This is Wall Street Week.

I'm David Weston, bringing you stories of capitalism playing dice with the universe, the strange new world of quantum computing and how it may change our lives even more than AI plus, coming to terms with growing older and lower interest rates as Western nations face growing problems providing for the elderly.

We take a look at the largest set of pension assets in Europe and why the Dutch are changing the way they invest those assets and turning concerns about data center energy consumption into a way to heat our houses.

That's what they're doing in Finland.

But we start with banking and how regulators in Europe and the United States are taking increasingly different approaches, creating both opportunities and challenges for Annaboutem, executive chairman of Spain's leading bank, Santander Bacos.

Santander has had a big year.

Give us a sense of how big a year it's been.

It's been a great year.

Our numbers will be totally on track to deliver all the numbers in our three year plan, and again in twenty five we're going to reach our profitability sixteen and a half percent.

And for shareholders, you know great value creation, increasing different per share.

Our share price is up one hundred percent, but there's still a lot of inherent value in our stock.

Our multiples are still very attractive compared to US banks.

For example, we're training a bit under ten times price earnings, and we deserve a premium to Europe and I would say even to the US banks because our profitability is getting better and we have growth.

What were the main drivers of the success you've had this year?

So I say it's an overnight success, ten years in the making.

So since I took over inherited a group of banks, it was a big bank, but many different geographies, different business models, very disconnected and the whole vision is to bring them all together and they are a single, open financial services platform and that's what we have been working on.

So this year, every single one of our five businesses is growing.

We have simplified the organization.

We sold Poland we bought in the UK, so UK business now is at scale and this is really the opportunity.

At Santandre we have profitable growth for many years.

Organically sometime there succeeded in selling half of its Polish unit this year, while other European banks, including UniCredit and BBVA had a tough time getting deals done.

As you say, you sold Poland, you bought in the UK.

There were other banks in Europe that tried to do transactions this year that didn't go so well.

How come you got it done well?

Y?

You know, the stale of Poland was the largest cross border m and A in Europe in a decade.

And in today's world, where governments defend their countries and you know, regulation is what it is, friendly deals are the way to go.

And so I believe that's a secret.

As you say, bacosana there as you inherit it is pretty far flung.

I mean, you've got obviously Spain, you've got Europe, You've got UK, you've got US, Mexico, Brazil.

How much is that helping baccos on there?

That diversification.

So in today's economy, either you're large and you have global scale, or you're very specialized and we have the scale.

We're one of the largest banks in the world by number of customers one hundred and eighty million.

That's more than the number one and number two bank in the United States together.

We have added sixty million customers in the last ten years.

And so you know that scale t to benefit from that scale, to have the operating leverage, you need to work across the company.

You cannot just work separately by business or by geographies.

One of your goals has been efficiency increasing the Efficiency Bank.

How much success have you had, how much further can you take it?

We're only just scratching the surface of our potential as a group.

We have gravity, our cooperating system.

We have our payments core system, which is allowing us to reduce cost per transaction in the last few years by a third.

What is now coming is what you as a customer are going to see, which is the Open Bank.

The front end this year will have flat to downcost and growing top line and this should continue into the next few years.

And again organically, you know, we are in markets with one point two one point three billion people where we are at scale in each one of them, and building our own platforms is something that very few banks, very few companies have in the world today.

One of Santantaier's strongest verticals is it's auto business, working with dealerships at fourteen thousand points of sale as well as through its digital platform Open Bank.

The last two years delinquencies were very low during COVID have normalized, so they have been going up.

But our final loss rate is actually stable over the last twelve months, and consumers are actually you know, getting up to date on their loans even though they get a bit behind.

So the loss rates are stable and we're not seeing anything right now that tells us the US consumer on average at least is having any issues.

It's very solid.

We see interest rates coming down in Europe.

Now what does that do to your bank and the banks generally.

So the way the terminal rate and you know, we can have a debate about what that is in Europe or in the US, given the size of a level of government debt, given demographics, defence, spending, deg organization.

