Finance Committee on Oct. 6th, 2011

[The Chair, Conservative, James Rajotte]

I call this meeting to order.

This is the 15th meeting of the Standing Committee on Finance in this session. We are continuing our discussions surrounding pre-budget consultation for 2011. We are very pleased to be here in Windsor, home of the Spitfires and the number one draft pick for the Edmonton Oilers last year.

We are very pleased to have two panels here this morning. In our first panel we have six organizations. We have the Canadian Natural Gas Vehicle Alliance, Spirits Canada, the Association of Equipment Manufacturers, Encana Corporation, the Canadian Shipowners Association, and the Canadian Solar Industries Association.

Welcome to all of you. Thank you very much for being with us this morning.

You will each have up to a maximum of five minutes for an opening statement. After the final presentation, we have questions from all members of the committee.

We will start with Ms. Milner's presentation, please.

[Alicia Milner, President, Canadian Natural Gas Vehicle Alliance]

Thank you, Mr. Rajotte.

It is great to have the opportunity to be here in Windsor, Ontario, one of Canada's leading automotive communities and the home of Canada's automotive centre of excellence, Auto21.

The automotive sector continues to play an integral role in Canada's economy. It employs more than 90,000 Canadians, and automotive exports constitute one-third of Ontario's direct trade with the United States. Canada's strength in the automotive sector, including its skilled workforce and established manufacturing base, are now being leveraged for the next generation of innovative green automotive technologies. This includes the production of electric vehicles at Toyota's facility in Woodstock, Ontario, and the development of next-generation components and lightweight materials through R and D investments being made by companies such as Dana and Magna International.

Canada can also claim a leadership position when it comes to the manufacture of innovative natural gas technologies for heavy trucks and buses. Canadian companies currently supply natural gas engine systems to more than 20 different North American truck and bus manufacturers, including New Flyer and Motor Coach Industries in Winnipeg, Daimler in Mississauga, and PACCAR in Quebec.

The U.S. EPA SmartWay program, which encourages highway trucking fleets to adopt lower emission technologies, recently certified its first liquefied natural gas, or LNG, highway tractor from Peterbilt. This truck incorporates engine technology made in Delta, British Columbia, by the Canadian company Westport Innovations. Natural gas is the next wave when it comes to innovative, lower-emission technologies for heavy vehicles. Canada is well positioned to capitalize on market growth and increased demand in North America.

Speaking on behalf of the natural gas vehicle industry, I'd like to briefly outline three key benefits associated with the increased use of natural gas in transportation. And I would like to highlight private sector investments being made in regions across Canada.

The first benefit relates to fuel choice. Whether for goods movement, people movement, or personal transportation, Canadian businesses and communities could benefit from having a choice of fuels. Right now, crude-oil-based fuels supply 99% of the energy used in the transportation sector. There is a lack of competition in the market. Natural gas is a cost-effective alternative. Increasing its use can leverage an abundant domestic resource.

Canada also has some high-density corridors where having access to a lower-cost fuel could be particularly advantageous and could create competition in fuel choice. For example, Windsor to Quebec City is the fourth-busiest trucking corridor in North America. This month, LNG highway trucks in the Robert transport fleet will begin operating along this corridor between Boucherville, Quebec, and Mississauga. New private sector investment supporting this project exceeds $16 million. This project marks the beginning of Canada's first smart trucking corridors. Additional private sector investments are being made in fleet projects in Alberta and British Columbia this year.

The second benefit relates to jobs and the economy. Using natural gas in transportation would open up a new market for an abundant Canadian resource. Increased sales of natural gas for transportation could contribute to economic strength in three ways. First, it could displace imported oil and improve Canada's balance of payments. Second, it could create new demand for natural gas to help offset declining exports to the U.S. And third, it could trigger economic activity in the natural gas fuel vehicle and station supply chain.

Alberta's Ministry of Energy estimates that for every additional billion cubic feet of Canadian natural gas produced, $17 million in direct and indirect benefits accrue across the Canadian economy. My colleague, Mr. Sam Shaw, of Encana, will be speaking in more detail on this point.

