Amidst a backdrop of Russia’s invasion of Ukraine, rapidly rising inflation, ever-lingering COVID, and near constant political convulsions, this year’s COP27 took on an unprecedented weight.

In this episode, let John Stackhouse walk you through the recently wrapped COP27 in Sharm el-Sheikh, Egypt. With his special guest co-host Naomi Powell, Managing Editor of RBC Economics and Thought Leadership, get John’s front-row seat perspective on the United Nations Climate
Change Conference, also known as the Conference of the Parties (COP27).

Hear from some of the world’s top leaders and thinkers, including talking to climate scientists Katharine Hayhoe and Johan Rockström; Elizabeth Nsimadala, the President of the Eastern Africa Farmers Federation; as well as Heather Chalmers, the president and CEO of GE Canada.

From loss and damages to climate financing, John talks about the successes and failures of COP27, and where Canada stands out. Is the goal of halting global warming at 1.5*C still attainable? Listen in and find out.

John Stackhouse shares his takeaways from COP27, click here to read the piece called, “Reality Bites”. For more information about COP27, the United Nations Climate Change Conference, in Sharm el-Sheikh, Egypt click here. If you’d like to know more about some of the people John spoke with, read up on Katharine Hayhoe at the Nature Conservancy; Rick Smith, the president of the Canadian Climate Institute, or the call to action by Elizabeth Nsimala, the President of the Eastern Africa Farmers Federation. Disruptors recently took an in-depth look at how

Canada can reduce emissions and waste in the agricultural sector, it’s a special, three-part series called, The Growing Challenge, listen here.

Speaker 1 [00:00:01] Hi. It’s John here. And today I’ve got a special co-host with me. Naomi Powell is our managing editor of economics and Thought Leadership, who leads many of our team’s major research projects. Hi, John. It’s a pleasure to be sitting in for Teresa today. It’s great to have you here on this special edition of Disruptors. Thanks. And you’ve had an exciting week. You just got back from COP 27, which is the United Nations Climate Change Conference this year. It was in Sharm el Sheikh, which is in Egypt’s remote Sinai Peninsula. Welcome back. You can’t imagine a more surreal, even bizarre place for a climate conference. I mean, Sharm el Sheikh is the ultimate in artificial places, is a beach resort the Israelis actually built during their occupation of the Sinai in the 1970s. Still a big attraction for beach goers from Europe, the Middle East and elsewhere. But for the last two weeks, 3000 people arrived for the major U.N. climate conference known as COP 27. So, John, after last year’s major conference in Glasgow, this cop was supposed to be a minor one. I thought it was meant to be this place where we could turn all those commitments countries made last year into action. Can you give us a sense of what the overall scene was like? The cop cycle tends to put a lot of weight on the big conferences every five years, like Paris and Glasgow, and people may remember Copenhagen. And then you have these smaller ones, although with 30,000 people who’s calling it small, that do a lot of the procedural work, which is actually really important to policies and collective action. That’s a real need. This is 2022 and the world changed a lot, starting with Russia’s invasion of Ukraine, record inflation, devastating droughts and floods around the world, and a looming energy crisis. I mean, this has all challenged a lot of assumptions about climate, about energy security and about public policy. Fascinating to watch. And it’s been fascinating over the last year to watch all of these plans that countries had kind of go off the rail as all these pressures sort of closed in. And it’ll be interesting to see where we get in the year ahead, but we can talk all about that now, I guess. Well, I certainly learned a ton in the last couple of weeks and also was fortunate to meet a lot of interesting people and thought it would be worthwhile capturing some of their voices, which we’re going to share on this special episode of Disruptors. And I’d love to start with someone who we’ve had on disruptors before. Katharine Hayhoe. She is the chief scientist for the Nature Conservancy. What inspired me at COP was all the thousands of faces of people from all around the world who are all here because they care about the same thing climate change, and they’re doing everything they can to fix it. I love that optimism, but did everyone walk away with the same sense of accomplishment? Let’s dig into the successes and the failures of COP 27. This is Disruptors. An RBC podcast. I’m John Stackhouse. And I’m Naomi Powell. On this episode, John, you get to be the guest. You had a front row seat in Sharm el Sheikh. So we’re doing a special episode on Canada’s Place at the Table in COP 27. A lot to discuss. So let’s jump right into it. Can you set the scene for us? What was it like? So the conference was built in an extended conference center that felt a lot like a military encampment. I felt like I was in the middle of the of the Green Zone in Baghdad at moments wandering between buildings, having no sense of where the geography was outside the conference. And part of that was for security reasons. The Egyptians are very sensitive to security. And you may remember the horrific terrorist attacks on Sharm el-Sheikh in 2003, which is still present in the minds of many Egyptians. So one has to understand their need for that kind of security. But within the protected zone of the conference, it was a logistics challenge. On day one, the Egyptians and of course, all the conference goers quickly discovered there wasn’t enough food and water, which made a lot of people kind of cranky at the beginning of COP 27.

