Energy Drivers - How do energy companies manage innovation and disruption?

47 mins | 12 March 2024

00:00:00 - 00:00:52

Lance Mortlock

Welcome to our next episode of Energy Drivers podcast. I'm Lance Mortlock, and I'm your host of today's discussion with our fantastic guests, Scott Balfour, the President and Chief Executive Officer of Emera, and Graeme Edge, the founder and Chief Executive Officer at Energy Disruptors. Throughout our series, we invite Canadian energy sector leaders to discuss key issues, provide insights and ask challenging questions. Innovation is always considered a critical enabler to unlocking value across many industries. Today's guests are here to share their knowledge and perspectives on how energy companies leverage innovation and manage disruption. Gentlemen, thank you for joining our podcast.

00:00:52 - 00:00:54

Scott and Graeme

Great to be here.

00:00:54 - 00:01:14

Lance Mortlock

This is the first time we've had two guests on the same episode, so I hope you guys will go easy on me. We get two for the price of one. So, for starters, perhaps we can introduce your organizations a little more. Scott, why don't you kick us off? Tell us about Emera and what you guys do.

00:01:14 - 00:02:27

Scott Balfour

Thanks, Lance. So, Emera, a publicly traded company headquartered in Halifax, Nova Scotia, TSX. 60, traded on the Toronto Stock Exchange. And we own principally, our business is made up of six regulated electric and gas utilities in Canada, the US and Caribbean. We serve about two and a half million customers and have about 7,000 employees. And with a longstanding strategy of delivering cleaner, reliable energy to our customers, while never losing sight of cost impacts for them. We've really been a leader in the transition to cleaner energy. And I'm proud of the fact that by 2025 we will deliver a 55% reduction in the CO2 emissions of the energy that we deliver to our customers since 2005, and we spend about $3 billion a year in capital, Canadian dollars, over 60% of that is really focused on that reliability, cleaner energy focus. So that's Emera.

00:02:27 - 00:02:31

Lance Mortlock

That's great. Thanks, Scott. Graeme, Energy Disruptors.

00:02:31 - 00:03:16

Graeme Edge

Yeah, a little bit of a different story. Energy Disruptors start is an idea on a flight I had coming back from Europe. Energy Disruptors today is the largest energy transition conference in Canada. One of the things that's really unique about the event, we bring together the whole energy value chain under one roof. So if you think about either the future of electrons or the future of molecules with the summits covering what's happening as the energy world is getting disrupted and we bring together oil and gas, renewables, nuclear people plus modern batteries supply chains, entrepreneurs, innovators, individuals in the world of finance, really trying to figure out this complex future energy landscape.

00:03:16 - 00:03:48

Lance Mortlock

Awesome. And you know, that's a good segue to my first question about innovation. Scott, maybe you could talk a little bit about innovation in the context of Emera. You know, we exist in this world where we're always talking about innovation, the importance of innovation, what it means. How would you describe innovation as sort of a power and utilities leader trying to drive what you're trying to drive?

00:03:48 - 00:06:34

Scott Balfour

Yeah, it's, you know, it's really interesting, Lance, because you think about it. And until recently, you know, this would not be an industry that one would think is, innovation is one of the key words and areas of focus. I mean, fundamentally, you know, the delivery of electricity, you know, that hasn't really changed in about 100 years, but it's changing quickly now. And there is a real transition. There's a transition into cleaner, of course, and there's also a transition in the way that we're using electricity in the electrification of things that previously weren't electrified. And so whether therefore it's in generation or in the delivery of the energy, we're fundamentally rebuilding a system that has been developed over the last hundred years and doing it at pace. This change is happening quickly now. And so, in order to navigate through that, of course, innovation is really important. Of course, starting with how do we actually generate electricity? And of course, that's happening in all sorts of different ways. But now also, you know, how do we achieve the climate goals that we've set for ourselves or that our regulators or legislators or customers require or expect? And then at the same time, how do we use new and developing technology to respond to the different ways that customers are using electricity? And so, you know, whether it's investments in in solar and wind, whether it's investments in grid-scale batteries like very, very large-scale deployment of batteries, the deployment of smart grids and, you know, things that you wouldn't have thought about before. I'm speaking to you here from Tampa. And, you know, today when we when we put up City Light standards, we have extra kit on them that will do things like provide notification to police if there's been a gunshot in the area and triangulate again. So, these, all this new technology and tools is expanding and changing the way that we deliver energy to our customers. And of course, you know, thinking about things like carbon capture is a big focus for us here, which is, you know, new technology that is helping to navigate that journey, to continue to reduce the carbon footprint and the carbon emission profile of the energy that we deliver to customers. So, there isn't an area across Emera today that, frankly, innovation isn't part of what we're doing, what we're focused on and what we need to in order to meet the ambitious goals in front of us.

