1 00:00:01,720 --> 00:00:06,200 Speaker 1: Welcome to zero I am Akshatrati this week, sun wind 2 00:00:06,559 --> 00:00:18,759 Speaker 1: and making money. The COP twenty eighth meeting that ended 3 00:00:18,760 --> 00:00:22,520 Speaker 1: in December led to many big announcements. That's the nature 4 00:00:22,600 --> 00:00:27,080 Speaker 1: of these global climate diplomacy shindix. Lots of countries make 5 00:00:27,120 --> 00:00:31,400 Speaker 1: big promises, such as tripling renewable energy, transitioning away from 6 00:00:31,400 --> 00:00:35,760 Speaker 1: fossil fuels. It's only really years after that you can 7 00:00:35,800 --> 00:00:39,120 Speaker 1: tell whether these countries were serious and delivered on those 8 00:00:39,159 --> 00:00:44,199 Speaker 1: promises or it was all just good sound bites. However, 9 00:00:44,360 --> 00:00:46,760 Speaker 1: there was one achievement on the first day of COP 10 00:00:46,760 --> 00:00:51,120 Speaker 1: twenty eight in Dubai that is delivering results. The United 11 00:00:51,159 --> 00:00:54,560 Speaker 1: Arab Emirates, the host country, pledged to put thirty billion 12 00:00:54,600 --> 00:00:58,160 Speaker 1: dollars into a new climate finance fund named al Terra, 13 00:00:58,920 --> 00:01:02,240 Speaker 1: and some of that money was immediately allocated to scaling 14 00:01:02,320 --> 00:01:06,400 Speaker 1: up renewable energy projects in developing countries where the need 15 00:01:06,440 --> 00:01:10,480 Speaker 1: for finance is the greatest. One of the firms that's 16 00:01:10,480 --> 00:01:13,160 Speaker 1: going to put some of those billions to work is 17 00:01:13,200 --> 00:01:18,600 Speaker 1: the Canadian asset management firm Brookfield. Brookfield already manages more 18 00:01:18,600 --> 00:01:21,640 Speaker 1: than eight hundred and fifty billion dollars worth of assets, 19 00:01:21,880 --> 00:01:25,840 Speaker 1: everything from real estate to private equity. About a tenth 20 00:01:25,840 --> 00:01:29,039 Speaker 1: of its total assets are in renewables and the climate transition. 21 00:01:29,800 --> 00:01:33,200 Speaker 1: In twenty twenty one, its renewable division launched the fifteen 22 00:01:33,280 --> 00:01:37,640 Speaker 1: billion dollar Brookfield Global Transition Fund. At the time, it 23 00:01:37,840 --> 00:01:41,400 Speaker 1: was the world's largest private fund of its kind dedicated 24 00:01:41,400 --> 00:01:45,360 Speaker 1: to financing the energy transition. Brookfield is now raising a 25 00:01:45,400 --> 00:01:48,760 Speaker 1: second fund of the same kind, and Alterra will invest 26 00:01:48,880 --> 00:01:53,600 Speaker 1: two billion dollars in that fund. More importantly, and separately, 27 00:01:54,240 --> 00:01:57,120 Speaker 1: Altera will invest one billion dollars in a new fund 28 00:01:57,160 --> 00:02:01,240 Speaker 1: that's supposed to only invest in developing country Yes, so, 29 00:02:01,480 --> 00:02:05,720 Speaker 1: how exactly will it work? To help me understand, I 30 00:02:05,760 --> 00:02:09,280 Speaker 1: spoke to Connor Tesky. He started his career at Brookfield 31 00:02:09,280 --> 00:02:12,640 Speaker 1: eleven years ago in private equity and became the CEO 32 00:02:12,800 --> 00:02:16,960 Speaker 1: of Brookfield Renewable Partners in twenty twenty. I spoke with 33 00:02:17,040 --> 00:02:20,000 Speaker 1: Connor at COP twenty eight in December to ask how 34 00:02:20,040 --> 00:02:23,000 Speaker 1: to invest big money in developing countries, how to make 35 00:02:23,040 --> 00:02:27,680 Speaker 1: a good return on renewables, and how to transition fossil 36 00:02:27,720 --> 00:02:44,399 Speaker 1: fuel assets into clean energy. 37 00:02:45,639 --> 00:02:46,840 Speaker 2: Connor, welcome to the show. 38 00:02:47,080 --> 00:02:48,760 Speaker 3: Thank you, thank you for having us. 39 00:02:48,800 --> 00:02:51,880 Speaker 2: Now at Brookfield. You do a few things, but you 40 00:02:51,960 --> 00:02:55,040 Speaker 2: do head the renewables section, and here at COP twenty 41 00:02:55,040 --> 00:02:58,160 Speaker 2: eight there is a lot of talk about renewables. There's 42 00:02:58,200 --> 00:03:02,519 Speaker 2: a global goal to try and trip renewables by twenty thirty. 43 00:03:03,560 --> 00:03:06,680 Speaker 2: Seems Brookfield's target is much more than just tripling, isn't it? 44 00:03:07,440 --> 00:03:10,120 Speaker 3: I would say so yeah, And when we hear the 45 00:03:10,639 --> 00:03:15,040 Speaker 3: global target of tripling renewables by twenty thirty, that seems 46 00:03:15,160 --> 00:03:19,240 Speaker 3: very achievable. When we look across our business today, almost 47 00:03:19,280 --> 00:03:23,520 Speaker 3: across asset classes and across geographies, the one thing that 48 00:03:23,639 --> 00:03:28,040 Speaker 3: is overwhelming today is simply the amount of demand for 49 00:03:28,160 --> 00:03:31,960 Speaker 3: clean power, in particular from corporates. And this has been 50 00:03:32,000 --> 00:03:36,080 Speaker 3: accelerating for years and is at its highest level today 51 00:03:36,120 --> 00:03:39,120 Speaker 3: and only expected to continue to accelerate going forward. 52 00:03:39,320 --> 00:03:41,840 Speaker 2: As is in the management for renewables for you, were 53 00:03:41,880 --> 00:03:45,560 Speaker 2: fifty seven billion dollars in twenty twenty, sixty nine billion 54 00:03:45,600 --> 00:03:49,320 Speaker 2: dollars in twenty twenty one, and seventy seven billion dollars 55 00:03:49,360 --> 00:03:53,360 Speaker 2: in twenty twenty two. Clearly it's gone up, but it's 56 00:03:53,360 --> 00:03:54,400 Speaker 2: slowed down a little bit. 57 00:03:55,840 --> 00:03:58,920 Speaker 3: I wouldn't read too much into that trajectory. I would 58 00:03:58,960 --> 00:04:03,280 Speaker 3: say our our business is growing faster today than ever before. 59 00:04:03,440 --> 00:04:06,640 Speaker 3: And assets under management. There's a lot of things that 60 00:04:06,720 --> 00:04:09,400 Speaker 3: go into that. What assets are we building, what assets 61 00:04:09,440 --> 00:04:13,120 Speaker 3: are we buying, what assets are we selling. But if 62 00:04:13,160 --> 00:04:16,800 Speaker 3: there was a number to focus on that is illustrative 63 00:04:17,400 --> 00:04:21,039 Speaker 3: of the growth in our business and the growth of 64 00:04:21,240 --> 00:04:24,760 Speaker 3: the renewables market going forward. Is our run rate on 65 00:04:24,800 --> 00:04:30,000 Speaker 3: a global basis is? Today we bring online about seven 66 00:04:30,120 --> 00:04:34,440 Speaker 3: thousand megawatts of new capacity every year. That number is 67 00:04:34,520 --> 00:04:37,719 Speaker 3: up significantly versus three or four or five years ago. 68 00:04:38,320 --> 00:04:40,520 Speaker 2: Now we're talking renewables, but of course there are different 69 00:04:40,560 --> 00:04:45,039 Speaker 2: forms of renewables, and solar deployment globally is at a 70 00:04:45,120 --> 00:04:49,680 Speaker 2: record base. Wind is struggling. So can we just talk 71 00:04:49,760 --> 00:04:53,880 Speaker 2: through the different technologies. Where do you see progress and 72 00:04:53,920 --> 00:04:55,360 Speaker 2: where do you see challenges? 