So, John, the Paris Agreement had a goal. It was to cap global temperature rise to 1.5 degrees Celsius. Is that still happening? Is that still alive or.

Yeah, you may recall the great slogan of COP26 in Glasgow when this was really pushed by Boris Johnson, the British Prime Minister at the time, which was keep 1.5 alive. And that’s been really challenged by the energy crisis and other challenges, including inflation. No one likes to see this publicly, but it was striking how many conversations in the corridors with a range of delegates and observers focused on the challenges of 1.5 and the growing perception, perhaps reality, that 1.5 may not be alive. Some people are starting to say, you know, maybe we should be more realistic and focus on containing global temperature increases to, let’s say, no more than two degrees rather than being more stringent with 1.5. That debate is going to continue. The final document does still commit to the threshold of 1.5 degrees, but emissions are growing. I mean, the blunt reality is global emissions last year increased. 1% would have been higher if China hadn’t been in lockdown for much of the year. And the UN is projecting that if we don’t do more, we could see emissions grow 10% this this decade when they need to come down by 50%. So year by year, we have to come to grips with the fact that the math is not working out towards net zero and we’ve got to start to do things differently. I connected on this with Johan Rockström. He’s the director of the Potsdam Institute for Climate Research, a leading climate site who is very passionate about the commitment to 1.5.

Speaker 2 [00:05:52] All the evidence that 1.5 degrees Celsius is not a goal. It’s not something you can compromise with. It’s a physical limits go beyond that, and we’re likely to cross tipping points that irreversibly make the planet less unless you’re above all future generations. So we’re providing the sciences across from the risk analysis all the way to the solutions space for support to accelerate the pathway towards a, you know, a safe and equitable and a planetary aligned climate transition.

Speaker 1 [00:06:23] So, the U.S. obviously has a lot of power to push the drive toward 1.5. Joe Biden showed up in Sharm el Sheikh at least for a few hours. He gave a speech. And the U.S. quite bullish on the IRA, the Inflation Reduction Act. I’m curious to know, though, what reaction did the IRA get from the corporations and the policymakers that were there?