00:06:34:13 - 00:06:47

Lance Mortlock

So it kind of touches all aspects of the value chain, whether it's generation, transmission, distribution, retail to the customer, it's innovation all the way along that value chain?

00:06:47 - 00:06:58

Scott Balfour

Yeah, absolutely. And you know, even back office in terms of, you know, how we work. And so, it is touching every point of what we do.

00:06:58 - 00:07:07

Lance Mortlock

Yeah. Graeme, maybe bringing you in at this point. Same view, different view? Like how do you see innovation? What's your definition?

00:07:07 - 00:08:44

Graeme Edge

Well, the first thing I think is fascinating, Scott mentioned kind of this traditional electricity delivery model and then how you’re having to transform that. And one of the things I immediately think about is when I think about innovation, I think about culture, almost the cultural journey that the organization's gone on and how you manage that tension between delivering reliably in a high-risk environment, but also where you can appropriately innovate. So, you know, for me, I tend to spend my time working with lots of founders and startups where perhaps it's easier to innovate because you don't have an existing structure in place, so there's less risk. And then typically you're working in smaller teams and in that type of environment, often from an innovation perspective, what you’re really trying to do is something truly original that's then going to be defensible, and you can scale and it's either going to be a unique product or service that’s typically going to enhance the customer experience. So, I think the other thing that comes to mind for me is this aspect of putting the customer at the heart of what you're doing and always trying to anticipate where the customer is going. So, when we think about electricity, you know, most customers are probably going to go, okay, I want affordable electricity, ideally I want it to be really reliable and I want it to be clean. And so that's one of the things that I think is pulling the customer. And then you lay on top this digital landscape of we want things immediately and we want to have that flexibility in terms of how we receive products and services. So that's some of the things that come to mind on that question.

00:08:44 - 00:09:23

Lance Mortlock

Yeah, I mean, it's an interesting point, Graeme. It's a challenge. I always think about the trilemma of sustainability, affordability, and energy security. And it's a tough balance, right? Trying to do all of those things. You know, you want, when you switch the lights on, you want it to work, and you want the lights to go on. You want it to be accessible and secure and you want it to be affordable. You want low-cost electricity. And, you know, these days we want it to be sustainable and we want to get to net zero. That is the big target that we're all focused on. And it's hard to balance those three things, right?

00:09:23 - 00:09:56

Graeme Edge

It is. And I think when you've got legacy assets, that's where it gets even more complicated because you've got almost the classic innovator's dilemma of where do you focus your attention and how do you continue to move that existing business forward while also building the future and you get the pace right? So, I think that's one of the challenges that it's not just unique to the utility world. I think a lot of oil and gas producing companies are facing this. Anyone with legacy assets have some sort of emissions profile are dealing with that strategic challenge.

00:09:56 - 00:10:39

Lance Mortlock

Yeah, for sure. Maybe pivoting a little bit. Over the last decade, and Scott, you touched on this, electric utilities have gone, you know, undergone a huge amount of change from a technology and an innovation perspective. And it continues, as we've talked about. And I've said on previous episodes that utilities used to be this sort of steady, somewhat boring business, but actually it's pretty dynamic, it's pretty disruptive, it's pretty exciting. What do you think, Scott, is the catalyst for just the rampant need for innovation in the energy industry? Could you just characterize that, you know, from where you sit?

