Finance Committee on Oct. 6th, 2011

[Alicia Milner]

Sure.

On the Westport technology, as I mentioned in my remarks, Peterbilt just got SmartWay certification for their LNG tractor, and actually we will have the first one in Canada out on Sparks Street October 19. We certainly welcome all of you to come by and take a look at that.

There was an earlier question around clean, what we mean by clean. I would agree with the gentleman from the solar industry. It is something that is incrementally better. With this particular technology, it matches the efficiency of diesel, 25% carbon benefit and an operating cost benefit.

The kind of interest we're seeing at this early stage is really from the larger players in the market. Robert is starting with this project with 180 LNG trucks, but we have also other fleets, like Trimac Transportation, like Armour, Challenger Motor Freight, etc., looking at this technology. Really, proof of performance is the first thing these fleets are going to look for: is it real, can I save money, and will it help me sell my services to my customers--i.e., selling a greener service. That's really where we see the fleet interest on this.

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

Mr. Shaw, we know we have an overabundance of natural gas, and it's not just vehicles, of course, that can benefit from this. Can you maybe tell us about some other projects? I am curious, for instance, about energy. We're closing our coal plants. We see the wind turbines that service small areas. Can we produce energy plants that are smaller, that would serve our smaller areas? Have you looked at that? Is there new technology involved in that as well?

[Sam Shaw]

That's a great question. Combined micro heat and power using natural gas has been looked at in Saskatchewan in a big way, putting the power generation where the demand is using natural gas. A lot of those initiatives are occurring, particularly in the U.S.

The other aspect is in our own operations we're converting our drilling rigs using natural gas. They are quiet, cleaner and so forth.

I have to tell you that there are lots of applications for natural gas. It comes back down to that we need to do more research and use the abundant, secure natural gas that we have for other applications.

[The Chair, Conservative, James Rajotte]

Thank you.

We'll go to Mr. Brison, please.

[Scott Brison, Liberal, Kings—Hants, NS]

Thank you very much to each of you for edifying us this morning.

My first question is to Ms. Milner, on the Natural Gas Vehicle Alliance issues. I think all of us believe very strongly in helping to stimulate demand for technologies and approaches in industries that help make Canada more competitive in terms of the emerging green economies. There's a school of thought that the ascension of the electric car technology and the end of the internal combustion engine is closer to a reality than we thought even two to three years ago. We recognize that as perhaps an iterative technology, natural gas is an important one, but do you agree that it's an iterative technological approach as we move towards what could be the end of internal combustion engine technology and the evolution towards electric cars?

[Alicia Milner]

That's a big question. Of course the internal combustion engine is notoriously inefficient, but it's all we've got right now. I think what we're seeing now in the market and with a lot of experience with different alternatives over the last 10 to 15 years, whether it's hybrid technology--propane, natural gas, hydrogen, or electric--is that we really need to be smarter about focusing first on the niches where these technologies fit the best.

Natural gas, of course, on the first go-around, was going to fuel everything with wheels in this country. I think there were a lot of hard learnings from that first go-around, both on the government and the private sector side. This time, starting with the medium and heavy vehicles, particularly a tractor trailer, that's not a particularly good application for electric because of the battery demands. But the passenger vehicle or urban delivery could be a very good fit with electric, and we're going to see that now as more of the automaker products come into the market.

Just to give you an idea, though, the heavy vehicles are only 4% of our vehicles but a third of our onroad carbon. We really think this portfolio approach is very important to move forward.

[Scott Brison, Liberal, Kings—Hants, NS]

So there could be synergies even in terms of carbon--

[Alicia Milner]

Absolutely. Thank you.

[Scott Brison, Liberal, Kings—Hants, NS]

I agree with Mr. Sellick in terms of making the accelerated capital cost allowance a more permanent fixture, because companies can't make important decisions on a two-year horizon. You have to be able to predict that. That's something the committee should take very seriously.

