football fields in our terms and we grow wheat, barley, canola peas, oats and sometimes some hybrid. RYAN As far as a few people may know, we do a fair bit with data and technology, and that really helps drive our farm operation. Speaker 2 [00:11:03] 30,000 acres. It’s a lot of work to keep a farm like that going. Speaker 1 [00:11:06] Kristjan is a third generation farmer working the same soil where his grandfather put down stakes in the early 1960s. But the challenges he faces are new acute labor shortages and difficulty attracting specialized talent to small town Canada because new farming techniques require different kinds of skills. Speaker 2 [00:11:25] Meanwhile, there’s also growing volatility in interest rates and foreign exchange rates and rising prices for a variety of inputs and equipment. And of course, farms like Christians across western Canada have faced more and more extreme weather in recent years. Droughts, floods and more droughts. Speaker 1 [00:11:43] Exactly. So given all this, I asked him what role sustainability played in his farm operations. As you’ll hear, it’s pretty integral. Speaker 4 [00:11:51] I’ve got a picture that hangs on my wall that says our you know, our legacy statement is is our sustainability statement. And that’s that the financial statements, the land, the community and the industry should be handed, you know, generation to generation in a better state. But all four of those need to improve each generation, not just one, when it comes to the land. I mean, it’s everything to us. It’s our asset. It’s like somebody’s home. You don’t let your home deteriorate generation to generation. It’s one thing that helps build family wealth, and that’s really our land. But not only is it like our home, it’s our engine. It generates everything on the farm. So, I mean, in today’s world, if you were to come to our farm, I could show you we’re taking soil tests every four acres on our farm. And I like to compare that to no different than a human taking a blood test to see what they need from their doctor to be healthy. Speaker 2 [00:12:35] I love that analogy of a soil test being like a blood test, a health check for the land, for sure. Speaker 1 [00:12:41] Everything, everything starts with the soil. But according to Kristjan, the key is to pay attention to what the soil is telling you. That’s your biggest data source. You need to learn from it. Speaker 4 [00:12:52] So we take soil tests to see exactly what nutrition our crops are going to require that year to hit the yield targets to allow us to produce the grain we need to feed the world so that we add the nutrition we need, which is in today’s world is called fertilizer. Fertilizer is really just food or calories that goes into a human body. A crop is no different. We give it food and nutrition to allow it to reach its full potential by the end of the growing year, which is only 100 or 120 days. Next step is we use a lot of data to determine which weeds, etc. and pasture in the crop and we remove them with our herbicide in order to to allow it to be healthy. And then lastly, we get to harvest and we collect all the data too on our yield data. We take all of this that we’ve collected all year, our soil test data, the nutrition we put down in the harvest data to create next year’s map to do a better job again. Speaker 1 [00:13:41] Christian said that the ability to collect data from farms has really improved in the last decade or so. Before that, he says, farmers had to rely more on gut feel and hunches for how to get better. Speaker 4 [00:13:52] And farmers did. An amazing job of that was with things like Zero Tail, etc. But as data is able to be collected, we can make a lot more changes in season and annually than we could in the past. And of course, the land is something I’m going to take care of. And my kids could come up to the Harvest crew right now and grab a handful of any grain I grow and throw it directly in their mouth and eat it and it would be safe and nutritious and I’d be happy with that. Speaker 2 [00:14:15] He mentioned zero till there, John. Basically a way of farming that causes less soil erosion. Speaker 1 [00:14:21] Right. And we’re going to explain more on that in a minute. Speaker 2 [00:14:24] What jumps out to me is how much passion he puts into what he grows and the precision with which he does it. Speaker 1 [00:14:29] Absolutely. And that reliance on data is core to how Kristjan Hebert and Hebert Green Ventures has achieved more sustainable results. But sustainability, as he explained to us, is nothing new to the family business. They’ve been on that path for decades, practicing no till farming and using technology such as air seeders which allow crops to be seeded and fertilized without disturbing the soil. Speaker 4 [00:14:53] Zero tilled came in because of erosion, working the fields in dry land. Farming was really tough on the fields you literally deteriorated your land. So we’ve been doing Zero Tillage since, I think it was the early nineties. The dad bought the first drill. I mean, I’d have been ten years old at the time, so we’ve done zero till forever. But then you look at little pieces like sectional control. We run 80 foot air sinas and he. Section shuts off as it starts to overlap. Where ten, 20 years ago it didn’t. You’d overlap half that air seeder on the way down. Whether you’re going around