00:10:39 - 00:13:40

Scott Balfour

Yeah, I think actually you both touched on it and, you know, really it hearkens back to this as it's been described and you referenced, Lance, the energy trilemma. And you know, there is, today we've got customers who, you know, their expectations are different. They do want their energy to be more sustainable. Our politicians, of course, want the energy to be more sustainable. But as Graeme said, there's this massive investment, you know, electricity system is a massive machine and it's already there and built and operating. And now, we need to change it, but we need to change it in a way that is, you know, as you say, is yes more sustainable, is cleaner, is also more reliable. In a time where, frankly, you know, weather-driven events are adding incremental challenge to the reliability of the existing system and at the same time, you know, want it to be affordable and, you know, this is the trilemma trying to balance those three things is really tricky. Balancing two of them, we can do that, right? We can definitely make it cleaner and we can definitely make it more reliable. And we could even do that quickly if we had to. But the impact on cost would be extraordinary. And so really working through trying to take advantage of new and developing technologies. But of course, we can't be too early in that in that curve. There's a lot of technology that people are really excited about. I referenced one, carbon capture and sequestration in the context of energy generation is new but is exciting. Small modular reactors. Again, very exciting. I have no doubt that that will be part of the energy future. But it's not commercially available at affordable cost today. But there are technologies and innovations that are, and you know, the lower cost of wind generation, the lower cost of solar generation that continues, both of those continue to get more and more efficient. Battery storage, you know, still has some ways to go, but in many applications is really helpful to backing up the intermittency that comes from those renewable resources of wind and solar. So it's really needing to embrace these emerging technologies when they are commercially viable, when we can justify them to our stakeholders and, of course, all of the capital that we invest, all the costs we incur, we don't get to just decide to do that ourselves, there are other stakeholders that have a voice in that, they need to support those investments in those transitions and working hard to be able to do all that in order to manage this energy trilemma. And it is tricky.

00:13:40 - 00:13:55

Lance Mortlock

Yeah. Now that's well said. Graeme, like from your perspective, why is innovation so important right now more than ever? Could you characterize that from what you see?

00:13:55 - 00:16:05

Graeme Edge

Yeah, I'll start with I think the scale and nature of the problem. And also, why am I personally trying it? Forward energy transition, you know, why have I made that choice? I think about the energy business as the platform business of the planet. So what I mean by that is every other business sits on that platform. So, in my view, energy is the most important business on the planet because technology businesses reside on top of that, all these different industry verticals. So if you're going to solve climate change and make meaningful progress on emissions reduction, you have to solve that energy challenge. So that's why it's so critical because, again, in my humble opinion, it's the most important business on the planet. You know, I think the other thing that what we're trying to do is we tend to get fixated on technology challenges or opportunities and economic challenges or economic opportunities. But one of the things we often forget, or it doesn't get enough attention is the social, cultural, the human factors of change. And so one of the big things that we're trying to do through our initiative is to say that the technologies and the economics are super important because that drives the adoption curves and that enables things to achieve scale. But you have to also have stakeholder acceptance and approval. And I would make the case almost that probably the biggest challenge we face in the next 30 years is building all of this infrastructure. And in order to do that, you actually need society to be on board with building that infrastructure. And often projects aren't tripped up by, sometimes the technology issue, but more often than not, not a technology issue, but it's actually that stakeholder piece and that societal piece. So that's also where we think innovation is really required, is how we think about solving those social challenges. That also comes down to things like trust and information and how you make decisions. So it's a really complex and interesting space.

00:16:05 - 00:16:32

Lance Mortlock

That past conference you had, and you did invite David Roberts, one of the big innovation, disruptive innovation thinkers. And we had a session with with him. And what struck me about that was putting humans at the centre of energy transition and just how important that was and how he was able to bring that to life, right?