Biden was not only bullish on the IRA, the Inflation Reduction Act. He really stressed how confident the US is in meeting that 50% reduction in commitment said flat out we will make this commitment. I think that meant a lot to the world who have watched the US with some concern and some hope over the decades make commitments and then pull away from them. And as the US goes, frankly, so will go the world’s prospects on climate change. And to see a confident us, to see a US government that’s saying we’re going to invest hundreds of billions of dollars in the technologies and the opportunities to get to net zero. I think that gave a lot of people confidence even when China didn’t really show up at this cop. Even when Russia, which is a serious player in all these conversations, is absent due to the war and may be absent for many more years. To see this kind of U.S. leadership actually does matter quite, quite a bit. On IRA, it’s also really created a lot of enthusiasm among investors who are seeing opportunities, whether it’s in carbon capture or hydrogen or renewable natural gas in the agriculture sector. Investors, Americans particularly, but investors from other continents are seeing pretty big opportunities right now in the US and then maybe looking at opportunities to to scale that globally. Now just trying to reconcile that with all of the pressures that countries are facing right now, including the U.S.. So, you know, how were high interest rates, high inflation and the need for really extraordinarily expensive climate investments all addressed, particularly with the developing countries that were present. There’s a number of things missing from COP, and one of the missing ingredients, frankly, is economists. Because you’re spot on, what’s happening in the real world with real money, with interest rates, is going to have significant impact on climate action. It already is interest rates at the levels there are and maybe going is deterring significantly investments in things like renewable energy in riskier markets in Africa, for instance, or the the Middle East, but also in more stable parts of the world. What’s happening in currency markets is also drawing a lot of capital back to the United States. So we’re seeing success, breeding success in the U.S. but that’s also bleeding. Possible successor opportunities in other parts of the world. That didn’t get a lot of attention at COP. And I thought that was unfortunate because we’re at a bit of a hinge point in in economic history. How can we adjust policy to address that, though, to address those factors like currency, like inflation? What governments are starting to do when you see the Canadian government starting to do this, is to put more capital on the table for the front end of the risk curve. So you’ve got major projects could be hydrogen or carbon capture that are going to require billions of dollars. And investors saying, yeah, in this kind of rate environment, in this kind of recessionary environment as well, maybe we’re even looking at stagflation. I’m not sure I want to put a billion or $10 billion down on a project that may not have the same returns as we could have forecasted even 12 or 24 months ago. In that kind of environment, having governments step in and say, okay, we’ll put the first billion down or we’ll cover, let’s say, the first the first series of losses. That gives enough comfort to investors to bring them off the sidelines, which is where a lot of capital is going, or to pull them back from less riskier opportunities, let’s say, in the US, where it is even more appealing with all this IRA money. This has become a much more competitive policy environment that makes certain governments nervous. Understandably so. But competition is what is presented to you often is not what you get to create. So we may be in a reactive period of policymaking when the countries, Canada included, need to read and react what’s going on in major economies. The U.S., which I keep citing, but also Western Europe and maybe to a degree is the East Asia. Yeah, it’s going to be interesting to see the different courses Europe in the U.S. take to this. In every conference, some issues get more buzz than others in this one and COP 27 where there’s some issues that have more weight than others compared to previous cops. Believe it or not, it’s been 27 cops. And this is the first one where agriculture has been front and center. There was an agriculture day, but more than that kind of notion of a dedicated day, there are serious policy conversations going on to determine better ways to get capital in the hands of farmers and food producers, to develop net zero ag practices or to scale net zero ag practices that are already out there. Here’s one of those farmers who I got to speak to at the conference. My name is Elizabeth for my daughters and my young farmer from Uganda and the president of the Eastern Africa Farmers Federation. This is our regional network of farmers organizations in the 22nd countries. We have a membership of 24 national farmers and my efficiency of presenting over 25 million smallholder farmers. So I’m here to represent the farmers voice in the different sessions where I will be speaking, but also to bring in this discussion. They are priorities for 27, which is our own increase, the funding for adaptation, but also loss and damage financing. This is one of the serendipity of a conference. I did not expect to meet Elizabeth and just bumped into her and got into what I found to be an inspiring conversation and it reminded me of the importance of small scale farmers. Because so much of what we talk about in agriculture, including Naomi, what you and I’ve been working on at RBC, tends to index towards large scale farming operations, even the notion of industrial farming. And we need to remind ourselves and Elizabeth in that clip reminds us that 70%. Of the world’s farmers are small scale farmers. And if we’re going to see net zero agriculture and we’re not going to see a net zero zero world without net zero agriculture, we’re going to rely on those millions and millions of small scale farmers who have the ingenuity. Many of them have the technology, they don’t have the scale, but in ways, their smallness can be their greatness. Yeah. And when there’s that many small farmers, I mean, they are fragmented across the agriculture sector, it means you have to shape specific approaches to how you help them lower emissions from their operations. But Elizabeth, the president of the Eastern Africa Farmers Federation, who was just in your last clip, she mentioned loss and damages. And I know that was a hotly anticipated negotiation going into COP. What was the outcome of it? Yeah, sadly, not much. Loss and damage was the great hope for the host country, Egypt, and for a lot of developing countries, for Africans particularly. These countries feel rightly so that they bear the brunt of the impact of climate change through no doing of their own and are least able to pardon the expression weather the storm. The classic example, which was front and center at COP is the floods this year in Pakistan. Pakistan claims it has suffered $30 billion of economic damage because of flooding that has been caused by early snowmelt in the mountains, which is caused by global warming that Pakistan has had very little to do with. So Pakistan showed up and said, hey, world, especially industrialized world, you put all the carbon into the atmosphere that’s causing the snowmelt to flood our plains. Maybe you’d like to consider paying for some of the damages. There was a pretty cold response to that, particularly from the Americans who understand the litigious nature of this discussion better than most. They don’t want unlimited liability. If Pakistan is going to claim 30 billion, what’s after that? What’s after that? And then how do you divide up responsibility? How do you assign responsibility? It’s really challenging. And the world’s going to have to spend a lot more time, I think, on this issue in the years ahead to to find more progress than we saw at Egypt, because there was certainly a respectful nod to the concerns. There were nice words. There’s commitments, of course, of money. And we know that only a fraction of that money will ever be paid up. The world is going to have to do better than that, unfortunately, and we’ll probably have to see more situations like we’ve seen in Pakistan to get us there.

I’ll be interesting to see which of the economic powers sort of assumes leadership on that issue. We’re going to take a quick break. But coming up, more of our conversation with John Stackhouse and his rundown of COP 27.