a slower a curve or turning around, it used to be 13% of your field would be overlapped. Now it’s down close to 1%. You know, 99% of our field gets exactly what it should for nutrition. So that was a huge move forward. I look at nitrogen inhibitors. I mean, that was just once again, we did testing to find out if any of our nitrogen was gassing off. And at times we did find there was conditions that allowed it. So we started using nitrogen inhibitors a number of years ago, but for two reasons. One, it’s better for the climate. The other thing is I don’t want my fertilizer to gas off my crop needs that like that. That’s supper for my crop. So if I only seed my crop two meals a day, it’s not going to be as healthy as if it gets three. So, I mean, the goals of the crop and of the climate are actually extremely intertwined and, and on the same page. And those things both hit my financial statements. And then I think lastly, we just use the ability to collect data alive and all the equipment. And, you know, I got weather stations with four foot soil probes that are reporting to my phone every 15 minutes now of how the water is moving through the soil. All the roots are moving through the soil, kind of what the yield algorithm is off of that and then correlating all the stations together, just the speed of which we can collect data and use AI to start to learn more and more than we currently know. I think the changes you’re going to see in the next decade will make what happened in the last decade small. Speaker 2 [00:16:39] So, John, it seems like anyone who’s lived and farmed on the prairies over the past decade or two has likely already seen some pretty profound changes in terms of emissions and technology with more to come. Speaker 1 [00:16:53] And if there’s one thing I learned from talking with Christian, it’s the farmers like him have been innovating for decades and will continue to innovate. Speaker 2 [00:17:04] John, I want to introduce another person now, someone else who’s had a front row seat to all this change. Meet Murad Al-Katib. Speaker 5 [00:17:12] We were community leaders. That’s how we grew up and agriculture in our community. I grew up in a time where the country elevators were closing and it was the race for the concrete elevators, you know, the terminals that would be built and those communities that secured those would survive their schools, their hospitals, you know, the communities on Main Street with Thrive, those that didn’t may not survive. Speaker 2 [00:17:33] Murad’s family moved from Turkey to rural Saskatchewan in the 1960s, ultimately settling in DAVIDSON In 1975, his father was a family doctor and his mother served as councilor for the regional municipality of Willmar. Speaker 5 [00:17:46] I had to go to my father and tell him that after five generations of doctors, I would disappoint him and go to business school. And I remember him saying, you know, son, is that an honorable profession, you know, going into business? And, you know, again, he supported my development. And, you know, 21 years ago, I founded the company. And it’s been a crazy ride to a couple of billion dollars in revenue and building something that I think has made a bit of a difference in western Canada. Speaker 2 [00:18:12] So Murad is the founder and CEO of AGT Food and Ingredients. Based in Regina, they’ve got over 2000 full time employees, so it’s one of the largest suppliers of value add pulses, staple foods and food ingredients in the world mirrored by his lentils, peas, beans and chickpeas from farmers in Canada, the U.S., Turkey and beyond processes them and then shipped the final products to customers in more than 120 countries around the globe. I asked him to talk about what motivated him to enter this famously volatile industry and how he thinks Canada can rise to the challenge of growing and exporting more food, more value added food while still cutting emissions. Speaker 5 [00:18:53] I think it’s all about technology and innovation. I mean, try, you know, implementing digital agriculture on one acre farms in India. We have farm families now with, you know, corporate entities, just farm families themselves that are producing 2 to 300000 acres of production sensors and data collection are going to allow us to do a lot more with a lot less. And I’ll give you a great example. The drought of 2021 was a historically bad drought in western Canada as a result of that drought. You know, nitrogen fertilizer wasn’t utilized like the nitrogen in the soil wasn’t taken by the crops because of the drought. In 2022, we had regions of Saskatchewan where there were enough nitrogen stores in the soil to grow a complete crop without the application of nitrogen fertilizer. In my days growing up in Davidson, we didn’t know that, right? People were farming by gut. Today we’re farming with data. Data is going to be the key to emission reduction. We’re going to have yield gains. We’re going to be using the same amount of nitrogen or last nitrogen, and we’re going to be growing more yield. Speaker 1 [00:19:58] Interesting to hear him echo Kristjan there on the importance of data. Speaker 2 [00:20:02] Yeah, he’s super happy. We’re now able to use data to monitor things like the nitrogen levels in the soil. He’s also excited about advances in irrigation technology. Speaker 5 [00:20:11] The Lake Diefenbaker Irrigation Project