00:16:32 - 00:18:39

Graeme Edge

Yeah. And I'll give you a very specific example in this electricity world. There's a group, a not-for-profit out of the US called Terra Praxis. And if you if you're not familiar with them, check them out. And I'd say to listeners, check them out as well. And really what they're doing is they're looking at this challenge of coal power globally, because if you look at global emissions, the number-one problem child is coal. And if you take the US as an example, a lot of those coal assets reside in “red” states, and you've already got typically an industrial site. Those facilities or those plants produce good-paying jobs for that local population. And it's pretty unrealistic of us to think that we're just going to say to those communities “we'll just all become rooftop solar installers and we're going to shut in those assets.” And if you're the person representing those jurisdictions politically, that's not very palatable for your base. So really what Terra Praxis is doing is looking at this and going, okay, simply say it's a grid connected, they’re industrial areas, how do we actually switch out the coal units for next-generation nuclear reactors and actually re-architect the existing infrastructure at scale? If we were able to do this globally with every single coal asset, this actually would have a transformative impact on global emissions. And they’re kind of pitching, it is the biggest decarbonization project. Now, it is wildly ambitious and it's fraught with challenges. But one of the other things they’re trying to figure out is how do you get the project execution and the stakeholder and the deployment model right at scale to be able to do this tens or hundreds of times? And there's a software piece to this as well, because if you own 100 coal assets, what sequence should you do and how you should allocate your capital? So, there are these super innovative things that are happening in this space, and it's not always about just building new. I think it's also about thinking about how we repurpose the existing system and infrastructure.

00:18:39 - 00:18:47

Lance Mortlock

That's incredible. So, retrofitting existing coal plants and turning them to small nuclear reactors. Wow.

00:18:47 - 00:18:58

Graeme Edge

It's for repowering coal. They have a global partnership with Microsoft. It's an incredible group of dynamic entrepreneurs doing this, taking on this gigantic challenge.

00:18:58 - 00:19:25

Lance Mortlock

That's a really good angle. You've both talked about different aspects of the value of innovation. Typically bringing, it typically brings to the energy sector. Maybe Scott, how do you, within your organization, encourage more innovation? And if you can provide some examples of what you're doing that helps Emera foster and apply innovation on a day-to-day basis?

00:19:25 - 00:22:40

Scott Balfour

Yeah, you know, I think, Graeme, you touched on it because, you know, this isn't just about technology. It's an important piece to it, of course, but it's not just about innovative technology. It's about mindset, it's about culture, it's about new ways of thinking, new ways of working. And so, you know, part of our execution, for example, around a digital strategy is grounded in managing the humans that are driving this change, that need to embrace this change. And even the way we go about the implementation of new technologies with new software, new tools and, is different using the agile method, is to do things in in very small pieces, constantly recycling and continuing to adjust as you go. You know, thinking about the governance model around it, of course, as a regulated utility, publicly traded company, governance is pretty important. It's not very good when things go wrong inside a utility or a public company. And so also making sure that we're creating the space for learning, for failure, for embracing all of that, but at the same time making sure that we've got a governance model around it, that doesn't diminish the ability to embrace that innovation, but at the same time, make sure that, you know, we don't step too far off the curb in terms of the things that have to get done. But it's also, you know, embracing and supporting innovation in our communities, that our customers and our partners and future employees. And so, a lot of the community work that we do, a lot of the community giving is focused around innovation, whether that's supporting infrastructure or programs at post-secondary schools and universities or community groups in order to embrace, encourage and develop innovation within the communities that we that we live and work. And then we also, you know, we also invest in it. And so we've you know, we've made an investment in a an industry partnership of a number of utilities in North America called Energy Impact Partners, which is a global investment platform that is early investing in developing technology around the clean energy space so that we are learning from that and seeing what's coming around the corner that, you know, that may impact how we deliver energy to our customers. But also embracing new technologies and trialling new technologies when and where we can, when it makes sense.

00:22:40 - 00:23:27

Lance Mortlock

One of the things, maybe building on that question, in my experience, particularly living in an energy city like Calgary, is a key challenge for innovation is this sort of balance between innovation and cost. And so, the boom-bust cycles that we see, especially during times of economic uncertainty, can be challenging. So how do you through those boom and bust cycles, Graeme, keep that momentum going? You know, when shareholders, investors are saying, hey, we need you to cut costs. And so, you start to deprioritize innovation, deprioritize some of those big investments that maybe don't have the same return. Thoughts, Graeme?

