Transport Committee on June 7th, 2012
Evidence of meeting #42 for Transport, Infrastructure and Communities in the 41st Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was propane.
A recording is available from Parliament.
On the agenda
June 7th, 2012 / 8:50 a.m.
The Chair Merv Tweed
Thank you and good morning everyone. Welcome to the Standing Committee on Transport, Infrastructure and Communities.
Our orders of the day, pursuant to Standing Order 108(2), are for a study of innovative transportation technologies.
Joining us today from Roush Cleantech is Todd Mouw, vice-president, alternative fuels; from Maxquip, Cameron Stewart, the president; and from Canada Post Corporation, Steve Clark, director of fleet management.
I know the clerk has given you some directions.
We'll open the floor to our guests and then we'll move to questions from our committee.
Have you decided who might want to start first?
Steve Clark Director, Fleet Management, Canada Post Corporation
Yes, it will be me.
The Chair Merv Tweed
Mr. Clark, please.
Director, Fleet Management, Canada Post Corporation
Good morning. My name is Steve Clark. I'm the director of fleet management for Canada Post Corporation. My responsibilities include managing and maintaining Canada Post's growing fleet of over 8,300 road vehicles, ensuring compliance with all provincial and federal regulations, and accounting for all safety, cost, and revenue indices associated with operating the Canada Post fleet.
Before joining Canada Post, I spent 21 years with United Parcel Service, beginning as a fleet mechanic and later advancing through a number of positions, in varying roles and responsibilities within the fleet, both in Canada and the United States. My educational background includes experience in both automotive trades and aircraft ground support maintenance. I am also a member of the Automotive Transportation Service Superintendents Association, which promotes and implements initiatives to enhance maintenance practices within the industry.
Over the years, Canada Post has championed every new mode of transportation, from horse-drawn wagons and stagecoaches, to trains, automobiles, planes, and alternative fuelled vehicles. With the second largest federal fleet in Canada, traveling more than 72 million kilometres a year, and consuming more than 21 million litres of fuel, Canada Post consistently looks for ways to reduce the environmental impact of our fleet.
There is quite a range of alternative fuel and propulsion technologies available on the market today and it's difficult to say with any degree of certainty if any, some, or all of them have a place within our fleet. Canada Post has tested a number of different technologies over the years. Since our earliest foray into their use, we've travelled over 190 million kilometres on alternative fuel and propulsion technologies.
We still continue today using a variety of these alternative fuels, including liquefied propane gas, compressed natural gas, and both hybrid-electric and full battery electric vehicle technology.
As part of our new delivery model, we continue replacing approximately 2,400 vehicles with new fuel-efficient light vehicles and expanding the use of our alternative fuels. We currently have 10 natural gas, 14 electric, 23 hybrid, and 123 propane vehicles operating in our fleet. Canada Post has also made significant investments in compressed natural gas and propane refuelling infrastructure to meet our operational needs, to realize a cost-per-litre savings in comparison to street pricing, and to improve the return on invested capital for alternative fuel and technology conversions.
In 2011, the total number of vehicles in our fleet increased by 6.2%. Even with an increase in fleet size, we managed to reduce our fuel consumption by 3.7% and our CO2 emissions by approximately 4.5%, or 2.4 kilotonnes.
Both Canada Post and Purolator have made considerable investments in researching and testing alternative technologies to reduce the environmental impact of our fleets. In 2012 we have continued to focus on this mandate, with key initiatives in the following areas: the continued introduction of light delivery vehicles, with over a 50% reduction in greenhouse gas emissions compared to the Ford F-150; the continued use of alternative fuels and technologies such as propane, compressed natural gas, gas and diesel-electric hybrids, hydraulic hybrids, and battery-electric vehicles; and participation with international postal administrations on benchmarking electric vehicle opportunities and alternative fuel technologies.
Although there has been great change over time in the makeup of our fleet and operating technologies, one thing that's remained constant is our commitment to acting responsibly toward the environment and the Canadian communities we are proud to serve.