You know, we don't see that rate being below two percent in Europe, probably below three in the United States something like that.

And that is a very good level for banks because it is high enough for us to have a margin, but not that high that the credit gets bad.

Rates are at a level that I think will allow growth to remain around three percent globally right now.

By the way, that's not fast enough, but at least we're growing.

Regulation maybe one thing holding down growth in Europe.

In the last six years, the EU has added thirteen thousand new banking rules.

Well, the US came up with only thirty five hundred.

Give us your sense of regulation of banks in Europe versus the United States.

Well, I think regulation, like life, is all about balance, right, and so we do believe in smart regulation.

But we've gone way too far on certain items like capital.

You know, soundless of banks doesn't just depend on capital, as we've seen.

You know, if you look at the capital ratios of some of the banks that had problems, sore pretty high.

And so we think against santandrev look at our CDs, it's one of the best in the world, including the best banks in the United States.

Why because it's about a strong balance sheet, liquidity, you know, scale, business model, et cetera.

So you know, we have gone as far as I think we need to go on capital, and now we need to be supporting growth.

Mario Dragging came out with a famous report.

What's been done with that report?

So the ambition is very high.

Even if you don't get to that, you're going to do pretty big things.

And so this is the thing in Europe.

What is our ambition for growth.

Maria Dragi gave us a diagnosis.

How much have we executed?

Not more than ten percent in one year.

So we have to have a much greater ambition on delivering on those recommendations.

I've said it publicly.

You know, if taxes every euro we make in Europe fifty eight cents go to the government, every dollar we make in the United States forty two, that's not a small number, but it's you know, significantly lower.

So excess regulation, excess taxation actually is a tax on the economy and growth.

At some point people don't invest, and so this is the balance we need to find.

And Europe is getting further apart from the United States not coming closer.

We also have regulation of banks at both the European level and member state level.

To what extent do member state whole things back?

Well, and there's one thing you didn't mention.

So there's the regulation, and then that's the level two and three.

Here in the United States, there's a lot of talk about the agencies.

Clearly there's work to do in the United States.

In Europe there's even much more work to do, right and I show at a conference on regulation only financial services regulation without the rest of the interpretation of the rules, which is thousands more ninety seven thousand lines, which a hundred don quixotes.

You know, I showed it there, and so that is a second level.

And then the third is what you say, which is the national rules and regulations.

How do you decide how to allocate your capital for growth and to what extent is it affected by things like the relative different in regulatory levels.

Well, that of course matters a lot, right if other things equal, every dollar I put in Europe, you know fifty eight of the profit goes to the state and forty two in the United States, Well, you know Europe is going to have to give me higher growth or higher profitability of both for us other things equal to go there.

So yes, it matters a lot.

There's innovation and creativity in Europe, entrepreneurship in Europe.

Do the capital market support it.

We have been pushing for a long time for capital markets union.

We now have the Savings Union, which is not exactly the same, but it's gonna be helpful.

The reality is that most of SME commercial lending comes from banks, and that is why it's so existential and urgent that we increase the ambition for change, because we will only be more competitive if there's more investment.

This is coming from smaller, medium sized companies and a lot of that lending comes from the banks, and that's why capacity to lend has to expand.

And that is what you know.

Again, regulation, smart regulation would be very helpful.

Is there any prospect of a unified banking regulatory system in Europe?

Well, you know how many years did it take to build the United States two hundred Europe we've been going at this for fifty or sixty years, so it will happen.

I'm not sure I will see.

It coming up.

We try to make sense of something that Einstein threw up his hands, trying to understand quantum mechanics and the revolution it may bring to computing by doing some things better than AI.

This is a story about God playing dice with the universe, something Albert Einstein told us he didn't do.

Back in nineteen twenty six, Einstein was criticizing physicists theory of quantum mechanics.

Yet a century after Einstein's denial, billions of dollars are being invested today in taking that theory and turning it into reality, with the prospect of a revolution in computing, potentially larger even than generative AI.