The final benefit relates to the environment. Natural gas can also help achieve the 2020 carbon goals. If 5% of new vehicles sold over the next 10 years were natural gas, the benefit would be one megatonne, and this equals the benefit from 2% biodiesel use.

In closing, committee members may have seen that Canada was just recognized as the top ranked country for business in the world. One of our members, Shell Canada, a global energy player, recently selected Canada for its first major investment in a liquefaction facility just west of Calgary to bring LNG into the transportation market. This investment of more than $50 million is part of a worldwide strategy for Shell, but it is encouraging and noteworthy to see that Shell chose Canada first.

On behalf of the natural gas vehicle industry, we look forward to continuing to partner with the Government of Canada to accelerate private sector investment related to natural gas for transportation.

Thank you.

[The Chair, Conservative, James Rajotte]

Thank you very much, Ms. Milner.

We will now hear from Mr. Westcott, please.

[Jan Westcott, President and Chief Executive Officer, Spirits Canada / Association of Canadian Distillers]

Thank you, Mr. Chairman.

I am Jan Westcott, the president and CEO of Spirits Canada. We are the only national trade association representing the interests of Canadian spirits manufacturers.

I am particularly pleased to be able to appear before you today here in Windsor, home of the largest distilled spirits plant in North America. In fact, we are currently sitting within 25 kilometres of over 10 million barrels of Canadian whiskey, slowly maturing, awaiting transformation into that golden elixir, Canada's iconic spirit. If you are tempted to get up, I'll understand why. It's just down the road, waiting.

We are here today to request your support for a $1 reduction in federal excise duties imposed on spirits—that is to say, a modest reduction from the current $11.69.06 per litre of alcohol to $10.69.06. On a typical 750 millilitre bottle, even after such a reduction in federal excise duties, they would still be over $3.20, a very high level by any comparable measure.

We also note that federal spirits excise revenues generated last year were over $170 million more than they were in 2006. And I'll come back to that; it's an important date. Excessive provincial and federal commodity taxes on spirits were identified as a key barrier to success in the first Canadian whiskey summit held earlier this year. The summit was attended by a broad range of stakeholders committed to developing a long-term strategy to re-invigorate Canada's signature drink category, including regulators, retailers, bartenders, farmers, manufacturers, media, and academics.

As you will recall, this particular committee previously supported the elimination of all excise duties on wines made from Canadian grapes and fruit, as well as a rate reduction for beer. The finance committee's recommendations were adopted by the government in the 2006 budget and remain in place to this day. We respectfully suggest it is time to turn federal tax policy attention to Canada's true national drink, Canadian whiskey, and other fine spirits.

The Canadian spirits industry has a very long and colourful history, predating Confederation, and has been a core export-intensive business from the very beginning. Yet spirits manufacturers have not been provided with the necessary tools and support to be a true international champion for Canada.

Our members make exceptional products enjoyed by adult consumers around the world, but they are faced with a heavy and unsustainable fiscal burden that impairs the industry's ability to compete and succeed. Spirits have the singular honour of being part of adult Canadians' moments of celebration and relaxation. Spirits help to contribute to positive social interaction between family, friends, and neighbours. We are proud of our role in the lives of Canadians for generations upon generations.

The spirits industry also takes our obligations very seriously. We have worked diligently with other committed stakeholders to bring to life the recommendations of Canada's national alcohol strategy, including the recent development of formal low-risk drinking guidelines. These guidelines provide expert advice to those who choose to drink, so they may do so in a form and a fashion that minimizes the risk of any harm.

Spirits manufacturing is also inexorably tied to the land through farmers, who grow the country's corn, wheat, barley, and rye. Taxes on spirits are a tax on these agricultural grains as well as on the farm families who grow them.

Spirits taxes are also a tax on those small independent businesses that sell spirits in licensed bars, restaurants, and clubs across the country. Spirits taxes are a tax on hardworking families who enjoy an occasional drink with their friends and neighbours.