Gaseous fuels, both compressed natural gas and propane, are good alternatives for use in Canada and have many advantages as a motor fuel. Both have fewer toxic and smog-forming air pollutants. It's generally accepted that it takes a hundred 10-year-old trees or 50 mature trees to offset one tonne of greenhouse gas emissions. So, more simply, for every Transit Connect van that Canada Post puts on the street operating on propane as opposed to gasoline, it has the environmental equivalent of planting 56 trees.
Propane is really a made-in-Canada solution. With 80% of Canada's propane supply currently being exported, we could reduce our dependence on foreign oil by converting more vehicles to operate on this fuel. Both propane and natural gas are less expensive than gasoline per equivalent litre. And for fleets, the longer life cycle of custom-built vehicles means the opportunity to travel more kilometres and consume more fuel, which in turn translates into an increased return on invested capital.
Electric vehicles, both pure and hybrid, also boast many advantages. They are energy efficient and environmentally friendly, with pure battery electric vehicles emitting zero tailpipe emissions. They provide quiet, smooth operation and require less maintenance than standard internal combustion gasoline engines. Hybrid electric vehicles, depending upon their duty cycle, can realize up to a 40% fuel economy improvement, up to 30% lower maintenance costs, and a reduction in greenhouse gas emissions of up to 30%.
Furthermore, in Canada, electricity is a domestic resource and its use for vehicle propulsion can reduce our dependence on foreign oil.
With the evolution and advancements being made in transportation technology, I think it's important to share the following. The continued and increased use of alternative fuels and electric vehicle technologies are of great importance to Canada Post and Purolator. As these technologies enable us to continue to reduce greenhouse gas emissions and our total carbon footprint, they further ensure product development, technology refinement, mass production and, ultimately, volume price and cost improvements of new and advancing technologies, and reduce our overall operating costs.
We currently face barriers that challenge the expanded use of these technologies. The first is that refuelling and recharging infrastructure is limited or non-existent in many parts of the country. Also, regulations associated with the use of gaseous-fuelled vehicles are not consistent; they differ municipally, provincially, and federally. In addition, electric vehicles, both hybrid and pure, are far too costly when compared to conventional gas-powered vehicles and remain ill-suited for most fleet applications.
If the Standing Committee on Transport, Infrastructure and Communities were to recommend to the Government of Canada that it offer financial incentives or tax rebates to vehicle owners that would help offset the incremental cost of purchasing or converting vehicles to operate on alternative fuel or electric vehicle technology; and would recommend standardization of regulations across all provinces as they pertain to the use, marking, and inspection of alternative fuelled vehicles; and would recommend or incent fuel companies to provide improved availability of refuelling infrastructure for gaseous fuels, these recommendations would all aid in overcoming the barriers identified and pave the way for the continued and expanded use of these technologies.
Thank you for your time today and for the invitation to speak to the committee.
The Chair Merv Tweed
Mr. Mouw, please go ahead.
Todd Mouw Vice-President, Alternative Fuels, Roush Cleantech
Good morning. Thank you for having me here today. It's an honour to be brought from Detroit, Michigan, across the border, to talk about propane auto gas, one of my passions.
I'm a vice-president with Roush Enterprises. We are a 3,000 employee company based in the United States. We've been around for 36 years with more than $300 million in sales. We are Ford's premier powertrain development company, and as you look at my first slide, you'll see that we're a very diverse organization involved in performance, life sciences, and industries—and I'll talk about alternative fuels here in a second.
One of the issues in our business and the alternative fuels business over the past several decades has been the types of companies that have brought solutions to the marketplace not having the staying power to continue to service customers like Canada Post, once they sell the vehicle, on through the evolution of that vehicle over eight to ten years of its life cycle.