Quantum computing is very high potential Inbastors are increasingly asking us about the implications of quantum.

Computing, quantum computing, quantum computing, political and state level economic supports to develop quantum and we want to be part of that.

IBM is one of the companies leading the charge in quantum computing.

Not IBM, we developed some of the very foundations of quantum information science starting as early as nineteen seventy.

Jamie Garcia is the Director of Quantum Partnerships at IBM.

A PhD chemist, she's working on quantum computers transforming healthcare at places like the Cleveland Clinic.

Quantum computers are just a totally different paradigm to calculate solutions to problems, and so what most experts have done today that are studying quantum computing for different application spaces is to really sit down with the math and figure out, like, are the algorithms here that I can use and that I can exploit using a quantum computer going to bring me any sort of advantage over what can be done today in classical sort of state of the art techniques.

At the core of classical computing are bits, single pieces of information that can have the value of zero or one, But quantum technology relies on cubits, a unit that can have multiple values simultaneously.

It's like holding a coin in your hand that is heads, tails and everything in between until you open your hand to check.

Physicist Jerry Chow is IBM's director of Quantum Hardware System Development.

Really fundamentally, there's a different math, right's the mathematics of quantum mechanics that is governing how you actually manipulate these quantum bits, which then gives rise to a whole host of different opportunities for algorithms and types of problems that you can actually solve using quantum muters.

As we're studying things today, we're using a lot of something called error mitigation as our approach to dealing with errors and ways in the system and in the quantum computer itself.

This is going to continue to evolve.

In fact, we think that next year we're going to see examples of what we call quantum advantage, which is where you're able to come up with a solution to a problem that is cheaper, faster, or more accurate than with classical alone.

A turning point in IBM's efforts to make quantum computing a reality came when it made it available to the world on the.

Cloud twenty sixteen.

The IBM Quantum Experience was really a pivotal moment for us in terms of getting quantum computers for the first time out onto the cloud and into the hands of anybody, really people.

Right.

What's interesting is that before that period, I'd say, it was really much more in the realm of physics, right that we were doing experiments on small devices, cubit devices that we were looking at, understanding how they worked, trying to make them better, but we didn't have any kind of real thought about how is this going to be used for computation.

In the nine years since you put Quantum Experience out there, what is what have you learned at IBM?

I think what I learned from that experience really was that there was a whole lot of people out there who wanted to touch and learn about quantum.

I think we were sitting there that first night after we launched it, watching these circuits coming in and people were actually running things, and we were like, oh wow, this is picking up some steam here.

And then you know, to this point, we've had tremendous uptake in terms of using the platform to actually generate new papers and research.

Thousands of papers have been generated which have been would have been impossible for us to do, just as individual scientists or researchers studying these devices in our own lab and working with other scientists and collaborations, and.

In success, that community could go places that classical computing, even using the large language models of AI, could never take us.

So it's not just speech, it's actual accuracy.

When we're using classical no matter how infinite we get, it's an approximation.

Right, Absolutely, it's absolutely not just not not a question about speed.

The whole point of the quantum computer and what it can do is that it can give us the ability to actually get potentially more accurate results, also get results that otherwise are unattainable using a classical computer alone.

Companies like Google, Microsoft, and Intel are all exploring the potential of quantum computing, but there's also a new group of contenders, startups that are betting it all on the hope that quantum tech will one day become profitable.

One of those firms is Maryland based ion Q.

Its CEO is Nicolo Demasi, who believes he has the best horse in the race.

We supply quantum computers to both federal, state and commercial customer partners.

We also provide quantum key distribution, and we do that both on the ground and up in the heavens.

Quantum key dissolution is effectively quantum cyber security, and we're very focused on this not being just proof points in the lad lab, but doing useful quantum advantage examples for our customers and embedding ourselves into their workflows on an ongoing basis.

So what will it look like as we go beyond showing so called quantum advantage in the lab and embedding it into real world workflows.