We have provided some background information on Canada's spirits industry's key economic indicators and a summary of the top 15 reasons why we believe a reduction in the spirits excise burden deserves serious consideration. I am not going to go through all of them today, but I would just note one or two. We believe a reduction will provide the opportunity to grow our international exports. We currently export about $500 million worth of whiskey and other spirits around the world. Clearly, there is an opportunity to increase treasury revenues by stimulating the business. Last, a modest reduction in excise duty would spur investment in our industry in quite dramatic fashion.

Thank you very much for your time.

[The Chair, Conservative, James Rajotte]

Thank you very much, Mr. Westcott.

We will hear now from Mr. Sellick, please.

[Howard Sellick, President, Sellick Equipment Limited, Association of Equipment Manufacturers]

Thank you, Mr. Chair and members of the committee, for the opportunity to address you today on behalf of the Association of Equipment Manufacturers, or AEM.

AEM is a trade association representing manufacturers of equipment for the agriculture, forestry, construction, and mining sectors. We make the machines that build roads, extract resources, move material, and plant and harvest crops. AEM members range in size from multinationals like Caterpillar to smaller Canadian firms like my own, Sellick Equipment, located just 30 kilometres south of here in a small town called Harrow.

For the last 42 years we have continued the business our father started. We produce material-handling equipment--rugged forklifts used in rough-terrain applications, including construction sites and mines around Canada and the United States.

We export half of our equipment to the United States through the Windsor-Detroit corridor. Our supply chain runs back and forth on a daily basis across the bridge. We are constantly feeling a pinch at the border with congestion and delays. Most of the other half of our products are delivered to customers here in Canada, three-quarters of which are shipped west, where they're used extensively in the oil sands in Alberta and in the potash industry in Saskatchewan.

However, the decline in the North American economy has meant tough times for our business. Since the fall of 2008, we've had to downsize our company by 27 people, a significant number in a town of only 2,000. These were good-quality manufacturing jobs.

Federal government programs have been instrumental in helping us deal with this slowdown. The work-sharing program has helped us to retain a skilled workforce. We applaud the government for making this program happen. These kinds of programs have made a difference in our operations and the operations of AEM member companies across the country.

Like all Canadian manufacturers, AEM members must continually invest in modern equipment that allows us to achieve unmatched productivity gains. The accelerated capital cost allowances for investments in new equipment that the government has introduced, lowering these investment costs, have benefited my company directly. These accelerated writeoffs allowed us to invest in new manufacturing software, boosting our productivity.

My fellow AEM board member Gary MacDonald, from MacDon Industries--they make agriculture harvesting equipment--has been investing in new enterprise software as well, and he too has seen the benefits. These tax policies work.

This kind of cooperation from the government in creating a competitive environment for business is essential if we are to continue to have strong equipment manufacturers in Canada.

With the prospect of another recession before us, manufacturers like my company face increasing competitive pressures and challenges. Given these conditions, AEM has four recommendations that we would ask the finance committee to consider in its report to Parliament.

One, make the two-year writeoff for manufacturing and processing machinery and equipment a permanent part of the tax system.

Two, aggressively negotiate with our trading partners to eliminate trade barriers, especially those involving the U.S.-Canada border.

Three, reduce the regulatory burden that delays major investments in energy projects.

And four, make infrastructure projects a priority to stimulate the economy, drive demand for manufacturers, and ease the movement of goods.

Each of these recommendations will help Canadian equipment manufacturers invest, innovate, and compete in the global marketplace. I know first-hand that these policies work. I've seen it from my own company's shop floor and in the facilities of AEM members across the country.

Thank you for undertaking this study and for your consideration of AEM's submission. I look forward to your questions.

Thank you.

[The Chair, Conservative, James Rajotte]

Thank you very much, Mr. Sellick.

We'll now hear from Mr. Shaw, please.

[Sam Shaw, Vice-President, Natural Gas Policy Development, Encana Corporation]

Good morning. With me is Wayne Geis, vice-president of strategic planning.

We are very aware of the fragile global economy; hence, our submission to you is to create a new opportunity for a cleaner, more prosperous future through a natural gas transportation strategy. We're proposing using our secure natural gas resource as an alternative transportation fuel because it is abundant, affordable, and clean. Natural gas gives Canadians competitive fuel choice for all modes of transportation, including on- and off-road vehicles, marine vessels, and rail locomotives.