Roush has been here for 36 years, and we'll continue to be here for a much longer period of time, employing our diverse solutions for our customers to make the experience even better. As it pertains specifically to propane auto gas, we formed my division, Roush Cleantech, roughly three years ago with a specific focus on propane auto gas and alternative fuels such as natural gas. We believe in the United States, and have seen great success with propane auto gas, and have put more than $30 million U.S. into developing this technology for deployment in the United States. All our technology and products are certified to United States standards, and one of the issues I'll talk about in my presentation is how we can bring this product to market here in Canada.
Some of the successes we've had in the United States obviously centre around cost. In the United States, and similarly here in Canada, propane costs typically more than 40% less than gasoline per litre. I need to speak in litres and not gallons here in Canada. We have the economic benefit of the lower cost of the fuel, and we also have the emissions benefit, from lower greenhouse gas, NOx, and carbon monoxide emissions.
From a national security perspective, most of the propane we use here in North America comes from North America. So we're not sending our dollars overseas to folks who don't care for us very much.
Also from a perspective referenced in the March 6 presentation by Jim Facette to the committee, 83% of the propane we use here in Canada comes from natural gas exploration. So again, these gaseous fuels have a firm place here in Canada.
The support of federal and state initiatives down in the United States has also helped folks like Canada Post, UPS, Frito-Lay, and Coke to adopt technologies like propane, natural gas, electric, and hybrids. And as you see on the next slide, several fleets in the United States have adopted the propane auto gas technology. These are large Fortune 100 companies such as Sears, ARS, ThyssenKrupp, DirecTV, Frito-Lay, Pepsi, Veolia, and Blue Bird, the school bus company.
Many folks ask what's holding us back from further mass adoption, and when you look at the next slide you will see that we consider the alternative fuel fantasy. In other words, is this reality, or can we deliver it today? The answer is we can. As I referenced before, the fuel costs 40% less. It comes from North America. The performance is Ford's powertrain development company. We calibrate our technology, and it's OEM certified and an OEM warranty is in place, so the horsepower and torque are equivalent to the gasoline vehicle that we convert.
As for service, the warranty coverage and the diagnostic equipment work just as they do on a gasoline vehicle.
And with regard to refuelling, most people aren't aware that propane is the third most common engine fuel in the world. In the States we have more than 5,000 locations for fleets to get fuel. I believe here in Canada that number is between 2,000 and 2,500. It has the lowest cost of infrastructure of any fuel, gasoline and diesel included. Again, we talked about the emissions briefly before.
To be really quick on our technology—and I appreciate Steve's comments from an end-user perspective—but when we got into this market about five years ago, we wanted to understand what went right and what went wrong with fleets. One of the major issues was cold start issues, which is obviously a potential concern in Canada; then horsepower and torque and performance of that vehicle; and how that technology is integrated into the vehicle itself. We have a dedicated liquid injection technology so that the vehicle only runs on propane, keeps it under low pressure all the way through the tip of the injector, and delivers the benefits I referenced earlier, including no issues with cold start and no issues with horsepower and torque.
Not to bore you with the next slide, it just shows you how the technology integrates into the vehicle seamlessly from an end-user perspective.
Then the next slide talks about the variety of vehicles that we have brought to market. There's everything from a commercial perspective related to Ford: trucks, vans, school buses, and cutaways. For fleets operating here in Canada, we believe that we have a host of solutions that can be adopted immediately. We're shovel ready.
On the economic impacts of this technology, as was referenced in Mr. Facette's presentation on March 6, the propane industry impacts the Canadian economy by $10 billion per year. There are jobs supporting over 20,000 Canadians, and there's a benefit of almost $900 million in annual taxes and royalties paid back to the government. We talked about the domestic aspect and the national security aspect as well. I just wanted to make sure that we hammered that point home, that instead of sending our money overseas for foreign sources of energy, we've got it right here in Canada as well as in the United States.
We've been talking about coming to Canada for several years. As a matter of fact, I remember talking to Steve a few years ago about the issues pertaining to why Roush has not brought our technology to Canada. We're an engineering company. We have some struggles with the rules and regulations and testing standards to make this work here. We're not afraid of spending money to bring the technology to Canada, but we'd just like to have a clear goal line and a clear path of success.