In terms of the solar industries, the green retrofit program that was available to Canadian homeowners previously and then was cancelled was brought back last spring for a one-year period. Would you agree that making these more permanent, not introducing them and pulling them back and reintroducing them, would have a significant impact on consumer demand for these technologies and approaches?

Also, I would appreciate your views in terms of the power of government procurement. The federal government buys $14 billion to $15 billion worth of goods and services a year, plus manages seven million square metres of office space, making what would be the largest commercial landlord in the country, if it were a private landlord. I'd appreciate your views on government itself helping create a market by investing proactively in these emerging green economic spaces.

[Patrick Bateman]

Thank you, Mr. Brison.

With regard to stability in government programs for stimulating market activity, many of our members would agree that they would prefer a stable and predictable policy environment rather than higher rebates. It's a very strong driver for growth when the future can be foreseen.

With regard to government procurements, the Government of Canada is doing a good job with their sustainable procurement policies. All government buildings currently have to achieve a standard for LEED, which is “Leadership in Energy and Environmental Design”. Within that program, there are also opportunities for the integration of solar technologies put into those buildings as well.

[The Chair, Conservative, James Rajotte]

You have 30 seconds.

[Scott Brison, Liberal, Kings—Hants, NS]

One of the things that can help in terms of government procurement is if--and this is a Treasury Board issue--we simply consider life-cycle costing for every acquisition, every purchase, because then you're not considering simply front-end cost and life-cycle costing. That might be something the committee considers in terms of recommendations in terms of government procurement as well.

[The Chair, Conservative, James Rajotte]

Thank you.

We'll go to Mr. Hoback, please.

[Randy Hoback, Conservative, Prince Albert, SK]

Thank you, Chair.

I want to thank you all for being here today. It's great to see you here.

I must repeat what Mr. Van Kesteren said about the view we have behind us here. It's actually great to see Detroit with some bright lights on it.

I'd like to talk to all of you, because all of you have some good ideas on the budget, but we only have five minutes. I think I'm going to the area I've had some expertise in in the past, and that's the Equipment Manufacturers' Association, and some of the things you're doing, Mr. Sellick.

You talked about the two years depreciation. Can you give us the uptake on that? You've used that now for two years. What would have happened in your scenario if--

[Howard Sellick]

In our scenario, basically we're a debt-free company. We don't have a line of credit. We can purchase equipment and use that tax credit as--

[Randy Hoback, Conservative, Prince Albert, SK]

But you've been using it. If it weren't there, would you have proceeded with the purchase that you made?

[Howard Sellick]

I would say no. It's been a definite asset to our company and also to other member companies across Canada.

[Randy Hoback, Conservative, Prince Albert, SK]

I notice you talked about MacDon.

[Howard Sellick]

Yes, that's in Winnipeg.

[Randy Hoback, Conservative, Prince Albert, SK]

I know them very well. Would they have made the purchases, investments in their companies?

[Howard Sellick]

Yes, in software. They've made quite a few purchases in software and that type of thing.

[Randy Hoback, Conservative, Prince Albert, SK]

You also talked about trade and the importance of trade. I know MacDon is selling swathers and harvesting equipment all over the world. Of course, our government's been very active on the bilateral front doing trade agreements in Colombia, Panama, and now one in Honduras. What has your association been doing to follow up with those trade agreements to see that your manufacturers are actually going into those markets now, seeing what opportunities exist and trying to take advantage of those opportunities?

[Howard Sellick]

There are a number of manufacturers from our trade association going to South America this month. This trade mission was all set up through the Association of Equipment Manufacturers. They've set up appointments with different government officials and dealers of our equipment. We've been very active. That's all happening, and I think we leave in the middle of the month.

[Randy Hoback, Conservative, Prince Albert, SK]

So again—those bilateral agreements—you wouldn't be going unless you had some trade agreements with some of these countries?

[Howard Sellick]

That's correct.