in Saskatchewan, which is again, another generational project that we’re going to see freshwater resources brought into irrigation, you know, development that could be 5 million acres of irrigation that doesn’t exist today. The government’s talking about emission reduction, GHG footprint, water use, efficiency. All these things are achievable with technology and innovation and our farmers have the ability to do that. That’s how I think Canada is going to be one that will step outside the crowd and be very relevant to the new consumer that’s going to demand this profile from the food industry. Speaker 2 [00:20:51] Coming up, we’ll hear more from Iraq on how Canada can lead the world in building a sustainable agricultural advantage. So stay right there. You’re listening to Disruptors and RBC podcast. I’m Theresa Do. I’d like to share a bit about our latest report from RBC Economics and Thought Leadership. It’s called The Price of Power. And in it, we outline the scale of the challenge facing our policymakers over the next three decades to reach a net zero electricity grid by 2035. Is Canada ready to meet a 50% surge in electricity consumption over the next decade? It’s a tall order, even unlikely at our current pace of decision making. If we get it wrong, Canada could suffer Europe’s fate of a hobbled, energy insecure grid that leaves consumers with soaring bills. To learn more, visit our BBC.com thought leadership. Welcome back. Today, we’re talking about how Canada’s farmers and agricultural innovators can lead and feed the world in an age of climate disruption. We just heard from Murad Al-Katib, the CEO of AGT Foods, a leading exporter of Canadian agricultural goods. Canadian farmers already punch above their weight as exporters. We’re a global leader in the production of wheat, barley and canola. A Canadian invention, by the way. But Murad thinks that looking forward, Canada still has so much more potential. Speaker 5 [00:22:24] You know, I see when a baby is hungry, they cry. And when a 19 year old man is hungry and unemployed, they protest. And what we’re going to see in the world is, I think over the next decade, a resurgence of Canadian geopolitical importance. We’re going to see Canada as a big part of the solution in a Russia, Ukraine, you know, post-conflict, we hope a post-conflict soon. But, you know, Canada is going to be an important part of filling that gap, you know, as infrastructures are rebuilt and food systems in those regions start to recover. So, you know, I’ve kind of seen that, you know, a renaissance of food. Speaker 1 [00:22:57] A renaissance of food. Sounds promising. Speaker 2 [00:23:00] Agreed. And I wanted to know more about that. What does that Renaissance look like? Exactly. Speaker 5 [00:23:05] Governments are again thinking of buffer stocks. They’re thinking of food policy again. That’s important to recognize that we have in Canada the two scarcest resources in the world, land and water. And then I want to probably throw in that early adopters of technology, the farmers. You know, that is, for us, a recipe for success if we get it right in terms of the governmental policy and, you know, the the trends we’re seeing in plant based protein, renewable fuels, I see today the canola transformation that we saw was let’s grow canola and make oil. And canola oil will become one of the most important oils in North America and in the world. Well, now, you know, the renewable fuel side is going to take the canola fields of western Canada and make them synonymous with the Saudi Arabian oil fields. But they just renew annually. Every time we harvest the new crop, pulses are going to go through a similar renaissance where, you know, milling of pulses into protein starch, fiber fractions and flour are going to provide very nutritious protein ingredients to a growing population in the world that’s demanding clean, sustainable ingredients for the development of the food sector. Speaker 1 [00:24:20] Clean, sustainable ingredients to feed the world. I love that vision. But to achieve that field of dreams, Canada needs to put some serious thought into how we will get agricultural products to markets efficiently. Speaker 2 [00:24:32] Right. And so Murad says that means a serious rethink of our transportation infrastructure. Speaker 5 [00:24:39] Our railways need to be relocated from the centers of cities around this country to allow us to reserve the lands to develop the trade infrastructure required for ten, 20, 30 and 40 years from now. We are a trading nation that is blessed with a productive capacity that’s only going to increase our average crop size was, you know, call it 55 million. You know, I think that 70 to 75 million tonnes is going to be more the norm in the future. And that’s again because of the use of technology and agronomy, new varieties, better farm management practices and data. So, you know, we’ve got to get serious about recognizing that potash demand is going to continue to rise. The demand for forestry products is rising. Agricultural production is going through the roof. And we have two national railways that have to share certain infrastructure through mountains and other areas. We’ve got to get serious about developing it, and we’ve got to get serious about a multi-modal strategy in this country. It can’t just be the Port of Vancouver all in the same period. We got