Getting early customer adoption and finding some fleets are important, and there are obviously some here now. Folks like Frito-Lay, Coke, Canada Post, UPS, and Purolator clearly want to adopt the technology.
Then, as Steve referenced, it would be helpful to get some support incentives, rebates, tax credits, and access to HOV lanes. Again, from my perspective, we don't need those to succeed, but they would be nice to stimulate the market early on here in Canada.
With regard to return on investment, I've got a couple of iCharts in litres here for you to analyze. This clearly shows, with our conversion technology, on any E-series van running an equivalent number of kilometres over the life cycle that the payback is there for fleets to convert to propane autogas.
We talked about the economic impact of propane, amounting to almost $28,000 in savings from running that vehicle on propane autogas. And the emissions benefit from running the vehicle on propane over its life cycle is almost 38,000 fewer kilograms of CO2.
In summary, we believe that there's a huge opportunity, not only for us at Roush but also for you and the Canadian government to use a Canadian natural resource to power your public and private fleets. We do believe that that will carry over to the consumer market.
We strongly believe that fleets such as Canada Post and UPS and folks like that will help build infrastructure that consumers can then utilize as it's built out. We need government support to streamline the certification process for this. It is a job creator. We've got a company here that we use on another set of our business, Farmbro. It's a high-quality partner in integrating and installing this equipment.
Training service centres is a workforce development opportunity.
Then there is the strategic planning to help public and private fleets migrate from foreign sources of gasoline and diesel foreign sources of energy.
I very much appreciate the opportunity to be here in front of you today and I look forward to questions afterward.
The Chair Merv Tweed
Cameron Stewart President, Maxquip
Thank you, and good morning.
I'm Cameron Stewart. I'm the president of Maxquip. We're a supplier of LPG autogas and CNG conversion kits. We supply this technology throughout North America. These customized conversion kits are fitted to many different engine and vehicle models. Our kits enable users to realize fuel cost savings typically in the 40% to 50% range, by converting from their original gasoline engines to LPG—liquefied petroleum gas—or by adding LPG injection to diesel engines.
Some of the conversion technologies that we supply include vapour sequential injection systems, liquid injection systems, and diesel blending systems. Vapour sequential injection systems are dual-fuel systems that will allow a gasoline engine to also run on LPG. With these systems, the engine will typically start on gasoline and will automatically switch to run on LPG when the engine reaches an appropriate operating temperature. The engine will continue to run on LPG as long as there is a supply of LPG or until it's manually switched to run on gasoline.
These systems can also be configured as semi-dedicated systems. With a semi-dedicated system, the vehicle will start on gasoline and switch to LPG when the vehicle reaches an appropriate operating temperature, but it cannot be switched back to run on gasoline.
The LiquiMax system is a liquid injection system. With these systems the vehicle is set to run exclusively on LPG. With these systems, LPG is pumped in a liquid phase from the storage tank to the injectors, allowing the engine to run exclusively on LPG.
The DieselFlex and the Dieselblend systems allow users to convert diesel engines to operate on a blend of diesel and LPG fuels. Essentially, a portion of the diesel fuel is replaced by a cleaner-burning LPG fuel. The amount of diesel that is replaced will vary by engine usage conditions, but typical replacement factors are in the range of 30%. These systems have resulted in horsepower increments of about 20% to 25% and fuel savings in the range of 10% to 15%.
Why are these technologies important? LPG is by far the most widely used and accepted alternative fuel in use in the world today. Global consumption of autogas has been rising rapidly in recent years, reaching 22.9 million tonnes in 2010, an increase of about 60% over the year-2000 levels. There are now more than 17 million autogas vehicles in use around the world today.