00:23:27 - 00:26:21

Graeme Edge

I think that’s this really hard to needle to thread. You’ve got obviously this tension between the quarterly results and the pressure that comes with that, especially if you’re publicly traded, it’s much easier as a private enterprise. It's much easier to do as a smaller company in some ways when you've got that public scrutiny and the stakeholders. You know, without naming names, there's a number of examples of major oil and gas companies who were pretty focused on diversification and energy transition efforts three years ago, as an example, two years ago, and over the last 18 months have had a lot of shareholder pressure. And effectively the message has been stick to your knitting. Don't mess about with this new stuff, focus on your core business. So again, what is the right answer? I suppose it depends, you know, what stakeholder eyes you're looking through. If you're looking at it purely from a shareholder perspective, perhaps the right answer is kind of that, perhaps shorter-term thinking, but at a societal level and from a longer-term perspective, maybe that doesn't look so smart. I think the other thing we've got to decouple is that innovation has to be super expensive. Often, you'll see companies spend inordinate amounts of money on these efforts with little to show for it. And so how do you get much nimbler? How do you protect these groups that are innovating within these organizations? Because you don't necessarily need your whole organization innovating and don't necessarily want that in that environment. So, how do you create these pockets of culture that are going to have really profound impact on the organization? You have to look longer term. You know, it's, if you're $100 billion energy company and you create a new billion-dollar software business in a new area that doesn't meaningfully move the dial on the overall organization, but you can see the future opportunity and potential. I’ll give one other quick parallel, if you look at electric vehicles, if we were to rewind the clock and go back to kind of 2013 when the Tesla model S came out and we were in the boardroom at Daimler or GM, Tesla was probably a laughingstock at that time, and everyone was thinking this EV thing would pass and wouldn't be a big deal. And none of those companies were committing any resources to EVs. And that doesn't look so smart in today's environment. And a lot of those companies are really struggling to manage this new business and this new supply chain. And I do wonder a little bit with some of the traditional oil and gas players, are they going to look at in a decade's time, is it going to look pretty short sighted the view they took on energy transition and particularly renewables at scale.

00:26:21 - 00:27:08

Lance Mortlock

It's balancing those horizons the here and now and what's going to drive shareholder return with an eye on the future as well and that incredibly difficult balance, particularly when you're publicly traded. Another topic I wanted to discuss was around just change management. There is no doubt that innovation can be disruptive to organizations. Scott, how can leaders effectively communicate and engage with employees during periods of change? Because naturally, humans, a lot of humans, don't like change. It's difficult. It's challenging. Like how do you overcome that when you're trying to move an organization to a different space in the future?

00:27:08 - 00:29:11

Scott Balfour

Yeah, you're right. It is hard, Lance. And it's, you know, it's such an important question. One of the things that I've always believed is really important in that change management journey that, you know, is certainly part of our culture, I believe is the need for candor. And, you know, being up front about the challenges that we face as a sector, as a company and putting those on the table so that, you know, we can have an honest conversation about that. But then also to make sure that we frame it around what that creates in terms of opportunity, in terms of ability to make a difference, to be leading and driving the change and shaping it in a way that is better. And so, you know, sort of being candid about the challenge, but really trying to then frame it in a positive way in terms of the role that we can play. And so, you know, I think it's, again, part of that effort to try and make innovation and the reasons for it, part of the culture, which is hard, you know, when it's hard in an organization of 7,000 employees to make that universally true, there's no doubt within Emera it is not yet universally true that that would be a consistent part of our culture, of our purpose and our values. But it is important. I think part of it, too, is giving employees, helping employees to feel like they've got permission to be trying new things, to be doing things that just make sense to do without being bound by the way it's always been done.