73 00:04:56,120 --> 00:04:59,400 Speaker 3: You're highlighting a great point. Today's solar is the fastest 74 00:04:59,440 --> 00:05:04,200 Speaker 3: growing tech technology on a global basis, and it's important 75 00:05:04,279 --> 00:05:08,400 Speaker 3: to recognize why. Twenty years ago, if you were developing renewables, 76 00:05:08,400 --> 00:05:13,000 Speaker 3: you were likely developing a hydro electric facility. That's millions 77 00:05:13,000 --> 00:05:15,520 Speaker 3: and tons of steel, millions and tons of concrete, multi 78 00:05:15,600 --> 00:05:20,279 Speaker 3: year construction period, usually somewhere out in the wilderness. You 79 00:05:20,360 --> 00:05:23,920 Speaker 3: need to camp workers there overnight, et cetera. Go back 80 00:05:24,000 --> 00:05:28,200 Speaker 3: maybe twelve to fifteen years ago, if you were developing renewables. 81 00:05:28,320 --> 00:05:32,240 Speaker 3: You're developing wind that is far easier than hydro, but 82 00:05:32,360 --> 00:05:35,800 Speaker 3: it's still special ships to transport the equipment. You've still 83 00:05:35,800 --> 00:05:38,760 Speaker 3: got to shut highways at night. If something breaks, you 84 00:05:38,760 --> 00:05:41,920 Speaker 3: got to get a crane. And then came a long solar. 85 00:05:42,640 --> 00:05:45,279 Speaker 3: The majority of solar is built between three and twelve 86 00:05:45,320 --> 00:05:48,920 Speaker 3: feet above the ground. The equipment is modular. You can 87 00:05:49,000 --> 00:05:51,960 Speaker 3: start a construction program on all four sides and meat 88 00:05:52,000 --> 00:05:56,320 Speaker 3: in the middle. And therefore, if you can generate the 89 00:05:56,360 --> 00:06:03,719 Speaker 3: same financial return building solar versus building wind or hydro, 90 00:06:04,040 --> 00:06:07,039 Speaker 3: you will naturally pick solar because it is the least 91 00:06:07,080 --> 00:06:11,160 Speaker 3: operationally intensive. Now that being said, the whole world can't 92 00:06:11,200 --> 00:06:15,800 Speaker 3: run on solar. The nature of intermittent renewable technologies is 93 00:06:15,839 --> 00:06:19,960 Speaker 3: we need different forms of energy that have differentiated load 94 00:06:20,000 --> 00:06:23,880 Speaker 3: patterns to provide a complete energy solution to the grid. 95 00:06:24,080 --> 00:06:28,839 Speaker 3: So while solar is accelerating now and wind perhaps accelerated 96 00:06:28,839 --> 00:06:31,960 Speaker 3: a few years ago and is plateauing off, they all 97 00:06:32,080 --> 00:06:35,120 Speaker 3: need to grow going forward. And our view is some 98 00:06:35,200 --> 00:06:38,960 Speaker 3: of the headwinds being felt in the wind space are 99 00:06:39,040 --> 00:06:42,239 Speaker 3: quite discrete in nature and the industry will move past 100 00:06:42,279 --> 00:06:45,760 Speaker 3: them and you will continue to see very significant growth 101 00:06:45,960 --> 00:06:47,159 Speaker 3: in the wind asset class. 102 00:06:47,279 --> 00:06:49,239 Speaker 2: When do you see that happening very readily? 103 00:06:49,480 --> 00:06:52,040 Speaker 3: A number of the issues that took place in wind 104 00:06:52,200 --> 00:06:56,560 Speaker 3: are discrete. They can be attributable to disruptions in shipping 105 00:06:57,160 --> 00:07:01,880 Speaker 3: and a cohort of contracts in a number of wind 106 00:07:01,920 --> 00:07:06,080 Speaker 3: farms around the world, in particular offshore wind that we're struck, 107 00:07:06,560 --> 00:07:10,280 Speaker 3: I would say with unfortunate timing and unfortunate economics for 108 00:07:10,320 --> 00:07:13,640 Speaker 3: those across the value chain. We are already seeing the 109 00:07:13,800 --> 00:07:18,200 Speaker 3: industry react very quickly, not only to adjust those economics 110 00:07:18,200 --> 00:07:20,800 Speaker 3: to enable the greater build out of wind going forward, 111 00:07:21,120 --> 00:07:24,800 Speaker 3: but also more appropriate risk sharing across the value chain. 112 00:07:24,880 --> 00:07:29,360 Speaker 3: That will ensure we've learned our lessons from those experiences 113 00:07:29,400 --> 00:07:32,640 Speaker 3: and the whole industry will be better equipped to not 114 00:07:32,720 --> 00:07:33,720 Speaker 3: repeat those going. 115 00:07:33,560 --> 00:07:36,440 Speaker 2: Forward, which is going to cause prices to go up 116 00:07:36,560 --> 00:07:41,760 Speaker 2: for wind deployment. Our customers, the off takers ready for it. 117 00:07:41,840 --> 00:07:46,360 Speaker 2: Are governments ready to ensure that those prices are reflective 118 00:07:46,520 --> 00:07:52,000 Speaker 2: of an industry that needs to grow. Absolutely, the wind 119 00:07:52,000 --> 00:07:56,040 Speaker 2: industry has suffered critical setbacks in recent years. The pandemic 120 00:07:56,080 --> 00:07:59,320 Speaker 2: caused disruptions in the global economy and trade, pushing up 121 00:07:59,320 --> 00:08:03,880 Speaker 2: the cost of coodities, labor and borrowing. That's a problem 122 00:08:04,120 --> 00:08:06,800 Speaker 2: because a lot of wind farms are locked into contracts 123 00:08:07,120 --> 00:08:11,080 Speaker 2: agreed two years ago, and that means produces a bound 124 00:08:11,120 --> 00:08:15,000 Speaker 2: to projects that sell power at fixed rates, which, given 125 00:08:15,040 --> 00:08:19,760 Speaker 2: today's cost structure, makes the project unprofitable. As a result, 126 00:08:19,800 --> 00:08:22,960 Speaker 2: developers have been forced to walk away from contracts. The 127 00:08:23,040 --> 00:08:25,760 Speaker 2: long list of cancel projects is causing a headache for 128 00:08:25,840 --> 00:08:29,280 Speaker 2: governments across Europe and the US that have set targets 129 00:08:29,360 --> 00:08:32,000 Speaker 2: to reach a certain amount of wind power in their mix. 130 00:08:33,040 --> 00:08:35,360 Speaker 2: Now these governments are going to have to pay more 131 00:08:35,600 --> 00:08:36,880 Speaker 2: than they previously thought. 132 00:08:38,800 --> 00:08:42,920 Speaker 3: And this is probably one of the most dramatic things 133 00:08:42,960 --> 00:08:46,080 Speaker 3: that we are seeing across our business around the world today. 