to use the Great Lakes better. We’ve got to use Prince Rupert better. We’ve got to use containers as a surge capacity to get our products to market. And as we start out valuing, it’s not all going to be bulk vessels and bulk railcars anymore. We’re going to need intermodal and containers to get food products and ingredients to the world. We have one advantage a neighbor to the south called the United States, which is providing us with containers that come in full of consumer goods for them, which gives Canada an opportunity to fill them up and send them back to Asia to meet the growing middle class spending demand. So these are part of the infrastructure challenges that have to be solved. Speaker 1 [00:26:19] And from what we’ve heard today, Theresa, it’s about transportation, it’s about data. It’s about sustainable practices with the soil and water. It’s about technology and learning lessons from Mars. A common refrain from farmers we talk to is that there’s no one size fits all strategy to boost productivity, while cutting emissions will require a tailored approach, one that fits both the individual farm and its location. Here’s Kristjan Hebert again. Speaker 4 [00:26:45] The biggest thing I’ve learned is that we need to have a global theory and regional strategies. And what I mean by that is the global theory can absolutely be GHG emissions reduction. But what regional theories and global theories one would be, we probably need to stand up to some countries around the world that are willing to do anything about it before we focus on completely changing our 1%. You know, Russia and China might be two. That government should make sure everybody’s on board. Speaker 2 [00:27:12] Christian is driving at the fact that Russia and China have been slow to adopt globally accepted climate treaties, and he feels they should be held more accountable. But he also knows there’s a lot more work to be done here. At home to make farming more sustainable. And the nature of that work is going to vary depending on where you’re standing. Speaker 4 [00:27:30] A few years to scratch when I got eight feet of frost and three feet of snow from November till March. So I’m not going to get as much of a bang for my bark on our climate positive practices of cover cropping as south west Ontario. And I’m definitely not going to compare to Brazil. In Brazil, a cover crop is an absolute must wear zero. In western Canada, it’s an absolute. We almost have to do it. It’s so much better for our soil. And so that’s what I mean, is that we need a global theory of a reduction, but we need to understand that it’s going to be regional strategies and the data and science behind each of those regional strategies so that we don’t use one paint, brush and paint everybody into having to use certain management practices that might actually make no sense in their region. Speaker 1 [00:28:10] Christian feels more attention needs to be paid to the sustainability of regional economies which are struggling due to urbanization and what he calls the brain drag into the cities. He’s been very outspoken on this issue, speaking to media and governments right across the country. Speaker 4 [00:28:26] The one group of people that gives me anxiety is the current agriculture ministers and policymakers, because policy is the only thing that could bankrupt my farm. And so I look them in the face and said, You guys are worried about GHG emissions and all these buzzwords of sustainability, which don’t get me wrong. We’ve cared about sustainability and environment forever in agriculture. If we wreck our land or only screwing our own generation like our kids. But I said, the one thing you haven’t talked about is the sustainability of rural economies. Because if you can’t hire people on a farm and we can’t convince people to live in small towns of 500 or a thousand or 3000 people, there is going to be nobody here to partake and get the sustainable practices you want done. So until we challenge that and quit what I call the brain drag into the cities, well, we’re going to have a problem in agriculture and small business in general in rural areas for a long time. And yet the majority of Canadian GDP comes from natural resources, which are in the middle of cities. Speaker 2 [00:29:21] So listening to that, Christian clearly feels there needs to be some more incentivization for workers to move to farming communities. Speaker 1 [00:29:29] And not just any workers, but people can deliver on the newest farming techniques. So just before we wind up, I want to bring Evan Fraser back for a minute. He’s the director of the Arrow Food Institute, who we heard from earlier, the guy from the University of Guelph doing experiments about growing food on Mars. Evan says we need to encourage the next generation to think differently about what a career in agriculture can look like. Speaker 3 [00:29:53] While ag and food is a huge growth industry, the jobs in agriculture are not spending your life spent pulling weeds out of a strawberry patch anymore. They’re high tech jobs. They’re knowledge economy jobs. They’re jobs that involve lab coats just as often as they involve tractors. So, yes, we need people to go into the sector. We desperately do. And I’m now speaking as an educator and a University of Guelph employee who trains the next generation. We really need to get young people energized