Among the benefits, number one is in operating costs. While the price of autogas varies across Canada, the average price as of May 22 was about 73¢ per litre, according to the Natural Resources Canada website. This equates to a gasoline equivalent of about 84¢ per litre. The average price at the same time for gasoline was about $1.29, a difference of about 45¢ per litre. For a vehicle averaging 7,500 litres per year, this would equate to a savings of about $3,375 annually.
The second benefit is in performance. The performance and operating characteristics of autogas used in vehicles compare very favourably with those of other fuels. Autogas has a higher octane rating than gasoline, so converted gasoline-powered spark-ignition engines tend to run more smoothly. Acceleration and top speed using the latest generation of autogas fuel systems are comparable to those for gasoline or diesel.
The third benefit is on the environmental side. Autogas burns more cleanly than gasoline or diesel fuel. On a per unit energy-use basis, autogas produces fewer greenhouse gas emissions. It also contains fewer toxic pollutants, including sulphur oxides, which can contribute to acid rain and smog. It's a pressurized fuel that is contained within a sealed system, so it is not likely to escape into the soil or water through careless handling, spills, or evaporation.
Natural Resources Canada’s own model for life-cycle assessment of transportation fuels, GHGenius, shows that LPG autogas produces from 20% to 25% fewer greenhouse emissions than gasoline.
Among the barriers that I see in Canada facing LPG autogas, to which Steven alluded, is, first of all, the availability of qualified installation centres. Some markets in Canada have an abundance of qualified conversion centres, while in others they are scarcer. If there is a demand for conversions, then the maintenance facilities need to invest in the proper training required to become certified. In markets where there are limited conversion centres today, there needs to be an impetus to create the demand and supply before the market will become self-sustaining.
The Propane Training Institute, a division of the Canadian Propane Association, has developed a two-day training course to certify and train automotive mechanics in the safe handling of LPG and related components. Equipment suppliers such as Maxquip offer training to these certified installation centres on the equipment that we supply. This collaborative approach has been adopted by the British Columbia Safety Authority and is being adopted in other provinces as well.
The second barrier that I see is restrictions on underground parking. Some municipalities and insurance companies have placed restrictions on LPG vehicles from entering underground parking facilities. This restriction may be related to incidents in the past in which an LPG tank may have been overfilled. If an overfilled tank enters a warm parking facility, the LPG in the tank will expand and potentially cause the tank's relief valve to open and vent some LPG into the atmosphere.
Technology that has been in use since the mid-1990s includes an auto-stop valve on the tank's fill line. This valve prevents the tank from being filled to more than 80% capacity, essentially making it impossible to overfill a tank.
The restriction on LPG vehicles from entering underground parking facilities remains a deterrent to potential users today.
Thirdly, there is the inconvenience of limited refuelling infrastructure. There are approximately 2,000 refuelling stations across Canada today. The availability of the LPG fuelling stations will grow with demand, as long as provincial regulatory requirements are not prohibitive.
The convenience of LPG fuelling in Canada currently suffers from a requirement that a vehicle be refuelled by a trained attendant. This requirement places an additional burden on retailers, who must have qualified staff on site to dispense autogas. Once again, the Propane Training Institute offers a course on filling auto propane tanks. It is required that this course be administered by a PTI-certified trainer or examiner. The accessibility of this process is currently not the most convenient, and similar results might be achieved from an online examination process, similar to what one must complete to receive a Transport Canada pleasure craft operator card.
In many countries around the world that operate larger volumes of LPG vehicles, consumers can typically fill their own vehicles, making it much more convenient. Use of newer-technology dispensing nozzles that prohibit the release of product if the nozzle is not properly attached to the vehicle's filler valve could be incorporated to improve safety.
The fourth challenge that we have in the Canadian market pertains to some historical problems that we've had in the industry. LPG has been a fuel for vehicles in Canada for a long time. It has a blemished reputation with some people in Canada because of a combination of improper installations and poor technology that has been used in the past. Both of these areas have improved drastically. As long as vehicles are being converted with properly approved systems and by qualified and trained automotive technicians, LPG is a viable alternative, as demonstrated by many fleets and users across Canada, including the London police force, Air Canada, UPS, Canada Post, and the British Columbia Ministry of Transportation, to name a few.