134 00:08:46,240 --> 00:08:51,800 Speaker 3: Is yes, due to financing costs increasing, capex costs increasing 135 00:08:51,880 --> 00:08:54,880 Speaker 3: as they have over the last twelve to twenty four 136 00:08:54,920 --> 00:08:59,600 Speaker 3: to thirty months, you have seen corporate off take contracts 137 00:09:00,040 --> 00:09:05,640 Speaker 3: appropriately adjust to ensure that renewable developers can continue to 138 00:09:05,679 --> 00:09:09,079 Speaker 3: earn an appropriate margin and capital can continue to be 139 00:09:09,120 --> 00:09:12,680 Speaker 3: attracted to the sector. But what's important to recognize as well, 140 00:09:12,760 --> 00:09:16,200 Speaker 3: there's two dynamics. One they still are typically at a 141 00:09:16,240 --> 00:09:19,880 Speaker 3: significant discount to retail costs, so the end customer is 142 00:09:20,000 --> 00:09:24,719 Speaker 3: still getting a energy price discount a cost savings by 143 00:09:24,840 --> 00:09:29,560 Speaker 3: using renewable power. And two, the demand for green power 144 00:09:29,600 --> 00:09:33,079 Speaker 3: today is higher than it has been at any point 145 00:09:33,120 --> 00:09:37,160 Speaker 3: in history. There has long been a supply demand imbalance, 146 00:09:37,320 --> 00:09:41,320 Speaker 3: meaning there is more demand for new green power off 147 00:09:41,360 --> 00:09:44,480 Speaker 3: takes and there are ready to build projects available. That 148 00:09:44,640 --> 00:09:48,280 Speaker 3: supply demand imbalance today is stronger than any before. We 149 00:09:48,400 --> 00:09:52,040 Speaker 3: don't struggle to find demand and off take to pull 150 00:09:52,040 --> 00:09:53,280 Speaker 3: projects out of the ground. Well. 151 00:09:53,320 --> 00:09:55,520 Speaker 2: One example played out in the UK where I live, 152 00:09:55,920 --> 00:09:58,800 Speaker 2: where the gun brought in a bid to get offshore 153 00:09:58,800 --> 00:10:04,160 Speaker 2: wind deployment a lower price than had ever been set, 154 00:10:04,240 --> 00:10:06,319 Speaker 2: and the government was pretty confident there would be bids 155 00:10:06,320 --> 00:10:09,080 Speaker 2: coming in. Zero came in and so they've had to 156 00:10:09,160 --> 00:10:12,480 Speaker 2: change and increase their bid for the next round. 157 00:10:12,520 --> 00:10:14,439 Speaker 3: That sounds about right, yeah, and. 158 00:10:14,400 --> 00:10:18,040 Speaker 2: They had to increase their price by forty percent. The 159 00:10:18,080 --> 00:10:20,760 Speaker 2: next auction hasn't happened, so we'll see if new bids 160 00:10:20,800 --> 00:10:23,280 Speaker 2: come in, but the industry says they are interested in 161 00:10:23,320 --> 00:10:27,160 Speaker 2: it now. Tripling renewables by twenty thirty is as we've 162 00:10:27,160 --> 00:10:31,400 Speaker 2: looked from other analysts to quite doable. The bottlenecks that 163 00:10:31,440 --> 00:10:35,520 Speaker 2: they see isn't really deploying the assets for wind and solar, 164 00:10:35,679 --> 00:10:39,920 Speaker 2: it's really grids and permitting. How are you thinking about them? 165 00:10:40,040 --> 00:10:42,920 Speaker 3: You nailed it. Depending on the region around the world, 166 00:10:43,040 --> 00:10:48,040 Speaker 3: there tends to be three bottlenecks to the development of renewables, 167 00:10:48,440 --> 00:10:52,120 Speaker 3: securing land, securing grids, and securing permits. And I would 168 00:10:52,120 --> 00:10:54,760 Speaker 3: say in different regions around the world it's a different 169 00:10:54,800 --> 00:10:58,040 Speaker 3: one of those three. The vast majority of the bottlenecks 170 00:10:58,080 --> 00:11:02,480 Speaker 3: are permits and interction. What I would say as well, 171 00:11:02,520 --> 00:11:06,400 Speaker 3: these are real limitations. Today, there is a very cohesive effort, 172 00:11:06,480 --> 00:11:09,480 Speaker 3: I would say, in almost every major market around the 173 00:11:09,520 --> 00:11:13,480 Speaker 3: world to accelerate and overcome some of these bottlenecks. One 174 00:11:13,520 --> 00:11:19,040 Speaker 3: of the very positive outcomes over the European energy crisis 175 00:11:19,040 --> 00:11:20,920 Speaker 3: over the last two or three years, if you've seen 176 00:11:21,040 --> 00:11:25,320 Speaker 3: concerted efforts across the EUS to accelerate the permitting process, 177 00:11:26,440 --> 00:11:30,200 Speaker 3: that had a noticeable impact on the ground at the 178 00:11:30,240 --> 00:11:33,680 Speaker 3: local development level. It was immediately felt and allowed more 179 00:11:33,720 --> 00:11:37,200 Speaker 3: projects to get into planning and construction than at a 180 00:11:37,240 --> 00:11:40,679 Speaker 3: faster rate than before. When it comes to interconnection, there 181 00:11:40,760 --> 00:11:44,040 Speaker 3: is going to need to be significant grid enhancement going 182 00:11:44,080 --> 00:11:47,600 Speaker 3: forward to support the build out of renewables. Grids around 183 00:11:47,600 --> 00:11:51,160 Speaker 3: the world are attracting that capital. It will continue to 184 00:11:51,240 --> 00:11:53,360 Speaker 3: be a bottleneck for some period of time, but it's 185 00:11:53,360 --> 00:11:56,880 Speaker 3: also important to recognize that many of the solutions are 186 00:11:56,920 --> 00:12:00,840 Speaker 3: accelerating equally. As fast storage is being built out even 187 00:12:01,000 --> 00:12:05,280 Speaker 3: on a relative basis, growing faster than renewables. That helps 188 00:12:05,280 --> 00:12:08,760 Speaker 3: address some of the interconnection concerns, as well as the 189 00:12:08,800 --> 00:12:12,800 Speaker 3: growth of asset classes like distributed generation where you can 190 00:12:12,920 --> 00:12:15,280 Speaker 3: produce the electricity right at the point of the end 191 00:12:15,320 --> 00:12:18,160 Speaker 3: consumer and not be as reliant on the grid. So 192 00:12:18,679 --> 00:12:22,120 Speaker 3: you're absolutely right, those are the limitations today. They are 193 00:12:22,160 --> 00:12:25,079 Speaker 3: getting better. There is still work to do. I would 194 00:12:25,120 --> 00:12:31,679 Speaker 3: say the investors and operators who will drive the greatest 195 00:12:31,720 --> 00:12:34,599 Speaker 3: amount going forward are the ones most well positioned to 196 00:12:35,120 --> 00:12:39,240 Speaker 3: navigate those issues because there are not immediate fixes. 197 00:12:43,280 --> 00:12:58,280 Speaker 2: More from the conversation after the break. Now, developed markets 198 00:12:58,600 --> 00:13:03,520 Speaker 2: are places where you have less risk of all kinds 199 00:13:03,840 --> 00:13:07,680 Speaker 2: and you're able to invest heavily. What is the split 200 00:13:07,800 --> 00:13:12,600 Speaker 2: for Brookfield between developed economies and developing countries Globally? 201 00:13:12,760 --> 00:13:16,000 Speaker 3: We like to think we're generally about three quarters in 202 00:13:16,080 --> 00:13:19,560 Speaker 3: develop markets. Around the world and twenty to twenty five 203 00:13:19,600 --> 00:13:22,760 Speaker 3: percent in developing markets. We have a long history in 204 00:13:22,800 --> 00:13:28,120 Speaker 3: developing markets, in particular large businesses in Brazil, India and 205 00:13:28,200 --> 00:13:30,960 Speaker 3: Latin America, and we are actually in the process of 206 00:13:31,080 --> 00:13:36,120 Speaker 3: expanding that mandate to take some of our capital and 207 00:13:36,160 --> 00:13:40,040 Speaker 3: our operating capabilities to address transition investing in a wider 208 00:13:40,080 --> 00:13:41,440 Speaker 3: spectrum of developing market. 209 00:13:41,640 --> 00:13:44,280 Speaker 2: Can you talk a little more about what new markets 210 00:13:44,320 --> 00:13:46,160 Speaker 2: are you looking at in the developing countries? 