One place people look to first is in the life sciences work like doctor Garcia is doing at the Cleveland Clinic.

An example of something that we've done is we've taken in some of the algorithms that we've worked on for chemistry, and alongside Cleveland Clinic, we've started looking at different chemical processes that they really care about.

So you can think about this in the larger context of therapeutics, design, drug discovery, that kind of thing, and really what we're doing with Cleveland Clinic is pushing the boundaries of algorithm development methodology of using quantum computers, again in concert with classical computers to come up with solutions to problems that they care about.

Protein folding is definitely one area mRNA Secondary structure.

Understanding how things come together and how they look in sort of three D is a very interesting area, as you can imagine as you're trying to understand how these things fit together in a biological system.

It isn't just life sciences that could be revolutionized by the addition of quantum computing.

Financial markets are another target of opportunity.

IBM scored an early advantage this year when HSBC said it used the tech company's Heron quantum processor to make a thirty four percent improvement in predicting how likely a bond will trade at a given price.

I think there's a lot of excitement in the market space as well right especially because optimization is certainly in another area which we know is a classically difficult problem, and from the point of view of actually using a quantum computer to address optimization, are many threads there in terms of leveraging this kind of large, exponentially computational space.

To handle problems such as portfolio optimization right or risk management.

So there's a lot of interesting ideas there that are being looked at by various financial institutions.

What I can say at this stage is portfolio theory, options pricing.

These are very much now accessible from a quantum advantage perspective using our new tempo system, quantum key distribution and cybersecurity that is of course front and center for financial services on a global basis, and so security and integrity of the data flow is of course vital.

I always like to jokingly say that you can spot our quantum security customers because they are not in the news for data breaches.

Even agriculture could benefit from quantum computing in ways we haven't yet imagined.

Understanding processes such as nitrogen fixation to make things like better fertilizer right to help us grow better crops right, Understanding things that are critical in impacting climate change right and in terms of how carbon is handled right, other things including better batteries right in terms of materials discovery.

The potential may be great, as are the investments being made, but when can we expect to see these potentially dramatic results.

It turns out that that depends on whom you ask.

IBM has made getting to quantum advantage in the real world a strategic priority and has a timeline of getting there in a big way by twenty twenty nine.

Our roadmap really shows the detail in terms of how we want to get from today to twenty twenty nine.

In between, we have this real important milestone also that we believe that with the community, we'll be hitting quantum advantage right where there will be some problems and claims of advantage where we'll see quantum really surpassing any classical methods of solving certain types of problems.

Right, and we are looking at various ways of showing that academically, scientifically and also empirically from the ground up in terms of compared with various kinds of classical methods today.

And then we're building a lot of the it's you know, it's in the end, it's like architecting a large skyscraper.

We're building a lot of the foundational elements so that when we hit Starling and twenty twenty nine, all the applications that people have been developing, all the software stack, all the eventual software libraries, they're still going to work that they're going to work on a machine that's even more capable, something that can run hundreds of millions of gate operations compared to several thousands of gate operations on the on the advantage level machines that we're building today.

IBM says it's on track to have quantum computing payoff in a big way by twenty twenty nine, but ion C's Demasi says they're already there.

So our machines we announced on September twelfth at our Analyst Day are thirty six quadrillion times more powerful than anyone else's machine, and that gap is increasing.

Not only do we believe we are five years ahead of anybody else in the quantum computing business, whether it's government programs, adversaries, or commercial companies, but we also have the lowest unit economics, so we're able to build a fully tolerant two million Cuba system and keep our cost of good souls under thirty million dollars.

Taking that together, it means that we're a fully flagged quantum Internet solution.

We can provide our customer as a platform of computing, cybersecurity, networking, communications and sensing, and there's no other company in the history of the world that's evering able to supply a complete quantum Internet.

Everyone in the quantum business seems to agree that Einstein was wrong, that it's either coming soon or is already here, and that it will be big.

But figuring out who's ahead in this race sometimes feels like predicting those dice.