00:29:11 - 00:29:30

Lance Mortlock

Yeah. So, maybe pivoting a little bit, going from the employee to sort of more of a macro view. Graeme, when you think about the globe, are we, from a Canadian perspective, are we quite innovative? Are we behind the eight ball internationally?

00:29:30 - 00:31:36

Graeme Edge

It is a tough question because you've got incredible pockets of innovation. And I think just in general terms, Canada has so many things going for it, and we almost tend to criticize ourselves a lot. And now I'm a transplant to Canada. I'm originally from Scotland, but moved here 16, 17 years ago. And it never fails to amaze me the cool stuff that's happening. I think one thing I have noticed is we don't necessarily celebrate those wins and that innovation and those entrepreneurs and companies that are doing this in a big enough way. Perhaps it's not as well known or not as well celebrated as other jurisdictions. The other thought that comes to mind. Again, I tend to meet lots of entrepreneurs every week and through the course of producing these events and outside of Energy Disruptors, I also have an executive search firm that focuses on the energy transition market, just working with entrepreneurs. And what I often hear from Canadian entrepreneurs is, it's easier to get their first client in the US than it is in Canada. There's more risk appetite to try things. So, if I say if there was one kind of constructive criticism, I think where Canada can do a bit better is that partnership between big enterprise and small companies. And there's a magic there when it really happens and there's an onus on the entrepreneur and there's also an onus on the bigger company to figure out how do you make it easy to collaborate and partner and actually get things at scale? And I think one other aspect I pick up on is just some of it is just down to sheer confidence and ambition as well. We have a bit of a tendency, a company will get to a billion dollars or $2 billion in valuation and often that gets sold to private equity firms, often out in the US. And having that willingness to go beyond that is what most people say, well, the greatest success and really take it to a truly global scale. I think that's one of the other things that we need to just have that confidence to be able to do that a little bit more in Canada.

00:31:36 - 00:31:40

Lance Mortlock

Yeah, punch above our weight a little bit.

00:31:40 - 00:31:50

Graeme Edge

It’s really Canadian to be humble, isn’t it, and self-deprecating. I think we need to be a little bit more, maybe cocky is the wrong word, to have just some confidence in what we're doing.

00:31:50 - 00:32:21

Lance Mortlock

I was talking to someone about this last night, how in America there's much more emphasis on the individual and it's the American dream, right? And to some extent, that creates a system and an environment that supports innovation, supports, you know, trying to create a company, scale a company, and make a difference in the world. And there's some magic involved in that, right?

00:32:21 - 00:33:00

Graeme Edge

I think also when you've got a group of people who've then done it, it's easier to then imagine for the next wave to do that. And you see wildly successful companies will then seed other founders. I mean, Tesla and SpaceX are amazing examples of this, where you've now got this, people who've kind of been spun out of the system. They're in a pretty tough culture and environment, but you learn a hell of a lot and then they've gone off and scaled their own companies. You know, when you have one Tesla or one Space X, it can obviously create an incredible next wave of innovation and talented entrepreneurs.

00:33:00 - 00:33:32

Lance Mortlock

And maybe that's a good segue into my last question here. When you think about that ecosystem, Scott, and you think about governments and regulatory bodies that obviously play an important role in the energy space, what is that role of governments and regulators in fostering innovation? Should they sort of stay out of the way and let companies get on with it, or is there a role to play in your mind?