211 00:13:46,400 --> 00:13:50,640 Speaker 3: Certainly absolutely a greater reach within Latin and Central America, 212 00:13:51,280 --> 00:13:54,520 Speaker 3: and then Eastern Europe and then the last one I 213 00:13:54,520 --> 00:13:57,880 Speaker 3: would highlight being Southeast Asia. Those are three markets that 214 00:13:57,960 --> 00:14:02,160 Speaker 3: we see tremendous operation tunity, and in fact what's important 215 00:14:02,200 --> 00:14:05,480 Speaker 3: to recognize is we have a global platform and when 216 00:14:05,520 --> 00:14:09,959 Speaker 3: we look to invest in these countries, in these regions, 217 00:14:10,000 --> 00:14:13,000 Speaker 3: we need two things. We need one to see a 218 00:14:13,040 --> 00:14:15,760 Speaker 3: market opportunity there, and then two we need to have 219 00:14:15,800 --> 00:14:19,720 Speaker 3: an appropriate pool of capital that matches that market opportunity. 220 00:14:20,400 --> 00:14:24,920 Speaker 3: We've just recently announced a vehicle that will focus specifically 221 00:14:25,000 --> 00:14:28,080 Speaker 3: on those developing and emerging markets with a mandate of 222 00:14:28,160 --> 00:14:31,400 Speaker 3: accelerating the transition in those regions. So we're now very 223 00:14:31,640 --> 00:14:34,360 Speaker 3: excited to have that second component, which is that pool 224 00:14:34,360 --> 00:14:39,040 Speaker 3: of capital to appropriately direct to that investment opportunity set. 225 00:14:39,200 --> 00:14:41,640 Speaker 2: You're hinting at a new fund that was announced here 226 00:14:41,640 --> 00:14:44,480 Speaker 2: at COP twenty eight, the al Terra Fund, which at 227 00:14:44,560 --> 00:14:47,200 Speaker 2: least as plans go, is supposed to have thirty billion 228 00:14:47,240 --> 00:14:49,720 Speaker 2: dollars in it, where twenty five billion dollars would be 229 00:14:49,800 --> 00:14:53,600 Speaker 2: invested in developed countries and five billion dollars would be 230 00:14:53,720 --> 00:14:59,160 Speaker 2: used as concessional finances attract more capital and specifically targeted 231 00:14:59,360 --> 00:15:02,760 Speaker 2: in developm in countries. How much of that is Brookfield 232 00:15:03,480 --> 00:15:06,960 Speaker 2: going to be participating in and how exactly. 233 00:15:06,720 --> 00:15:08,840 Speaker 3: Al Tara and Brookfield are going to partner in two 234 00:15:08,840 --> 00:15:12,240 Speaker 3: different ways. Al Tara is making a very meaningful commitment 235 00:15:12,320 --> 00:15:15,800 Speaker 3: to our Global Transition Fund, which is currently on its 236 00:15:15,880 --> 00:15:20,040 Speaker 3: second vintage. And then, perhaps more interesting to the comments 237 00:15:20,080 --> 00:15:24,000 Speaker 3: you just made, Altara will also be committing one billion 238 00:15:24,080 --> 00:15:29,000 Speaker 3: dollars to what we call the Catalytic Transition Fund, which 239 00:15:29,040 --> 00:15:34,440 Speaker 3: we'll focus on accelerating decarbonization and transition investing in emerging markets. 240 00:15:34,480 --> 00:15:38,440 Speaker 3: And what's very exciting about the one billion dollars that 241 00:15:38,920 --> 00:15:41,320 Speaker 3: al Tara will commit to that fund is it comes 242 00:15:41,320 --> 00:15:45,280 Speaker 3: in the form of catalytic capital that enhances the returns 243 00:15:45,280 --> 00:15:47,800 Speaker 3: to other LPs in the fund, with a view of 244 00:15:47,880 --> 00:15:52,480 Speaker 3: crowding in more institutional capital and really scaling up the 245 00:15:52,880 --> 00:15:55,280 Speaker 3: pool for investment in those markets. 246 00:15:57,160 --> 00:15:59,880 Speaker 1: Let's break down that jargon. What Connor is saying is 247 00:15:59,880 --> 00:16:02,800 Speaker 1: that at Brookfield will use al Terra's billion dollars to 248 00:16:02,880 --> 00:16:06,480 Speaker 1: bring in other investors and perhaps launch a four billion 249 00:16:06,520 --> 00:16:11,160 Speaker 1: dollar fund dedicated to investing in renewable projects in developing countries. 250 00:16:11,880 --> 00:16:15,520 Speaker 1: Why would other investors join It's because the profits on 251 00:16:15,600 --> 00:16:18,560 Speaker 1: the billion dollar investment will be capped, and so the 252 00:16:18,640 --> 00:16:21,880 Speaker 1: other investors joining in the fund can take more of 253 00:16:21,920 --> 00:16:26,040 Speaker 1: the profits. And that's important because most private investors putting 254 00:16:26,120 --> 00:16:29,400 Speaker 1: money in, say a solar farm in Kenya, see it 255 00:16:29,440 --> 00:16:32,880 Speaker 1: as a riskier investment than a solar farm in France. 256 00:16:33,960 --> 00:16:37,240 Speaker 1: That's because developing countries can often have currencies that fluctuate, 257 00:16:37,280 --> 00:16:40,640 Speaker 1: a lot of bureaucracies that can mean payments are delayed 258 00:16:41,080 --> 00:16:45,520 Speaker 1: or myriad other problems, and so the private investors want 259 00:16:45,800 --> 00:16:48,920 Speaker 1: higher returns from a Kenyan solar farm than they would 260 00:16:48,960 --> 00:16:51,960 Speaker 1: from a French solar farm, and that's what all Terra's 261 00:16:52,000 --> 00:16:54,120 Speaker 1: billion dollar is promising to deliver. 262 00:16:55,320 --> 00:16:57,800 Speaker 2: But you just said that there are billions being invested 263 00:16:57,840 --> 00:17:01,560 Speaker 2: in developing countries already. Is it just more billions going 264 00:17:01,640 --> 00:17:04,240 Speaker 2: in or is it actually opening new marks? 265 00:17:04,280 --> 00:17:07,560 Speaker 3: Great? Great question. To date, the majority of the capital 266 00:17:07,680 --> 00:17:11,560 Speaker 3: going into emerging markets has it has gone towards transition 267 00:17:11,680 --> 00:17:15,160 Speaker 3: or decarbonization investments, But I would say ones that are 268 00:17:15,400 --> 00:17:19,119 Speaker 3: more de risked, and therefore within those markets, it is 269 00:17:19,160 --> 00:17:23,000 Speaker 3: a somewhat limited opportunity set that most investors are allowed 270 00:17:23,000 --> 00:17:26,320 Speaker 3: to target within these markets. With now the benefit of 271 00:17:26,320 --> 00:17:31,600 Speaker 3: the Catalytic Transition Fund and its differentiated investment profile and 272 00:17:31,640 --> 00:17:34,680 Speaker 3: return mandate, there are different things we can look at, 273 00:17:34,720 --> 00:17:37,200 Speaker 3: and I'll give you an example to make this play out. 274 00:17:38,520 --> 00:17:44,840 Speaker 3: If we go to large developing markets like India and 275 00:17:44,880 --> 00:17:49,840 Speaker 3: Brazil and we use our large global corporate off take 276 00:17:49,920 --> 00:17:53,080 Speaker 3: relationships and we partner with some of the biggest global 277 00:17:53,119 --> 00:17:56,800 Speaker 3: corporates simply to build wind and solar farms there with 278 00:17:56,880 --> 00:18:00,440 Speaker 3: twenty year inflation link corporate off takes, we add absolutely 279 00:18:00,520 --> 00:18:03,720 Speaker 3: we're already doing that in markets like India and Brazil 280 00:18:03,840 --> 00:18:05,080 Speaker 3: and Columbia to date. 281 00:18:05,760 --> 00:18:09,840 Speaker 1: Connor refers to corporate opt takes or corporate PPAs interchangeably. 