IBM says it's ahead because it has more total cubits in its machines.

Ion Q says it's not the number of cubits, but the number of algorithmic cubits, putting it in front.

And quantum company Continuum has yet a third measure of quantum value.

Maybe we shouldn't be surprised that there isn't a single measurement.

It's like those cubits that are both ones and zero's at the same time until they're observed.

And it looks likely that we will all be able to observe what quantum computing can do for us in the very near future.

Up next, an aging population meets lower interest rates.

It's a problem countries throughout the West are facing.

We tell the story of what the Netherlands is doing about it.

This is a story about nest eggs.

Those nest eggs were all supposed to be putting away for our retirement years, with or without the help of the government or employers.

Unfortunately, too many of us count on support that may or may not be enough to carry us in our later years.

We have still fifty seven million Americans who don't have any savings or any retirement plan, whether it's state funded pension plans for teachers and policemen or Social Security for everyone.

We all know about the looming problems in providing adequate income for retirees in the United States, but it's not just the US that has a problem.

Many countries made provisions for those promises, and now promises are being cashed in, and many countries are saying, oh wait, you know we don't want to pay the bill.

Teresa gillard Ucci is professor of economics and policy analysis at the New School in New York and author of Rescuing Retirement with Tony James.

The challenges faced by retirees around much of the world are reflected in higher poverty levels of those over sixty five, with the OECD reporting that forty percent of the elderly in Korea live on less than half of the median income in the country and the United States just under twenty five percent.

Gilarducci says one of the reasons is lower interest rates.

The life expectancy does not put a strain on pension system, but what has changed as over the past twenty years, there was a regime of very low interest rates for lots of reasons.

One of them was a financial crisis.

A lot of it was the way that we managed our economies was to make sure that capital investment was low.

That distorted a lot of decisions.

But one of those things that it distorted is that the safe assets like government bonds didn't pay much.

The US is hardly alone in facing the coming retirement crisis, but one country, the Netherlands, is doing something about it.

Adrian Riker's firm is one of those putting those funds to work.

In the Dutch pension system.

In the second pillar, there are around sixteen hundred billion euros of assets under management, which equates to around one point five two times the GDP of the Netherlands.

That one point six trillion euros in Dutch pension assets accounts for fifty nine percent of all European pension funds, while having only four percent of the population, which means that it ranks near the bottom of the OECD numbers in elderly poverty at just under five percent, But despite having more assets set aside for retirement than any other European country, the Netherlands is about to overhaul the fundamentals of its pension system.

Now we are moving from defined benefits to defined country and the reason for this change is mainly to increase the sustainability of the fund towards the future.

At first glance, the math seems straightforward.

The old model wasn't sustainable, it was time for something new, But the debate over restructuring the system was anything but simple.

The private pillar is what is in the process of getting reformed now.

That reform took a number of years to reach.

Discussions started in the early two thousands after the dot Com crisis, when a number of Dutch pension funds sought a coverage ratios drop.

It came to a conclusion sort of around the started pandemic when the shape of the current Pensruon reform was decided upon.

Stan Voiger is a senior fellow in Economic policy Studies at the American Enterprise Institute and director of the Netherland America Foundation.

That didn't mean, of course, that the political discussions around the reform completely dissipated.

In the outgoing government, the Scove Cabinet that was in place for the past year or so, there was there was one political party, the New Social Contract Party, that was quite aggressively opposed to the Benson reform as it had been designed, and they in fact tried to derail it by letting individual workers and retiaries vote on an industry by industry, or occupation by occupation, or even firm by firm basis on whether to remain under the old pension system, which is a defined benefit system basically, or whether to accept the transition to the new, more collective, defined contribution system.

That effort by them ultimately failed.

It lost a vote in Parliament, but only barely, and I think that was really the end of political uncertainty around this Benson reform, not only because that vote failed, but also because the Scove of government fell.

This summer we had elections and the party most associated with those efforts to basically undo the pension reform to a significant extent, that party lost all of its seats in Partland.