00:33:32 - 00:38:49

Scott Balfour

Yeah, for sure there's a role to play. There's a role they do play already. And that's critical. But, you know, I'd also say this is maybe my biggest worry point in this whole transition, Lance, and just in the, you know, government is setting very ambitious goals in terms of the energy transition and whether it's, the requirements across Canada to close all the coal plants in Canada by 2030. And for context, 55% of those are in Nova Scotia, where we have 3% of the population. This is not a small thing in terms of impact. Of course, we've got a carbon tax that puts a tax on our carbon emissions. And of course, now draft regulations around clean energy regulations. A lot of talk about that I know in your home province, Lance, and generally, ambitions towards net zero. And you know, the difficult part of this, the frustrating part of this is those are all great and fine, and companies like Emera and others, our peers can respond to all of those things. The trouble is that these policies are getting set without having honest conversations about what the cost of the transition is and who's going to pay for it. And, you know, if you think in Nova Scotia, there is there is unfortunately a lot of magical thinking that this energy transition is not going to cost more. We can replace coal plants or natural gas plants with solar panels, and the cost of solar has come down. And so, you know, this is going to be great. And cost of energy is going to be lower. Well, unfortunately, that's not true, because, of course, we could put solar panels on every rooftop in the province of Nova Scotia and in every empty field. And we would not be able to close a single coal plant because, of course, the peak generation requirement to deliver energy to our customers when they want the light switch to go on is, you know at dinner time, in February, on a cold winter night and there is no solar at that point in time. And so we need some other form of generation. And so, yes, we can deploy these new technologies, but we also need tools, generation capacity to back them up when the wind is blowing, or the sun isn't shining. And so, you know, the role that government can play in this is helping to ensure that we're having honest conversations as we're setting policy around how do we achieve these ambitious goals? What is the right timing? Because pace makes a difference. The faster we go, the more it will cost, and to make sure that we're pacing it in the right and appropriate way. And so, you know, working to have policy clarity, you know, a lot of things are shifting around just even in a Canadian context right now, of course. And if we have a change of government, some of those policies are going to shift around again. It makes it very difficult to be making capital investment decisions where that capital is, you know, 30-, 40-year capital that's being invested in when the landscape is changing so quickly. Making sure that we're not pancaking policies. The reality is putting in renewable energy standards or closing coal mandates or carbon tax, they all give different price signals that sometimes can conflict. Putting in place enabling legislation that enables, permitting to happen more quickly, which is a challenge across many industries in the country. As you would know, it's very difficult to get new infrastructure built. And yet we need to build a lot of new infrastructure in order to achieve this transition. And then finally, creating financial paths and whether it's investment tax credits or subsidy funding or transference of cost from customers to taxpayers. But ultimately, we have to find paths to fund this in order to attract the capital and frankly, in many ways to compete against other jurisdictions and lots of talk about the Inflation Reduction Act in the in the US, which of course is activating a lot of capital investment and progress in the US. So yes, all to say, very important role for government to play. And right now, it's hard and until we really have honest conversations about all of these and create clear pathways, we aren't going to do it in the most cost-efficient way possible. And that's, part of our job is to make sure that we're having a discussion and raising these issues and certainly opportunities like this conversation we're having here in this podcast, Lance, is an important part of the journey.

00:38:49 - 00:40:45

Lance Mortlock

It makes me think about two things, Scott. One was, and Graeme will know what I'm talking about. A few weeks ago, we had a cold January day, I think it was a Friday night. And we all got an alert message from the government saying, hey, we have a bit of a problem as it relates to electricity, and we need you guys to switch lights off and actually, the impact that, the folks at Enmax were telling me, was 200 megawatt hours. Like, it was huge in terms of the impact within minutes. It also struck me how wasteful we are as it relates to the use of energy. But probably strategically it highlighted to me just the importance of, you know, baseload capacity when the wind's not blowing, the sun's not shining. You don't have the battery at scale capacity yet and you need power to keep homes warm. There's a kind of a practical reality to this. The second thing that it highlights to me, Scott, is actually a piece of research that I'm doing right now with one of our mining leaders that looks at the regulatory process for new, rare metals and minerals mines in Canada that can take up to 25 years to get approval. And again, I think about what Graeme was saying earlier about the scale of infrastructure that we need to build, the scale of investment that you talked about, that we need to do, the decisions that we need to make. We need a regulatory system that's agile, that's flexible, while protecting the environment, of course. But we can't be waiting 25 years for regulatory approval for mines that we need to support battery technology as an example, right?

00:40:45 - 00:41:22

Scott Balfour

Exactly right. And it is hard building, mining infrastructure, linear infrastructure, whether that's to move molecules or to move electrons, even to move clean electrons, it's really hard to build this. Now, this is not a uniquely Canadian challenge. And, you know, the challenge would be similar in the in the US. But if we're going to do this in a quick and cost-effective way as possible, we need to sort these things out. But we need to make more progress faster.