282 00:18:10,520 --> 00:18:15,480 Speaker 1: PPA basically stands for power purchasing agreements, and global companies 283 00:18:15,520 --> 00:18:18,560 Speaker 1: are one of the biggest reasons for signing these power 284 00:18:18,560 --> 00:18:23,840 Speaker 1: purchasing agreements for renewable deployment across the world. It's because 285 00:18:23,880 --> 00:18:27,399 Speaker 1: companies like Amazon or Google want their warehouses and data 286 00:18:27,400 --> 00:18:31,440 Speaker 1: centers to be only powered by renewables, regardless of where 287 00:18:31,480 --> 00:18:34,920 Speaker 1: they operate in the world, and so they signed contracts 288 00:18:34,920 --> 00:18:38,480 Speaker 1: with utilities that build solar wind farms, with almost all 289 00:18:38,480 --> 00:18:42,440 Speaker 1: the electricity generated being fully consumed by these companies. It's 290 00:18:42,440 --> 00:18:44,960 Speaker 1: a good deal for the utilities because they know these 291 00:18:44,960 --> 00:18:47,919 Speaker 1: global companies will pay them on time. And it's a 292 00:18:47,920 --> 00:18:50,520 Speaker 1: good deal for the global companies because they get clean 293 00:18:50,600 --> 00:18:53,560 Speaker 1: energy in a country whether grid is typically powered by 294 00:18:53,560 --> 00:18:57,720 Speaker 1: fossil fuels. And from an investor perspective, it means this 295 00:18:57,840 --> 00:19:01,359 Speaker 1: type of solar farm asset is risk free, lower risk, 296 00:19:01,640 --> 00:19:03,840 Speaker 1: or as Connor says, de risked. 297 00:19:04,840 --> 00:19:09,080 Speaker 3: But in some of the emerging markets, maybe there isn't 298 00:19:09,080 --> 00:19:14,960 Speaker 3: that well defined robust revenue construct. Maybe the corporate ppa 299 00:19:15,119 --> 00:19:18,600 Speaker 3: market isn't as long in term, and therefore things like 300 00:19:18,640 --> 00:19:23,600 Speaker 3: the catalytic capital appropriately adjust the risk return profile to 301 00:19:23,640 --> 00:19:27,159 Speaker 3: make it more attractive. Maybe in even more mature developing 302 00:19:27,200 --> 00:19:30,720 Speaker 3: markets like Brazil and India. It's not necessarily the down 303 00:19:30,800 --> 00:19:33,240 Speaker 3: the fair Way wind and solar, but maybe it's getting 304 00:19:33,280 --> 00:19:37,639 Speaker 3: into things like building out hydrogen or equipment supply chains 305 00:19:37,640 --> 00:19:41,240 Speaker 3: and things like that. So while there is capital flowing 306 00:19:41,400 --> 00:19:44,760 Speaker 3: into some of those developing markets already, there is no 307 00:19:44,920 --> 00:19:48,720 Speaker 3: doubt that the Catalytic Transition Fund, with its differentiated risk 308 00:19:48,800 --> 00:19:53,560 Speaker 3: return profile, certainly one increases the number of geographies, but 309 00:19:53,680 --> 00:19:59,320 Speaker 3: even within those geographies increases the spectrum of investible opportunities. 310 00:20:00,000 --> 00:20:02,199 Speaker 2: We do not name any new geographies that you have 311 00:20:02,320 --> 00:20:04,280 Speaker 2: not invested in which could open up with. 312 00:20:04,280 --> 00:20:07,680 Speaker 3: This, So today we are not invested in Southeast Asia, 313 00:20:07,800 --> 00:20:09,719 Speaker 3: so that is a market that will open up as 314 00:20:09,760 --> 00:20:13,200 Speaker 3: a result of this. We are quite active in Latin 315 00:20:13,800 --> 00:20:18,280 Speaker 3: in Brazil that goes very long to Brookfield's history. But 316 00:20:18,359 --> 00:20:20,640 Speaker 3: I would say there are more geographies we can now 317 00:20:20,680 --> 00:20:24,280 Speaker 3: go to, particularly in and around Central America where perhaps 318 00:20:24,280 --> 00:20:27,040 Speaker 3: we haven't gone in the past, as well as Eastern Europe, 319 00:20:27,040 --> 00:20:29,800 Speaker 3: where we have a modest presence but not in all countries. 320 00:20:29,920 --> 00:20:32,119 Speaker 3: And with this fund, we now have the mandate to 321 00:20:32,200 --> 00:20:35,040 Speaker 3: go into more countries in those regions. So I would 322 00:20:35,080 --> 00:20:40,080 Speaker 3: expect to see the Catalyic Transition Fund lead to us 323 00:20:40,440 --> 00:20:45,880 Speaker 3: bringing our global platform and its operating capabilities and its 324 00:20:45,920 --> 00:20:49,040 Speaker 3: capital to a large number of new countries. 325 00:20:49,800 --> 00:20:53,000 Speaker 2: Well, the all Terra Funds catalytic portion has been pitched 326 00:20:53,000 --> 00:20:57,880 Speaker 2: as never done before, is going to make a revolutionary difference. Now, 327 00:20:58,160 --> 00:21:00,879 Speaker 2: we as journalists haven't really got to details, and so 328 00:21:01,840 --> 00:21:05,520 Speaker 2: we are taking this claim on face value. But it's 329 00:21:05,680 --> 00:21:08,840 Speaker 2: difficult to make this capital work. How serious do you 330 00:21:08,960 --> 00:21:12,160 Speaker 2: think EUAE is when it's making this investment? 331 00:21:13,520 --> 00:21:16,920 Speaker 3: Very serious, and I would perhaps put it in three buckets. 332 00:21:17,920 --> 00:21:20,840 Speaker 3: The first is simply the size of the commitment they 333 00:21:20,840 --> 00:21:25,600 Speaker 3: are making, which is truly transformational and well, a significant 334 00:21:25,600 --> 00:21:29,280 Speaker 3: amount of that out capital has been allocated today, much 335 00:21:29,280 --> 00:21:31,760 Speaker 3: of it will be allocated in the future, but the 336 00:21:31,760 --> 00:21:35,040 Speaker 3: sheer size of it and the multiplier effect it will 337 00:21:35,080 --> 00:21:39,399 Speaker 3: have on crowding in other institutional capital, it should not 338 00:21:39,440 --> 00:21:43,600 Speaker 3: be dismissed. This is quite transformative and very commendable what 339 00:21:43,640 --> 00:21:47,280 Speaker 3: they've done. From that perspective, the second thing, which I 340 00:21:47,320 --> 00:21:51,760 Speaker 3: think can be taken to demonstrate the seriousness of it 341 00:21:52,000 --> 00:21:55,760 Speaker 3: and how it will have an enduring impact, is they 342 00:21:55,760 --> 00:21:58,680 Speaker 3: have partnered with the leaders of this type of investing 343 00:21:58,760 --> 00:22:03,280 Speaker 3: around the world, have sought out council from the leading 344 00:22:03,359 --> 00:22:07,200 Speaker 3: transition platforms, all that have slightly different mandates and invest 345 00:22:07,280 --> 00:22:10,919 Speaker 3: slightly differently, but they have worked with those and supported 346 00:22:11,040 --> 00:22:15,320 Speaker 3: those and picked very strategically who their partners are in 347 00:22:15,440 --> 00:22:18,040 Speaker 3: order to have the best effect. And then the third 348 00:22:18,040 --> 00:22:21,959 Speaker 3: point we would make is what we have experienced in 349 00:22:22,000 --> 00:22:25,719 Speaker 3: working with the team at all Terra is this is 350 00:22:25,760 --> 00:22:28,240 Speaker 3: something they are very committed to. They are not simply 351 00:22:28,280 --> 00:22:32,399 Speaker 3: committing capital, they are committing human capital. They have dedicated 352 00:22:32,440 --> 00:22:37,280 Speaker 3: significant time and resources to working alongside those partners to 353 00:22:37,400 --> 00:22:39,879 Speaker 3: structure these vehicles to ensure that they're not only going 354 00:22:39,920 --> 00:22:43,200 Speaker 3: to be successful today at announcement, but will be successful 355 00:22:43,280 --> 00:22:45,080 Speaker 3: as they are executed in years to come. 356 00:22:45,320 --> 00:22:48,040 Speaker 2: The total amount that is needed to be invested in 357 00:22:48,080 --> 00:22:50,560 Speaker 2: the transition in developing countries needs to be three to 358 00:22:50,640 --> 00:22:55,400 Speaker 2: four times as it is today. Developed economies are getting 359 00:22:55,880 --> 00:22:59,480 Speaker 2: much of that money. But let's look at the fact 360 00:22:59,480 --> 00:23:02,520 Speaker 2: that you painting a picture which is yes, there's some problems, 361 00:23:02,760 --> 00:23:09,720 Speaker 2: but it's really rosie. There is just so much to build, 362 00:23:10,080 --> 00:23:14,760 Speaker 2: so much support and lots of profit on the table. 