North America has at least a 100-year supply of natural gas, making it a reliable, long-term transportation fuel option. Recently Canadian oil prices have averaged between $80 and $90 per barrel. Natural gas prices have averaged below $4 per thousand cubic feet, or $24 a barrel of oil on an energy equivalent basis. This makes natural gas affordable, with fuel savings of between 20% and 40% compared to diesel and gasoline.

Our budget recommendations are based on four objectives. First is to create highly skilled jobs. Encana estimates 65,000 jobs will be created over the next 10 years, if Canada supports an increased use of natural gas.

Second is to ensure a sustainable source of government revenues. Forecasts are that a growth of one billion cubic feet per day in transportation will generate, by the year 2030, an additional $11 billion in aggregate taxation revenue, and it will attract capital investments. Natural gas transportation strategy will attract new capital, investments in infrastructure, and manufacturing and vehicle purchases.

Companies like Encana are spending dollars on infrastructure. We estimate companies will spend $3 billion over the next 10 years.

The third objective is lowering emissions. The transportation sector is one of the largest contributors to GHG and other emissions. Using natural gas for the transportation sector has been shown to lower emissions by 20%.

In order to achieve these objectives, we have three recommendations for budget 2012. The first is to review the codes and standards associated with natural gas production, refuelling, storage and handling. Also, through the Regulatory Cooperation Council, we recommend aligning our standards with the United States so we can have a North American natural gas transportation industry. The recent funding allocation for phase two of NRCan's roadmap needs to ensure standards for both CNG and LNG vehicles and infrastructure.

Our second recommendation is to undertake the study that builds on the recommendations from the NRCAN roadmap and focus on key areas in user fiscal measures that would incent adoption and manufacturing of natural gas vehicles, regulations required to support natural gas vehicles, and barriers that prevent importing existing natural gas vehicles, to name a few. It's worth noting that there are 40 natural gas vehicles produced in the world that could be important in North America today if barriers were removed for their importation.

Our third recommendation is to commit to having no taxation levies, such as fuel, excise tax, and road taxes, on natural gas as a transportation fuel.

Given the fact that we now have a government that looks further, we have two recommendations for budget 2013. First is to implement fiscal measures over the next 10 years to incent adopters and manufacturers of natural gas vehicles. We believe those measures will provide a revenue payback, be sustainable, and they will attract significant capital investments and create jobs.

The second recommendation is to create a funding program for greening fleets in municipalities across Canada. In terms of pollution, converting one garbage truck to natural gas is equivalent to removing 325 cars off the road.

Encana thanks the Standing Committee on Finance for consideration of our recommendations to ensure creation of jobs, sustainable source of government revenues, attraction of capital investments, and reduction in emissions.

Thank you very much.

[The Chair, Conservative, James Rajotte]

Thank you very much, Mr. Shaw.

We'll now hear from Mr. Bowie, please.

[Bruce Bowie, President, Canadian Shipowners Association]

Thank you very much, Mr. Chairman.

My name is Bruce Bowie. I'm the president of the Canadian Shipowners Association. Thank you very much for the opportunity to appear before you today to speak about icebreaking services provided by the Canadian Coast Guard and the need to provide funding to renew the icebreaking fleet.

You may have noticed, or I hope you noticed this morning the icebreaker Griffon, which was docked right in front of the hotel. That's the kind of fleet I'm talking about, and I am hoping we can encourage you to recommend more icebreakers in the system.

The Shipowners Association represents Canadian companies that own and operate Canadian flag vessels operating in the Great Lakes, the St. Lawrence Seaway, the eastern seaboard, and in the Arctic. In 2010 the 70-vessel fleet of our members handled 55 million tonnes of bulk commodities in support of the steel industry, agriculture, construction, and petroleum industries, among others.

CSA members will bring 12 brand-new vessels, highly efficient vessels, environmentally advanced ships, into the Great Lakes system over the next three years. However, the operational and environmental benefits of these vessels and indeed the huge economic impact of the marine transportation system is at risk if Canadian icebreakers are not available to keep them moving between December and April. Much the way that trucks cannot operate in the winter without snowplows, the icebreaker service provided by the coast guard is essential to keep ships moving to get products to the industrial plants and to the markets that our customers serve.