The Dutch pension plan changes may be controversial, but necessary given the larger forces that all retirement plans in western countries are facing.

The move to define contributions is something that we see all across the globe if we look at the pension index that is published yearly, if you look at what pension advisors and actuaries are saying exactly.

These changes are not specific to just the Netherlands, but because we have such a large pension build up, we have so much capital in the system, very high adequacy rates.

It is very prevalent in the Dutch system.

Since the global financial crisis, interest rates have been in steady decline, mainly because of monetary policy and because of the way that pension liabilities are valued.

They have a direct link with interest rates, and as interest rates decrease, the liabilities of pension funds increase and thus place a burden on the pension fund sustainability.

But also on top of that you have longevity which has increased amongst the participants, and coverage in the Netherlands of the second pillar pensions is very high.

The way in the old system that we had, the way it worked is that employees would usually stay at the same firm that they started at or stay within the same industry and work until the retirement age.

And if this happened, the current pension system was perfectly equipped for this, but nowadays we see more and more people moving away from a lifetime employment and moving more into self employment.

One way to address the increased number of people relying on their pensions amid lower interest rates might be to extend the time when people start receiving their benefits, but that is not the way the Netherlands chose to go.

The reforms mainly are in the way we invest in, changing from defined benefits to only defining the contribution.

The Dutch system is designed to increase the size of the available pie by permitting pension asset managers to invest in higher risk and higher yield assets for younger workers with many years to go until their retirement.

You now go to a more individual approach with your collective investments, in that you have to see what individual investors need at certain age age groups.

So, for instance, a young person on average has less financial capital but still has a lot of years to work in its career, and what that enables younger investors to do is to take on more risk because the biggest determinant of capital build up at a young age is the contributions you get each year.

But as you near the end of your career, contributions become less of a big part, less of a big influence on the income that you will have on retirement, and the income or the focus shifts from contributions to investment results that should be stable and lower in shocks.

Whether permitting more flexible investments, particularly riskier ones for earlier in a worker's life, will work or not.

It does relieve the pensions from facing obligations greater than their resources, but also means that one's benefits could go up or down depending on the markets.

Getting people to agree to this big change took time and all the stakeholders working together.

One distinguishing feature of the Dutch system of policy making is that there is a lot of focus on consensus building between employers, employees, and the government.

The fact that ANUELYS has these structures that facilitate the coming together of business and labor, I think, is particularly helpful in the pension context.

There are lots of political problems where there are all sorts of other stakeholders involved, but in the pension context it really still is employers and employees who have to come together and reach agreement on on how to design the pension system.

What can the rest of the world learn from the Dutch in providing for retirement, perhaps a lesson in persistence.

The most recent changes are just the latest in a series of attempts at pension reform, go back to the eighties under Ronald Reagan, when they did take steps to try to extend SoC security.

What made it possible then, that doesn't make it possible now.

Well, what made it possible for a bipartisan commission and of fits to happen was that the crisis was only one year away.

It had to do with surprise inflation and a surprise among the actuaries that they wouldn't have enough money in the shortfall.

So money needed to be infused into the system immediately, and so the Green Span Commission under the Reagan administration recommended that the payroll tax be increased, and everybody agreed.

Later, when it came to Congress, there was some political effort to say, well, if we're going to raise taxes, we have to really look to see how much the taxes have to be increased.

And so that's when they looked at the past and said, well, since everybody's living longer, then we should have a system that represents that and will raise the retirement age to sixty seven.

But that cut and benefit was going to be in the future, and they all agreed they needed infusion of cash, and taxes were increased.

Maybe that's what we need to raise taxes, is to have a real look at what taxes pay for everyone likes their social security benefits, whether.

It's relying more on the capital markets like the Netherlands, or turning to taxpayers to contribute more.

The United States and other Western nations have some tough choices to make, and they need to be made sooner rather than later, as people live longer and we want to provide for them without stealing from the future.

Coming up, getting to zero emissions despite those data centers, Finland leads the way.