by the sector, but we need to remind people that this is part of the knowledge economy. This is just as cool as aerospace. In fact, I know a lot of kids that trained as aerospace engineers and have found better work working for greenhouses, applying their skills of robotics and sensor and artificial intelligence to make greenhouses more efficient because frankly, greenhouses employ more people than aerospace does. So I think there’s a sales job that we’ve got this impression that ag and ag employment is in a rural environment with a red barn and a straw hat and a pitchfork. And we’ve got those sort of impressions for historic reasons. But to any young people that might be listening to this conversation, I would say two things. One, there are jobs in agriculture. There is good jobs in agriculture, their knowledge, economy, jobs. And two, you can actually participate in this workforce, in this sector of the economy, and also be contributing to a huge moral mission, which is to sustainably feed the world’s growing population without wrecking the planet. Speaker 2 [00:31:22] Fascinating conversations, John, and certainly a lot to chew on. Speaker 1 [00:31:27] Oh, no, not food jokes. Speaker 2 [00:31:30] If Canada hopes to cut 85% of emissions from the agricultural supply chain by 2050, it’s becoming clearer that certain things will need to be done. We have to take advantage of available and emerging technology and mobilize finance and policy to support growers. Speaker 1 [00:31:46] To do this will need to invest in emissions reducing technologies that address the critical drivers of our agricultural emissions. We need to do better with fertilizer production and use methane in manure and from cattle digestion, all of which we’re going to get into in the next episode. Speaker 2 [00:32:02] And don’t forget regenerative agriculture practices like the No till farming use by Christian, which can help transform farming into a carbon sink rather than a source of carbon emissions, which, by the way, is also an important reframe. Agriculture and growers are an essential part of the climate solution and need to be viewed as such. Speaker 1 [00:32:21] Exactly. Getting the right people in place with the right skills to get the job done. I think about what Evan had to say about the extraordinary shifts going on in farm technology and the skills required to work a farm or in fact, work through the food supply chain. Often think of my own grandfather, who was a potato farmer in New Brunswick, and how he would see farming today. With all the technology, artificial intelligence sensors in every field, drones and data systems that every farmer has to be advanced with is really making it one of the most exciting fields for anyone to aspire to. Speaker 2 [00:32:58] And then with Murad, he talks about getting out of the commodity cycle into the ingredient and food cycle. How do we upscale? How do we capture value, and how do we leave that value in our communities? Speaker 1 [00:33:08] And how do we convince people to live in small towns of 500 or a thousand people? I think back to what Christian had to say about the glue of communities. Even in this digital work from anywhere world, we all want places where we can gather, whether it’s a coffee shop or a community center or a hockey rink. Small towns thrive when they have that community infrastructure, and we need to appreciate that an agriculture economy is only going to thrive when there is that community infrastructure right across the country. Speaker 2 [00:33:40] Well, that’s all for now. Thanks to our guests, Kristjan Hebert, Murad Al-Katib and Evan Fraser. Join us next time for part two of The Growing Challenge, when we’ll look at the important role that dairy and beef producers play in feeding the world while helping to reduce Canada’s greenhouse gas emissions in the process. Until then, I’m Theresa Do. Speaker 1 [00:34:00] And I’m John Stackhouse. This is Disruptors, an RBC podcast. Talk to you soon. Speaker 2 [00:34:09] Disruptors, an RBC podcast is created by the RBC Thought Leadership Group and does not constitute a recommendation for any organization, product or service. It’s produced and recorded by JAR audio. For more disruptors content, like or subscribe wherever you get your podcasts and visit rbc dot com slash disruptors.

Speaker 1: How can Canada feed an increasingly hungry world while also lowering emissions? Hi, it’s John here. Coming soon. My co-host, Teresa Do and I are going to tackle that critical question in a special three part series called, “The Growing Challenge”. We’ve assembled an array of experts from all over Canada and up and down the nation’s food supply chain, including farmers, academics, scientists and restaurateurs, as well as leaders at innovative companies like Conserve-X, TELUS Agriculture and DLS Biogas. We’ll take you from the field, to the plant, to the table as we explore how harnessing new technologies and processes will help achieve our net zero goals as we increase production. With 345 million people facing food insecurity worldwide, Canada has both a responsibility to help alleviate the global food crisis and an opportunity to expand our presence in global markets. Solving this challenge could be Canada’s moonshot for the 2020s and a defining moment for our country. So listen to, “The Growing Challenge”, coming soon on Disruptors.