A recent Transport Canada study concluded that the marine transportation mode has the lowest environmental and social costs for most movements along the Great Lakes and St. Lawrence corridor, and the marine mode saves shippers approximately $2.7 billion per year in transportation costs. In addition, the seaway system is significantly underutilized and has the capacity to handle double the cargo movements that it's handling today. Therefore, optimizing the utilization of the marine mode presents an important opportunity for Canada and the U.S. to both realize environmental gains and also revitalize the economy.

Icebreaking on the Great Lakes is a joint operation between the Canadian and U.S. coast guards. Effective icebreaking safely lengthens the navigation system and supports industry customers in maintaining adequate inventories throughout the year.

The Canadian Coast Guard is currently not equipped with sufficient icebreaking assets to meet the demand for its services. The region of the Great Lakes where we are today is particularly challenging, as it actually includes three distinct areas of operation. First is the portion of the St. Lawrence Seaway from Montreal up to the Welland Canal, including Lake Ontario. The second, and this is the area that's served by the Griffon that was out there this morning, covers the area right from Lake Erie up to Lake Huron, the Detroit River, Lake St. Clair, the St. Clair River, and Georgian Bay, all by that one icebreaker. The third distinct area of operation is Lake Superior.

Traditionally, the coast guard deployed three icebreakers in the area. Now there are only two Canadian icebreakers in the entire Great Lakes system. Due to the age of the vessels and the coast guard no longer being capable of meeting the demand, it no longer deploys a dedicated icebreaker on Lake Superior.

Canadian ports and commercial shipping on Lake Superior are now completely dependent on the icebreaking services of the U.S. Coast Guard. That's a problem for us. For example, in 2010 the U.S. Coast Guard's medium icebreaker suffered a catastrophic failure and was unable to support the port of Thunder Bay. That delayed a number of Canadian vessels serving the Canadian markets.

The demand for icebreaking services is equally important in other areas of the Great Lakes. The St. Clair River is a critical waterway that experiences ice buildup, and again we had failures of the Canadian fleet in 2010 that resulted in no services available in this area, having again to count on the U.S. fleet.

There is the need for a growing presence in the Canadian Arctic. The coast guard is putting additional pressure on the south as resources are devoted to the north. There's nothing identified in future-year budgets to respond to the loss of resources in the south.

Specifically, what we are recommending is that the Canadian government develop a fund to program and fund the renewal of the icebreaking fleet that's used in the Great Lakes. Secondly, we are recommending that the Canadian government adequately fund and ensure that there are three icebreakers available in this huge area of operation, the Great Lakes.

We certainly recognize that there isn't funding available today to start building icebreakers. Nevertheless, you need to start the design now, so that when deficit reduction is resolved the program will be there.

Thank you.

[The Chair, Conservative, James Rajotte]

Thank you.

We'll now hear from Mr. Bateman.

[Patrick Bateman, Policy and Research Advisor, Canadian Solar Industries Association]

Thank you, Mr. Chair.

Good morning.

My name is Patrick Bateman. I am the Policy and Research Advisor for the Canadian Solar Industries Association.

CanSIA is a national trade association that represents approximately 650 solar energy companies throughout Canada. Our vision is that by 2025 solar energy will be a viable and mainstream energy choice for Canadian consumers without the need for government incentives.

On behalf of our membership, I thank you for the invitation to appear before the committee today and to expand on recommendations we made to the Senate Standing Committee on Energy, Environment, and Natural Resources last week as to how to achieve the objective set by the government and members of the House of securing Canada's future position as a clean energy superpower.

CanSIA's written brief outlines three recommendations. Today I wish to provide information to complement the first of these recommendations--that is, the recommendation to establish a multi-year 30% investment tax credit for solar energy technology.