00:41:22 - 00:41:34

Lance Mortlock

Graeme, anything to add as it relates to industry collaboration, the partnership between private sector and government or between private sector companies?

00:41:34 - 00:43:49

Graeme Edge

I think, I mean, we're obviously talking from a business perspective. It would be fascinating what the municipal, federal and provincial levels, the government would say. I would say that they're in a difficult bind, right? Because they're also in some ways, when we talked about, you see, of a public company, you've got the competing pressures. It’s exactly the same if you're trying to get elected. This kind of short-term things are extremely popular when you're talking about decade-long infrastructure projects, it’s far easier to almost kind of defer and delay, if that makes sense, than actually take a position of true leadership on these types of things. But I think the other thing is there's just there's a lack of trust right now between business and government at all levels. And I would imagine you rewind the clock 20 years ago, it probably wasn't that bad. The state of that, where actually you got those groups actually talking and interacting more and trying to figure this out. And it doesn't feel like that's there. When I talk to people in these kinds of political circles, I just don't think there's a lot of trust of the energy business as a whole. So how do we fix that trust? How do we repair that relationship? Because I don't think this gets fixed until that relationship gets repaired. Now, that's really hard, how you do that, but I think that's one of the key aspects. I think we need to be more ambitious in some ways as well. I think we've got a scenario I'm going to pick on oil and gas right now, where there's a bit of a lack of ambition from the industry in a lot of quarters. And there's not a whole whack of kind of visionary leaders right now within some of those key companies. And when you've got that lack of leadership, then you're not engaging your stakeholders and the general public at large. So, I think we've got to be a bit braver and bolder. And it's hard because when you take a position, you're going to get shots and social media light up and it's not a whole lot of fun. But we've got to be courageous as business leaders and be willing to kind of step into these difficult, controversial areas.

00:43:49 - 00:44:13

Lance Mortlock

That's a good way to kind of wrap, I think wrap this this podcast, is just the importance of courageous leadership through the energy transition. That's good. Well, gents, thanks. Thanks very much for bearing with me and joining this podcast. It's been a pleasure to have you both on it.

00:44:13 - 00:44:28

Graeme Edge

Thanks so much. Appreciate it. Now, you said this was going out on audio Lance and I wore a shirt as a special occasion, and it was totally unnecessary. Is that what you're telling me? It was a massive, listen, that was a lot of fun. Thanks for having us. And, yeah, we'll catch up again soon.

00:44:28 - 00:44:40

Scott Balfour

Yeah, it was great. Graeme, nice to meet you. Lance, thanks for making this easy and fun and relevant. So, appreciate that.

00:44:40 - 00:46:40

Lance Mortlock

Maybe just to wrap up, it was a pleasure talking to you both and getting that perspective from Emera an Energy Disruptors and innovation in the energy space. So, for our listeners, if you have any questions or queries, you can reach out to EY via the attached contact details. Finishing another great conversation and episode. Maybe a few final thoughts from me. I think one, innovation means different things to different organizations. For some, it's focused on creating new products and services, while for others it's more of a cultural mindset attribute, which Graeme talked about. Use the definition that makes sense to you given where you are on your journey. Second point is innovation is hard and it needs sustained focus. Being an innovator in the energy space is not easy. There are obvious challenges. We've talked about those, but if your organization can overcome those challenges, you might be able to unlock new opportunities and value in the future. Thirdly, the importance of human-centricity, which accelerates innovation. A human-centric approach can accelerate innovation by focusing on the needs and the preferences of people, organizations that can create an inclusive and sustainable set of solutions. And maybe finally, and we talked about this, the importance of ecosystems. An ecosystem approach to collaboration is essential. Collaborating with others is helpful. For example, with governments and regulatory bodies that Scott talked about, and I often talk about the ecosystem approach to solving energy issues, and this conversation has really reinforced that belief for me. So once again, thank you for joining the podcast. We'll see you on the next episode.