363 00:23:15,240 --> 00:23:18,199 Speaker 2: If that's the case, why is it that oil and 364 00:23:18,240 --> 00:23:23,720 Speaker 2: gas companies are trying to shrink their renewables portfolio. Right, 365 00:23:23,760 --> 00:23:27,159 Speaker 2: these are companies that know how to do large infrastructure projects. 366 00:23:27,680 --> 00:23:29,880 Speaker 2: What causes them to step back? 367 00:23:30,600 --> 00:23:35,240 Speaker 3: So I would maybe come at that dynamic this way. 368 00:23:35,520 --> 00:23:39,560 Speaker 3: In the last few years, there are three things that 369 00:23:39,600 --> 00:23:43,440 Speaker 3: we have really seen in the developed transition market. The 370 00:23:43,520 --> 00:23:48,840 Speaker 3: first one is a larger and more attractive opportunity set 371 00:23:48,920 --> 00:23:53,280 Speaker 3: than both a commercial opportunity set and a more impactful 372 00:23:53,280 --> 00:23:58,760 Speaker 3: decarbonization opportunity set then I think almost anyone imagined. The 373 00:23:58,840 --> 00:24:01,560 Speaker 3: second one is in recently around the world we are 374 00:24:01,600 --> 00:24:04,800 Speaker 3: seeing energy transition is more of a corporate pull than 375 00:24:04,840 --> 00:24:08,080 Speaker 3: a government push. And what we would say is the 376 00:24:08,080 --> 00:24:11,560 Speaker 3: trend line on decarbonization is being driven by corporates, the 377 00:24:11,600 --> 00:24:14,200 Speaker 3: EBB and flow above that trend line is being driven 378 00:24:14,240 --> 00:24:18,600 Speaker 3: by government policy. And then the third deal that's specifically renewables, 379 00:24:18,840 --> 00:24:23,160 Speaker 3: renewables and other decarbonization solutions, whether it be biofuels or 380 00:24:23,480 --> 00:24:25,000 Speaker 3: carbon capture, things like that. 381 00:24:25,280 --> 00:24:28,320 Speaker 2: Surely that's not true given the fact that Inflation Reduction 382 00:24:28,400 --> 00:24:31,040 Speaker 2: Act the European Green Deal were necessary for these things. 383 00:24:31,080 --> 00:24:31,919 Speaker 3: To move on to. 384 00:24:32,200 --> 00:24:35,600 Speaker 2: That renewables, I may let you have that case. These 385 00:24:35,640 --> 00:24:37,760 Speaker 2: tax crisers in the US have been around for a while, 386 00:24:38,040 --> 00:24:41,080 Speaker 2: but really is the corporate ppa market that's driving the transition. 387 00:24:41,359 --> 00:24:43,840 Speaker 2: Those numbers make sense, but other solutions. 388 00:24:44,240 --> 00:24:46,280 Speaker 3: Let me frame it a different way, and let's see 389 00:24:46,320 --> 00:24:50,639 Speaker 3: if we agree, which is things like biofuels in carbon capture. 390 00:24:51,359 --> 00:24:55,439 Speaker 3: Without question, IRA has accelerated their growth. Nobody disputes that 391 00:24:56,080 --> 00:24:58,320 Speaker 3: they would still have been growing and still have been 392 00:24:58,359 --> 00:25:01,960 Speaker 3: accelerating in the absence of IR right. And then maybe 393 00:25:02,040 --> 00:25:04,119 Speaker 3: just the third one to round it out is the 394 00:25:04,200 --> 00:25:08,000 Speaker 3: last thing we've seen is not on the investment opportunity side, 395 00:25:08,000 --> 00:25:13,160 Speaker 3: but rather on the investor side. And in that bucket 396 00:25:13,200 --> 00:25:16,960 Speaker 3: we've seen really two or three things. One more and 397 00:25:17,040 --> 00:25:22,080 Speaker 3: more investors around the world having a transition or decarbonization 398 00:25:22,240 --> 00:25:26,760 Speaker 3: investing allocation. And I think that's because the commercial opportunity 399 00:25:26,800 --> 00:25:31,000 Speaker 3: set is large and growing. And then secondly, an increased 400 00:25:31,160 --> 00:25:36,480 Speaker 3: pragmatism amongst those investors that it isn't all about simply 401 00:25:36,520 --> 00:25:39,320 Speaker 3: what's building out more of what is already perfectly green 402 00:25:39,400 --> 00:25:43,080 Speaker 3: and clean and pristine, but also a willingness to sometimes 403 00:25:43,119 --> 00:25:47,159 Speaker 3: go where the emissions are in order to decarbonize something. 404 00:25:47,520 --> 00:25:52,960 Speaker 3: I highlight those three dynamics. Corporate demand, large and attractive 405 00:25:53,000 --> 00:25:59,720 Speaker 3: opportunity set, and growing investor momentum, and investor pragmatism because 406 00:25:59,720 --> 00:26:02,400 Speaker 3: we see I see all three of those things happening 407 00:26:02,920 --> 00:26:05,879 Speaker 3: in emerging markets very similar to how they have happened 408 00:26:05,920 --> 00:26:09,760 Speaker 3: in developed markets, but on a slightly lagged basis. And 409 00:26:09,800 --> 00:26:13,280 Speaker 3: that's why as we look to investing in those markets 410 00:26:13,320 --> 00:26:17,159 Speaker 3: going forward, we do think one, it's an attractive opportunity 411 00:26:17,240 --> 00:26:21,040 Speaker 3: set today. Now let's get back to the oil question. This, 412 00:26:21,320 --> 00:26:25,120 Speaker 3: I would say comes down to a very specific question 413 00:26:25,280 --> 00:26:27,960 Speaker 3: of who are your stakeholders and what do they want. 414 00:26:28,400 --> 00:26:30,800 Speaker 3: There is no question that if you look at the 415 00:26:31,320 --> 00:26:38,719 Speaker 3: investment profile of a new build twenty year contracted wind 416 00:26:39,119 --> 00:26:42,880 Speaker 3: or solar facility, it is a lower return. But if 417 00:26:42,920 --> 00:26:45,960 Speaker 3: you have a twenty year inflation linked off take with Microsoft, 418 00:26:46,200 --> 00:26:48,280 Speaker 3: you could argue it's a very de risk return. It's 419 00:26:48,280 --> 00:26:51,159 Speaker 3: slightly lower on the risk return spectrum. I am not 420 00:26:51,320 --> 00:26:54,239 Speaker 3: a oil and gas engineer, but I understand that if 421 00:26:54,280 --> 00:26:57,000 Speaker 3: you drill for oil, and you do it well and 422 00:26:57,119 --> 00:27:01,480 Speaker 3: you hit a good reserve, your short returns can be 423 00:27:01,560 --> 00:27:06,280 Speaker 3: a lot higher. And you are seeing some leading energy 424 00:27:06,359 --> 00:27:11,199 Speaker 3: companies either invest in renewables or invest in things like 425 00:27:11,320 --> 00:27:14,640 Speaker 3: e fuels or hydrogen where they feel their skill set 426 00:27:14,680 --> 00:27:19,160 Speaker 3: is more appropriate, or invest in other decarbonization solutions where 427 00:27:19,200 --> 00:27:22,240 Speaker 3: they feel that is more in line with the investment 428 00:27:22,359 --> 00:27:24,560 Speaker 3: profile that their investors want them to take. 429 00:27:25,040 --> 00:27:28,800 Speaker 2: Now, wearing the President's had seventy seven billion out of 430 00:27:28,840 --> 00:27:33,040 Speaker 2: the eight hundred and fifty billion dollars is renewables, you 431 00:27:33,119 --> 00:27:36,520 Speaker 2: have a lot of other assets and they are carbon generating. 