This is a story about featuring a problem instead of fixing it.

This month at COP thirty in Brazil, world leaders are trying to get back on the path the net zero emissions despite the huge and growing demand of data centers for more energy.

But European country is already a decade ahead.

Finland has set the most ambitious climate target in the world, pledging to reach carbon neutrality by twenty thirty five, and it's featuring the problem of data center growth to get there.

Bloomberg's Tom mackenzie has the story from Helsinki.

Finland, home to five million people and three million saunas.

Here warmth isn't just a comfort, it's a culture.

But now the nation that has perfected staying warm in any condition is finding a new way to do it.

Fifty meters below the streets of Helsinki a hidden network of tunnels hums with.

The sound of machinery.

Oh so where are we?

We are at the Helen here pump station where you're calling for their helsincodatas and we take the cool and sell it as a hereed for the Herzig households.

Our guide through this underground maze is Oli Circa, CEO of helen one of Finland's largest energy providers and the company turning data center heat into power for the city.

Here's how it works.

Above ground data centers, the engines of our digital lives, generate vast amounts of heat as they power everything from AI to streaming video.

That heat is captured and piped into Helen's system, where heat pumps raise its temperature even more and send it through the city's district heating network.

The same system then returns cooled water back to the data centers.

It's a test case for whether our growing digital appetite for energy can be contained.

When you have partners like and Microsoft and tell you a come to you to work with you and partner with Helen, what are they getting exactly in that partnership.

They have a problem with heat and they need to cool down somehow their premises.

And now our job is to sell heat.

So the starting point for this custom is really good, and in the end we can actually monetize their problem.

Can you just unpack the business part of that.

So in normal case, if you build a for example, one hundred megawatt data center, almost all of that power, practically all of that turns to heat, and they need to get rid of that.

They need to invest in heat pumps and all kinds of cooling equipment.

And if they cooperate with us, they don't have to do that investment.

We do it for them, and we take the heat out and on top of that, we monetize the excess heat by selling it to our customers, so they save all the cooling costs and it turns to business for us.

So that's a big CAPEX outlet, yes for you and Capex that they don't have to be putting exagnufacturing into their spending plans exactly.

The CAPEX is needed, but it's done by us and we can get a very good profit double business around that CAPEX, so it works for us.

For the local community, the benefits are tangible electricity prices that sit below the EU average.

Helen's newest partnership is expected to provide warmth for roughly fifteen hundred homes.

We have been able to increase our profits at the same time.

We have now lowered our prices door times in a row during the last four years.

The impressive progress in Helsinki is set against a challenging global backdrop.

According to Bloomberg New Energy Finance Research data, centers could consume about four point four percent global electricity by twenty thirty five.

If they were a country, they'd rank fourth in electricity use, just behind China, the US, and India, and cooling them already takes up nearly a third of that energy.

According to the World Economic Forum.

So this is the buzz of the Internet and our digital society.

So in here you have what we sometimes referred to as clouds.

Helen manages the heat, but it's Equinics that runs the data centers, more than two hundred and seventy of them worldwide.

A data center is a part of everything we do digitally.

Regina Donata, Dlstrom heads their Nordic operations.

So inside of these are servers that are collocated by enterprise customers of Equinics and Connectivity so connections.

So altogether we host over four hundred and ninety thousand connections at Tecinics.

Four hundred ninety thousand connections, and those connects and the work that's being done by these service creates a lot of heat.

You can feel it here in the data center.

It does, it does.

Managing the heat is one of the larger parts in operating a data center.

The heat a reminder that every click, stream and search has a footprint somewhere in the real world.

Managing it is one thing.

Finding a way to use it sustainably is another.

The way we measure our data centers is very thoroughly with efficiency measures.

Per each square meter that's on top of mind of any data center operator, because that's money, and it's also a proof point to how good of a data center you have towards your customers.

On top of that, we add back to the society in which we invest in infrastructure.

Around the world.