The industry is still somewhat tarnished by some of the problems of the past, and those who have experienced some of the problems remember them well. It's incumbent on us to educate everyone on the benefits of LPG autogas and to train and regulate the industry to ensure that systems are used correctly.
Some of the recommendations that I have proposed to the committee include, first, recognizing that LPG autogas is a viable alternative fuel that can reduce operating costs and emissions today, and promoting its use across Canada.
Second is recognizing that LPG autogas could used in applications, where appropriate, within the federal government's own fleet of new and existing vehicles.
Third is perhaps to revisit the Transport Canada motor safety regulations concerning LPG fuel system integrity—that is, standard 301.1. This regulation requires that school buses that are converted to run on LPG go through a series of crash testing to approve the installation of such a system. There may be more practical means of ensuring the safety of LPG systems on school buses.
Fourth is investigating what can be done to remove restrictions placed on LPG-powered vehicles from parking in underground facilities.
Fifth is revisiting the training and certification requirements of the CSA B149 code on filling auto gas vehicles to determine if it can be done in a more convenient, practical manner without jeopardizing safety.
Sixth is to consider allowing alternative fuel vehicles with lower greenhouse gas emissions to operate in high-occupancy vehicle lanes with single passengers as an incentive to those who use such technology.
Seventh is to consider making funding available for training of conversion centre and installation personnel.
Thank you very much for your time.
The Chair Merv Tweed
Thank you very much.
Robert Aubin Trois-Rivières, QC
Thank you, Mr. Chair.
Good morning gentlemen. Thank you for being with us today to share your expertise. After listening to you, and a number of other witnesses in the past few weeks, I get the sense that this is going to cost me a fortune, that my car is totally obsolete and I that I should just choose another technology. Let's hope we get there and it's for the better.
My first questions are for Mr. Clark, of the Canada Post Corporation.
You seem to have quite an extensive experimental lab. Why have you focused more on propane than on natural gas, given your experience and testing?
Director, Fleet Management, Canada Post Corporation
We've actually done more than just propane. We've done a bit of both.
Part of that was initially in the piloting phase to try to understand which would operate best. As I mentioned in my presentation, we know there's no magic bullet theory today that's going to say this is the ultimate technology we must use on every route, in every vehicle, for the rest of time.
We've invested in a number of different technologies to evaluate and pilot. Propane is a larger technology right now in use in Canada Post than natural gas. The primary reason at this time for that is the cost of refuelling infrastructure.
Robert Aubin Trois-Rivières, QC
Mr. Clark, according to the documentation I was given, this technology would save about $3,000 in fuel a year. How many years would it take to offset the technological conversion of vehicles?
Director, Fleet Management, Canada Post Corporation
The cost of the conversion and the return on that invested capital is ultimately dependent upon the total distance you're going to drive your vehicle.
The average postal route is 50 kilometres a day. Dependent upon whether we're operating an extremely poor fuel-efficient vehicle, such a step van, which gets about 33 litres per 100 kilometres, or a more fuel-efficient light vehicle...is how far you go, and the fuel economy that it's getting, to what the return on that investment is.
I guess in a step van scenario, for example, where a van would travel 100 kilometres at double what our normal is, the return on that investment is about 2.3 years.
Robert Aubin Trois-Rivières, QC
I have one last question for you, Mr. Clark. Then I will move on to the other witnesses.
In setting up your new propane-powered fleet, did you have to overcome any specific challenges or resolve any issues as far as building refuelling infrastructure goes?
Director, Fleet Management, Canada Post Corporation
I don't know about major challenges. There were some challenges. We had to do a number of things with site assessments, safety plans, and I guess on training an awful lot of our people to understand and accept what we were doing.
But no, I don't think the challenge was insurmountable.