Good afternoon, Mr. Chairman and members of the Standing Committee on Finance. My name is Eric Marsh. I am executive vice-president of Encana Corporation. Along with my two vice-presidents, Wayne Geis and Sam Shaw, it is my honour to address this committee.
Today we are proposing that the Government of Canada become a leader in a transportation policy that will offer an innovative solution to growing our economy, creating jobs, lowering emissions, and generating government revenue. We believe that with strong government leadership and the use of natural gas throughout the transportation sector, Canada would quickly marry the environmental benefits of natural gas with widespread economic growth and job creation.
Why choose natural gas? It's clean, affordable, and abundant. Natural gas emissions are lower than those from diesel or gasoline, so it's the right choice to achieve our emissions targets. Natural gas is abundant, and now discoveries of shale gas across Canada make it a resource that eastern and western provinces can develop and utilize.
The following proposal offers a long-term solution that would generate benefits through virtually every sector of society. We have summarized our plan on one page for the committee's convenience.
Encana is requesting that the federal government adopt and invest in a natural gas transportation policy for all of Canada. This policy has three measures that we will be requesting be in Budget 2011.
First, we request that the government make strategic investments by providing fiscal incentives to purchasers of natural gas vehicles in the heavy-, medium-, and light-duty ranges for fleet applications. These investments would help to reduce the substantial cost difference between natural gas vehicles and their diesel or gasoline equivalents. In addition, these investments would help to offset the business risk for early adopters who convert to using a cleaner, more affordable domestic fuel. This support could be in the form of a tax credit, a capital cost allowance modification, or a grant. We believe a declining per unit value incentive program should last 10 years to achieve the revenue generation, job creation, and emissions reductions that will be the hallmark of a successful program.
Second, tax credits for grants that assist with manufacturing and research and development could position Canada's auto sector as a global leader in natural gas vehicle manufacturing. This assistance would facilitate the introduction of expanded consumer vehicle choices, economies of scale, and technological improvements to reduce the cost of vehicles in increased spinoff companies developing new business opportunities.
Finally, to ensure consumer confidence, Encana would propose that government exclude any excise fuel taxation during the program. The incentives we are recommending are available in other jurisdictions, and the evidence is clear that adoption is accelerated when government participates in new industry. As many of you know, Quebec has adopted a provincial-level program. As a result, Robert Transport recently announced the purchase of 180 natural gas heavy-duty trucks with engines produced by Westport Innovations, the Canadian-based world leader in natural gas powertrains.
Our modelling demonstrates that government investment in this project would become revenue neutral within five years and would achieve investment payout within eight years through revenues generated by increased royalties and taxation. Cumulative government revenues would equal approximately $6.5 billion by the year 2025. Our estimate shows that the total government investment would average less than $300 million annually over the first five years of the program. This project would create 70,000 new jobs in all sectors of the natural gas vehicle value chain, including resource extraction, technology, and vehicle and equipment manufacturing infrastructure.
The impact of growing Canada's natural gas economy will be profound, but we must act to seize the opportunity. As oil prices continue to rise, gas prices remain low and stable, and this is expected to continue for the foreseeable future. The new abundance of natural gas will provide price stability and ensure affordability for future use as a transportation fuel with lower operating costs.
This government investment proposal will create jobs, return revenues, and drive down emissions. Encana looks forward to working with industry and all levels of government to help this nation realize this opportunity.
Thank you. We look forward to your questions.