The race to build for AI is putting new strain on power grids and sparking a backlash.

A Bloomberg analysis of wholesale electricity prices across the US found that electricity now costs as much as two hundred and sixty seven percent more for a single month than it did five years ago in areas located near it significant data center activity.

When you look at some of your competitors in the data center field, is it a sense of frustration or kind of head in your hands moment when you look at the fact that a lot of these data center operations don't seem to be thinking about all the different components that go into it in terms of addressing the energy needs.

No, saying that a data center is a data center is like saying a factory is a factory.

We do cool location services for enterprises, and I would say that respecting my peers in that part of the data center industry.

Most of us do care about sustainability.

I guess the critics would say, in this rush to build out for AI, that corners are going to be cut when it comes to energy and to sustainability.

And I think in any of the technology the waves that we've seen, whether that was IoT or five G or building up broadband, yes, there are some that get it wrong.

There are some that cut corners.

There are some that think they've got it right, and then actually the application of the services changes.

I think this is no different.

The question now is can the race to get there first coexist with the desire to get it right.

Nowhere is that question more urgent than in the US, home to more than five four hundred data centers, more than all other major economies combined, and most of the electricity to run those data centers still comes from gas and coal, which are also expected to meet much of the country's new power needs over the next decade.

Put simply, Finland may offer a glimpse of what's possible, but the real test is whether that model can scale worldwide.

It's a question that Noah Conja has put a lot of time into answering.

The Finnish case is slightly different and across Scandinavia because they have a lot of existing heat networks, and in a lot of other countries they're not as well developed for heat networks.

Having said that, it is still possible to apply some of the learnings.

One of the key ones is working with a utility or heat network operator that's keen and supportive.

In Gonja pioneered the technology Equinix uses here in Finland and says its applications could be endless.

It's important to point out that the heat export will tend to only work in the right types of climates, so those climates where there is a need for heating, so it won't be applicable for example in Dubai or South Africa where it's a very hot climate.

So it'll be probably mostly northern Europe and the northern part of North America as well.

And so what tends to be the limiting factor isn't whether you can technically connect in the data centers, but it's usually whether there's a partner who's actually willing to develop a heat network and make the captain investment.

Do you also do it because it's a valuable revenue stream.

It's not a really significant revenue stream compared to the overall data center business.

So we're not looking at heat export as a new revenue stream.

We're looking because it supports our customer sustainability targets and reporting.

And the model hasn't gone unnoticed.

Microsoft, one of the world's largest cloud operators, is building its own version, expanding the idea at a massive scale.

Ian Doherty leads the company's cloud operations in Europe, the Middle East and Africa.

We're very proud of the project that we're working on in Finland.

We're working with Fordham to leverage the waste heat from our data center to decarbonize their local heating system and provide heating to local homes over two hundred and fifty thousand local homes in vote.

In the data center, rate efficiency is the new currency, and even the world's biggest hyper scalers aren't immune from the pressure to balance growth with sustainability.

Clearly, AI is growing in its use case and diffusion across the globe, and we're seeing that in our own business, and clearly we need to do more of the same things in sustainability and contract further renewable energies.

So there's a lot of great opportunities that we have ahead of.

Us, momentum is building.

In Finland.

Almost one hundred data center operators are in discussions with Helen exploring projects that would feed their own excess heat into the city's energy system.

What do you think your example says about Finland's approach to decarbonizing its economy but growing at the same time.

Well, I think, and I hope we can show to the rest of the world that you can do the decarbonizing in a profitable way, because I don't believe it's going to happen if it's forced by state or EU or any other regulatory issues.

You have to find a way how to go to CEO two zero so that you can make money with that.

Then it starts to happen, and I really hope it can be an example how that is done.

In a moment when our digital lives demand more than ever.

Helsinki offers a quiet reminder that progress isn't measured only in speed and scale, but in the balance we keep as the world races ahead.

That does it for us.

Here at Wall Street Week, I'm David Weston.

See you next week for more stories of capitalism.