432 00:27:37,080 --> 00:27:38,240 Speaker 2: What are you doing about those? 433 00:27:39,080 --> 00:27:41,800 Speaker 3: So I think it's an important thing to recognize and 434 00:27:41,840 --> 00:27:46,000 Speaker 3: it's something we say proudly at Brookfield, even those within 435 00:27:46,080 --> 00:27:50,159 Speaker 3: the Renewable Power in Transition platform. It's important to recognize 436 00:27:50,200 --> 00:27:55,000 Speaker 3: that every asset at Brookfield is decarbonizing, not just the 437 00:27:55,000 --> 00:27:58,080 Speaker 3: ones in the Renewable Power and Transition platform, because we 438 00:27:58,160 --> 00:28:03,200 Speaker 3: have a fundamental belief across our organization that by decarbonizing 439 00:28:03,240 --> 00:28:06,879 Speaker 3: our investments, we are de risking them going forward and 440 00:28:07,040 --> 00:28:09,399 Speaker 3: enhancing their value. So it doesn't matter if you're in 441 00:28:09,440 --> 00:28:13,040 Speaker 3: real estate or infrastructure or private equity business. This is 442 00:28:13,080 --> 00:28:18,960 Speaker 3: a value lever to enhance the returns of our portfolio companies. 443 00:28:19,080 --> 00:28:21,600 Speaker 2: Yes, you have a zero by twenty fifty target for 444 00:28:21,880 --> 00:28:25,960 Speaker 2: all your assets, but real estate is a really difficult 445 00:28:26,040 --> 00:28:30,840 Speaker 2: asset to decarbonize. What's short term looking like, are you 446 00:28:31,000 --> 00:28:33,080 Speaker 2: able to hit the powers goals of being able to 447 00:28:33,200 --> 00:28:36,560 Speaker 2: havelff your asset emissions by twenty thirty. 448 00:28:36,760 --> 00:28:39,520 Speaker 3: You picked real estates one where I would say we 449 00:28:39,640 --> 00:28:43,440 Speaker 3: feel most confident about hitting those goals because of there 450 00:28:43,480 --> 00:28:47,720 Speaker 3: are such well established ways to reduce the carbon emissions 451 00:28:47,720 --> 00:28:50,800 Speaker 3: in real estate. Most notably the biggest thing is sourcing 452 00:28:50,840 --> 00:28:54,960 Speaker 3: and procuring green power. And then secondly, the other obvious 453 00:28:55,000 --> 00:28:57,320 Speaker 3: one when it comes to real estate is improving the 454 00:28:57,440 --> 00:29:00,560 Speaker 3: energy efficiency within the buildings, whether it be a facts 455 00:29:00,640 --> 00:29:03,680 Speaker 3: or smart meters, our products and solutions like that. One 456 00:29:03,720 --> 00:29:08,600 Speaker 3: of the key differentiators of those good versus bad dynamics 457 00:29:08,720 --> 00:29:11,840 Speaker 3: is how energy efficient is you're building and how well 458 00:29:11,960 --> 00:29:15,720 Speaker 3: is it set up. As those energy efficiency standards increase 459 00:29:15,800 --> 00:29:19,640 Speaker 3: going forwards, We're not doing that just to get a certification. 460 00:29:19,800 --> 00:29:23,520 Speaker 3: We're doing that because our end customers, the tenants are 461 00:29:23,560 --> 00:29:26,240 Speaker 3: demanding it when they pick the next place that they're 462 00:29:26,240 --> 00:29:29,320 Speaker 3: going to lease retailer office space. So I would say 463 00:29:29,360 --> 00:29:33,280 Speaker 3: this is front of mind, not simply as a philosophy, 464 00:29:33,360 --> 00:29:37,040 Speaker 3: but as a key commercial initiative to drive returns in 465 00:29:37,040 --> 00:29:37,800 Speaker 3: our investments. 466 00:29:38,160 --> 00:29:41,040 Speaker 2: One other thing that Rupield is trying to do hasn't 467 00:29:41,120 --> 00:29:46,840 Speaker 2: quite succeeded yet is trying to get brown assets fossil 468 00:29:46,880 --> 00:29:50,360 Speaker 2: assets and then trying to turn them into green assets. 469 00:29:50,600 --> 00:29:54,760 Speaker 2: You tried that with the Australian Utility AGL, didn't work out. 470 00:29:55,280 --> 00:29:58,920 Speaker 2: You are trying it and again there's failure today of 471 00:29:59,080 --> 00:30:03,680 Speaker 2: trying to or Origin and that didn't work out. Could 472 00:30:03,720 --> 00:30:05,560 Speaker 2: you just talk through the philosophy and why has it 473 00:30:05,600 --> 00:30:06,200 Speaker 2: been so hard? 474 00:30:07,360 --> 00:30:12,840 Speaker 3: We do feel that one of the most impactful ways 475 00:30:13,040 --> 00:30:16,560 Speaker 3: to drive the energy transition is that willingness to go 476 00:30:16,640 --> 00:30:22,040 Speaker 3: where the emissions are in order to make carbon intensive 477 00:30:22,120 --> 00:30:26,800 Speaker 3: but critical industries more sustainable going forward. And the nature 478 00:30:26,880 --> 00:30:32,080 Speaker 3: of these businesses is they need not only large capital 479 00:30:32,120 --> 00:30:36,360 Speaker 3: providers to effectuate that significant transition, but they also need 480 00:30:36,440 --> 00:30:40,719 Speaker 3: people with very large operating capabilities. This isn't necessarily a 481 00:30:40,760 --> 00:30:43,800 Speaker 3: problem you can just throw money at capital is a 482 00:30:43,840 --> 00:30:46,520 Speaker 3: big part of the solution, but it's also having the 483 00:30:46,720 --> 00:30:51,000 Speaker 3: know how of how to transition those large, critical, somewhat 484 00:30:51,040 --> 00:30:54,200 Speaker 3: complicated businesses to more sustainable business models. 485 00:30:54,840 --> 00:30:57,479 Speaker 1: Just a little bit of context here. AGAL and Origin 486 00:30:57,520 --> 00:31:00,680 Speaker 1: are some of the biggest electricity producers in Austria, with 487 00:31:00,920 --> 00:31:04,760 Speaker 1: many power plants burning fossil fields. Brookfield and a few 488 00:31:04,800 --> 00:31:08,040 Speaker 1: other like minded investors have tried to buy out these 489 00:31:08,080 --> 00:31:12,240 Speaker 1: public companies, make them private, and then accelerate their transition 490 00:31:12,320 --> 00:31:16,200 Speaker 1: to clean energy. The trouble is that it would mean 491 00:31:16,280 --> 00:31:19,240 Speaker 1: Brookfield will have to take on the additional emissions from 492 00:31:19,240 --> 00:31:22,640 Speaker 1: these companies when advise them, and then keep them on 493 00:31:22,720 --> 00:31:26,920 Speaker 1: its books until the clean energy transition is complete. In 494 00:31:26,960 --> 00:31:30,080 Speaker 1: accounting terms, it would look like Brookfield is going in 495 00:31:30,120 --> 00:31:33,440 Speaker 1: the wrong direction on its net zero goals, even as 496 00:31:33,440 --> 00:31:36,240 Speaker 1: it is helping the world get to net zero faster. 497 00:31:36,720 --> 00:31:39,640 Speaker 1: It's a tricky accounting problem that investors trying to speed 498 00:31:39,720 --> 00:31:43,280 Speaker 1: up the transition will have to deal with. For now. 499 00:31:43,400 --> 00:31:47,200 Speaker 1: Brookfield didn't succeed in Australia with AGL or with Origin, 500 00:31:47,840 --> 00:31:50,600 Speaker 1: but it has examples of making this kind of transition 501 00:31:50,720 --> 00:31:52,600 Speaker 1: work for other big companies. 