You’re listening to Disruptors, an RBC podcast. I’m Theresa Do. If you’re interested in all things Climate and COP 27, I’d like to tell you about the latest piece from RBC Economics and thought leadership called Reality Bites. This year’s COP 27 took on a whole new weight with troubling events like Russia’s invasion of Ukraine, devastating droughts and floods around the world, and a looming energy crisis as the backdrop. This truly was a wild year for the annual United Nations Climate Change Conference. Luckily, our own John Stackhouse was on the ground in Sharm el-Sheikh, Egypt, and has published his biggest takeaways. To read them visit RBC dot com slash thought leadership.

Welcome back, John. You had a front row seat at the UN climate conference in Egypt and it sounds like Canada’s nuclear reactors were getting some attention from the delegates. Can you fill us in?

Nuclear power, especially small nuclear power, is really popular these days and it’s gaining momentum. We’ve talked on this podcast about small modular nuclear reactors, and Canada is actually in the lead on this. We’re seeing important and interesting developments with Ontario Power Generation OPG, what it’s doing in terms of developing these so-called assemblers, we’ll see Saskatchewan probably trying to take on more of these. And what this means in turn is that Canada may become a nuclear provider again for the world. Heather Chalmers is the president and CEO of GE Canada, one of the big players in the nuclear business. And here’s what she had to say. What I’ve been so impressed with and I expected it coming in, but to see it demonstrated here is been remarkable. And that is Canada is leading in the energy transition, not just in terms of our pace, but we have an opportunity to share with the rest of the world some of our first of a kind technologies. And one of those examples that is very near and dear to us is small modular nuclear reactors. Well, that’s exciting. I mean, that’s a bright spot for us. And we’ve been talking about this a lot in the office lately. I think the potential for that technology is just fascinating. But we can’t forget that oil and gas remain major players for the moment. Did you hear anything from that sector or what was their reaction? Yeah, of course. There was a lot of talk about oil and gas, as there should be at at a climate conference. And it was more acute given the location both in Africa, but also kind of in the Middle East. And it was interesting to see the Saudis and the United Arab Emirates particularly really being ambitious on the stage at Sharm el-Sheikh, saying we are proud to be oil and gas producers and we think we can be net-zero oil and gas producers through things like carbon capture. And we’re going to spend billions of dollars on this to get it right and we’re going to continue to preserve oil, whether you like it or not. They were pretty blunt about that. The Saudis said we will be producing oil in the year 2100 and they’re very confident in that. This is a big challenge to a lot of people at court, but also to the whole court process, which is really designed to help engineer a decline over time of oil and gas production and consumption. So lots of tensions in the hallways over this, but lots of discussion as well about the opportunities that can come through technologies as well as the challenges of behavior change. Because none of this is going to happen until all of us are really come to grips with our own behaviors as consumers. Okay. So at the end of the day, at the end of the week, how would you say Canada performed on the global stage? How were we perceived? Canadians need to constantly remind ourselves that the world is growing faster than we are and the world is changing in many ways faster than we are as well. We still have incredible natural advantages. We are the energy and food producer to much of the world and we produce pretty much all types of energy and we do it with efficiency and sustainability. Of course, there may be exceptions, but we really are leaders in most aspects of energy production. The world respects that. The world is looking for more of that, but it’s also a divided world. And you really saw this I court unpack is going its own way. As I said, the Saudis are going to be very aggressive in their oil policy regardless of what the West thinks. Europe is becoming less influential with the rest of the world. America is still America, and that is perhaps part of Canada’s value to the world as being both an ally to America, but also an ally to many parts of the world and a connector with America. But I think we need to think about our place both in the world and in this divided world a little bit differently as we get deeper into the 2020s and get deeper into some of these challenges, how can we be a energy technology leader? How can we be an agtech leader harnessing what’s going on in the United States, but also using Canadian ideas and ingenuity to our own advantage? How do we sell more to the world? How do we help feed and fuel the world more sustainably, knowing it’s going to be a bigger world, going from 8 billion people to ten, maybe 11 billion, and it’s going to be a more divided world. Old alliances are going to require a bit more deft management and also thinking about our own transition and understanding that the world is watching us and the world is looking to us to lead by example, whether it’s in the energy transition, whether it’s in the agriculture transition, whether it’s in the built sector and housing sectors. These are areas where the world truly respects and admires Canada, where the world is going to buy whatever Canada develops, both in technology and processes. But you know what? There’s something that every Canadian knows is obvious but is truly special in the world. About Canada. That was reflected in the Canadian Pavilion. This is the first time the Canadian government has had a pavilion at COP in a number of years. That’s a shame because I think it’s really important for a country to to show its stuff to to the world. And a lot of other countries put on a real show and tell of technology’s real razzle dazzle. And the Canadian Pavilion, of course, reflected a bit of that classic Canadian modesty, but also became the venue of truly inclusive conversations that you would hear good debate and disagreement, respectful disagreement on some important challenges, but you’d also hear voices from all parts of society. Indigenous leaders were there, social activists were there, mayors were there talking about what they are doing, what their challenges are, but also where they’re finding success. And in many ways, that is Canada’s gift to the world, that we are an open, inclusive society, and we all like to talk about the inclusive and just transition. Well, you’re not going to have an inclusive or just transition if you don’t have all of society working on it together. And I thought that was really well reflected in the Canadian Pavilion.