502 00:31:53,520 --> 00:31:57,560 Speaker 3: We have a very successful investment in Central America called 503 00:31:57,640 --> 00:32:02,880 Speaker 3: inter Energy. This is a multi asset, class, multi jurisdictional 504 00:32:03,360 --> 00:32:07,680 Speaker 3: utility across five or six different countries in Central America 505 00:32:08,080 --> 00:32:10,680 Speaker 3: and we are currently working to get it off of 506 00:32:10,800 --> 00:32:16,600 Speaker 3: heavy fuel oil and diesel onto strictly natural gas and renewables. 507 00:32:16,640 --> 00:32:19,200 Speaker 3: And it's one of these great examples where doing so 508 00:32:19,360 --> 00:32:23,720 Speaker 3: not only very materially decarbonizes the business, but also enhances 509 00:32:23,760 --> 00:32:26,280 Speaker 3: the margins of the company as well. Many years ago, 510 00:32:26,360 --> 00:32:30,120 Speaker 3: we invested in a company called TransAlta in Canada where 511 00:32:30,120 --> 00:32:35,560 Speaker 3: we provided a very large structured investment into their portfolio 512 00:32:35,680 --> 00:32:39,200 Speaker 3: of operating assets, and that capital was used to transition 513 00:32:39,720 --> 00:32:43,360 Speaker 3: some of their coal facilities to more cleaner forms of 514 00:32:43,400 --> 00:32:47,240 Speaker 3: power generation and retire others while building out its renewable fleet. 515 00:32:47,480 --> 00:32:50,440 Speaker 3: So and today I would have to check the stat 516 00:32:50,520 --> 00:32:54,719 Speaker 3: but I believe the emissions of TransAlta are off seventy 517 00:32:54,840 --> 00:32:58,600 Speaker 3: eighty percent versus the time when we invested in that company, and. 518 00:32:58,600 --> 00:33:01,840 Speaker 2: Both of those have provided good returns. 519 00:33:01,720 --> 00:33:02,920 Speaker 3: At or above our targets. 520 00:33:02,960 --> 00:33:06,040 Speaker 2: And that's what's powering your interest in trying to go 521 00:33:06,080 --> 00:33:10,840 Speaker 2: to Australia and try and make that transition faster. Absolutely, 522 00:33:10,880 --> 00:33:13,760 Speaker 2: And what is in Australia? What is your philosophy? Is 523 00:33:13,800 --> 00:33:16,120 Speaker 2: it that Labor government has come through has set a 524 00:33:17,320 --> 00:33:21,040 Speaker 2: really ambitious renewables target and you see clearly if they're 525 00:33:21,080 --> 00:33:22,640 Speaker 2: going to have to meet this target, they're going to 526 00:33:22,680 --> 00:33:24,040 Speaker 2: have to clean up their utilities. 527 00:33:25,000 --> 00:33:27,040 Speaker 3: I would say that some of it, but I would 528 00:33:27,040 --> 00:33:30,400 Speaker 3: say when we look at these types of investments, the 529 00:33:30,480 --> 00:33:33,719 Speaker 3: investment philosophy and the investment thesis tends to be a 530 00:33:33,720 --> 00:33:37,200 Speaker 3: lot more micro in that when we looked at some 531 00:33:37,320 --> 00:33:40,160 Speaker 3: of the gen tailors in Australia, we thought they had 532 00:33:40,200 --> 00:33:44,520 Speaker 3: a very strong base of infrastructure that as you retired 533 00:33:44,720 --> 00:33:48,720 Speaker 3: the more carbon intensive power generation assets, you could leverage 534 00:33:48,720 --> 00:33:51,400 Speaker 3: some of that existing infrastructure to build out some of 535 00:33:51,400 --> 00:33:55,440 Speaker 3: the renewables. The other thing that was interesting about some 536 00:33:55,480 --> 00:33:58,760 Speaker 3: of the opportunities in Australia, but was equally interesting about 537 00:33:58,840 --> 00:34:02,920 Speaker 3: let's say our inter energy opportunity, is it paired not 538 00:34:03,000 --> 00:34:06,600 Speaker 3: only the generation asset with the off take, and therefore, 539 00:34:06,680 --> 00:34:09,239 Speaker 3: as you built out more of those renewables, there was 540 00:34:09,320 --> 00:34:11,919 Speaker 3: a clear off taker for that green power as well. 541 00:34:12,560 --> 00:34:16,160 Speaker 2: In doing so in the short term, at least, if 542 00:34:16,200 --> 00:34:20,200 Speaker 2: these assets are to be decarbonized faster than they were previously, 543 00:34:20,520 --> 00:34:22,480 Speaker 2: in the short term, you're going to take on emissions 544 00:34:22,960 --> 00:34:26,279 Speaker 2: as a result. How are you going to deal with 545 00:34:26,320 --> 00:34:28,800 Speaker 2: that accounting problem which is a real one. 546 00:34:29,080 --> 00:34:32,600 Speaker 3: We will take on those emissions in our accounting. We 547 00:34:32,719 --> 00:34:34,880 Speaker 3: do truly feel that this is some of the most 548 00:34:34,880 --> 00:34:39,319 Speaker 3: impactful and powerful decarbonization investing you can do. But you 549 00:34:39,360 --> 00:34:42,040 Speaker 3: do get that short term spike in your emissions, and 550 00:34:42,560 --> 00:34:47,319 Speaker 3: therefore we feel that people do recognize the benefit of 551 00:34:47,320 --> 00:34:49,799 Speaker 3: this type of investing, but you need to be very 552 00:34:49,800 --> 00:34:52,760 Speaker 3: transparent about what you're doing, and what we have generally 553 00:34:52,800 --> 00:34:55,920 Speaker 3: seen is you do have to take those emissions on absolutely, 554 00:34:56,360 --> 00:34:59,879 Speaker 3: but typically if you break them out from your broad 555 00:35:00,239 --> 00:35:03,680 Speaker 3: portfolio and show that these are emissions, we are going 556 00:35:03,719 --> 00:35:06,799 Speaker 3: to rationalize very quickly, and we are going to be 557 00:35:07,000 --> 00:35:11,040 Speaker 3: upfront and transparent. This isn't buried on page seventy of 558 00:35:11,080 --> 00:35:13,400 Speaker 3: your annual report. This is right up front in your 559 00:35:13,440 --> 00:35:17,160 Speaker 3: shareholder letter, tracking the progress you are making and being 560 00:35:17,160 --> 00:35:21,000 Speaker 3: transparent about how quickly you are decarbonizing, whether you're behind 561 00:35:21,000 --> 00:35:24,359 Speaker 3: schedule or ahead of it, then people are understanding if 562 00:35:24,400 --> 00:35:26,480 Speaker 3: you took some of those emissions on day one. 563 00:35:26,800 --> 00:35:29,239 Speaker 2: Thank you, conor, thank you, it was great to be here. 564 00:35:38,760 --> 00:35:41,360 Speaker 1: Thank you for listening to Zero. If you liked this episode, 565 00:35:41,360 --> 00:35:43,359 Speaker 1: please take a moment to rate or review the show 566 00:35:43,400 --> 00:35:47,000 Speaker 1: on Apple Podcasts and Spotify. Share this episode with a 567 00:35:47,000 --> 00:35:50,080 Speaker 1: friend or with a green investor. You can get in 568 00:35:50,120 --> 00:35:53,880 Speaker 1: touch at zero pod at Bloomberg dot Net. Zero's producers 569 00:35:53,920 --> 00:35:58,600 Speaker 1: are Tiffany Troy Magnus, Henrickson and Sommersadi. Our team music 570 00:35:58,680 --> 00:36:03,279 Speaker 1: is composed by Wonderley Special thanks to Kurepindrum. I'm Ashatrati 571 00:36:03,680 --> 00:36:05,640 Speaker 1: back next week.