Next year’s COP 28, John, is being held in the UAE, which should be interesting. What do you think the biggest issues will be for that conference?

Well, who knows where the world will be a year from now. But to think of a climate conference in Dubai in the year 2023 is fascinating. I spent a bit of time at the UAE Pavilion talking to Arab entrepreneurs as well as policymakers about what they’re looking for. And they are making huge bets on technology. It was eye opening to see how ambitious not just the UAE, but other Persian Gulf states are. And Saudi Arabia is on. Technologies like carbon capture, on technologies like solar, on hydrogen, looking to be world leaders and doing that at home first, but also exporting it to other parts of the Middle East, Asia, Africa, and who knows where they’ll take it from there. We’re going to see this tension between innovation and regulation on center stage. You’re going to have the host country and others saying we can innovate our way through this. We can engineer our way to net zero. And you’ve got a lot of other people saying, bring it on. We want all the innovation and technology you can create. But that alone is not going to get us anywhere near net zero in time. We also have to think about regulation and constraints. This is the war that’s going on in the bosom of the climate community and is going to rage perhaps in Dubai and really challenge the world to think about how we balance innovation and human ingenuity and the desire for progress and growth, and perhaps the need for constraint or at least management of certain parts of the economy that have become unsustainable. I think Rick Smith summed it up really well. Rick is the president of the Canadian Climate Institute. Here’s what he had to say.

Speaker 2 [00:25:37] This cop was billed as the implementation cop, and obviously there’s a lot of work to do in that regard. But there’s been some really big announcements and some things happening in parallel to this meeting that that are going to propel implementation, be the announcement by the government of Cameron just a few days ago was a good step forward, formalizing a very significant methane commitment and there are working with our international colleagues. There are many other exciting announcements happening there, but haven’t got a lot of press but deserve to. We work with colleagues in South Africa, for instance, who are finalizing the details of the package, have directed aides to expedite the energy transition in South Africa. I think this cop is going to drive implementation forward.

Speaker 1 [00:26:26] So what will be the main focus of the UN climate conference in five years time, do you think, John? In five years time we’re going to have a much clearer sense of whether we’ve turned the corner on the journey to net zero. I hope in five years we’re going to have some real success stories, not just episodic ones, but demonstrations across sectors of how to transition to. Net zero. We’re starting to see glimmers of this in sectors like aviation and steel. That’s really exciting to watch. And a few years from now, we may see those sectors a lot closer to net zero. That then becomes a model for other sectors. They want to get there but may not know the pathway to take and they can follow the lead that others are showing. That’s really exciting and encouraging to hear because I think the sense that there is that we’re running out of time. That’s the overall feeling of the ticking clock. And it sounds like there’s an awful lot of work still left to do. We are running out of time. And there was a very sobering clock in the middle of the conference that showed, you know, we are under seven years now to 2030. This is within eyesight and we know we have not done enough. So we have to be doing more today than we did yesterday and more tomorrow than we’re doing today. That’s just the hard thing about it. Climate change is borderless and it demands cooperation. Disruptors recently took an in-depth look at how Canada can reduce emissions and waste in the agricultural sector. It’s a special three part series called The Growing Challenge, and our other episodes can be found at our I thought leadership. Well, thank you for inviting me today to co-host John. I’m Naomi Powell.

And I’m John Stackhouse. This is Disruptors, an RBC podcast. Talk to you soon.

Disruptors, an RBC podcast is created by the RBC Thought Leadership Group and does not constitute a recommendation for any organization, product or service. It’s produced and recorded by JAR Audio. For more disruptors content, like or subscribe wherever you get your podcasts and visit rbc dot com, slash disruptors.

Jennifer Marron produces "Disruptors, an RBC podcast". Prior to joining RBC, Jennifer spent five years as Community Manager at MaRS Discovery District and cultivated a large network of industry leaders, entrepreneurs and partners to support the Canadian startup ecosystem. Her writing has appeared in The National Post, Financial Post, Techvibes, IT Business, CWTA Magazine and Procter & Gamble’s magazine, Rouge. Follow her on Twitter @J_Marron.

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