In particular, I would like to speak to the necessity of evolving our current national policy framework instruments to reflect the rates for market share and competitiveness of the global solar energy market, the demonstrated success and popularity of investment tax credits for consumers and business markets in the United States, and the benefits that the implementation of a federal tax mechanism in Canada equivalent to the U.S. investment tax credit will bring.

In 2011 the Canadian solar industry is expected to employ a Canadian labour force of over 8,000, generate investment revenues approaching $2 billion, and to boast over 30 manufacturers of high-value solar energy equipment. To build on these early gains an efficient national incentive structure that succeeds in attracting and sustaining private investment in the solar energy value chain while still incenting sustained cost reductions and performance improvements is critically needed.

There are currently two prominent provisions under Canadian income tax regulations that seek to incent investments in solar energy technology. One is the accelerated capital costs write-off for certain capital expenditures, and the other is the full deduction or flow-through-share financing of expenses incurred during their development and start-up. These provisions are well intended but are not contributing to the realization of the full potential of the Canadian solar energy industry.

The market dynamic for solar energy technology is different from that of large centralized energy assets. The owners of and investors in distributed solar energy technologies are not always energy companies or commercial entities. They can also be households or families. Many successful residential solar programs have demonstrated the willingness of Canadian consumers to invest in solar energy technology for their homes. Neither of the aforementioned tax measures are extended to federal personal income taxes, thus this market remains unstimulated by federal tax policy.

Further, the deduction limitations of the aforementioned tax provisions mean that many of the commercial potential adopters of solar energy technology are also not incented, as many do not have sufficient tax liability to benefit from the incentive. Members will recall that CanSIA is proposing a multi-year 30% investment tax credit that is equally applicable to individuals, households, businesses, and industry. The benefits of such an incentive would be to broaden the accessibility of existing federal tax policy to incent the private sector, both small and large, to invest in solar energy technology, to introduce stability into the solar energy market, to incent long-term investment in job creation in the solar value chain for the solar energy industry, and to support public policy objectives for energy and environment.

The United States has had a 30% investment tax credit in place since January 1, 2006. It is available to individuals and businesses alike. It has evolved, been amended, and has been extended to reflect changes in the marketplace and the successes that it has driven. Experience in the U.S. has shown that the U.S. ITC is an extremely successful measure for driving industry growth. Since its implementation, installations have grown by 800%. Solar photovoltaic manufacturing capacity has quadrupled and the average cost to consumers has fallen sharply.

In the 12 months prior to August 2011, the American solar industry created 6,735 jobs bringing the current total to over 100,000. Compared with the overall economy, which grew by only 0.7% during that same period, the solar industry experienced 6.8% growth. The U.S. has benefited significantly from effective solar energy policy mechanisms. So too could Canada.

Thank you for your attention to the potential that accelerating the deployment of solar energy with amendments to Canada's solar energy tax policy would bring to Canada and Canadians.

Similar to other energy sector developments where governments have taken a leadership role, the federal government can contribute to a stable solar sector by introducing an ITC to meet consumer demand.

Finally, as job creation remains an important issue for governments across the country, we believe the solar sector can contribute to replacing jobs lost in other industries, like the automotive sector. We've seen many new solar manufacturing jobs created in Windsor--

[The Chair, Conservative, James Rajotte]

Okay. Thank you.

Thank you for your presentation.

We will begin with Mr. Mai. You have five minutes.

[Hoang Mai, NDP, Brossard—La Prairie, QC]

Thank you, Mr. Chair.

My thanks to the witness for preparing these briefs and for providing us with good presentations.

I would also like to take a moment to thank my colleagues for the announcement of the replacement of the Champlain Bridge. That is one of the matters we have talked about at the Standing Committee on Finance at times.

My question is for the Association of Equipment Manufacturers.

You mentioned in your presentation that one of your recommendations is with regard to investment in infrastructure. The reason I bring up this point is that a lot of people, including expert economists and a lot of organizations we've met, have said that we need to invest in infrastructure. When do you think we should invest in infrastructure, and how?

[Howard Sellick]

In reference to infrastructure, we refer to bridges, roads, and harbours. In our local area, there are a lot of infrastructure projects going on here in Windsor. When you're in the dirt business, that's what it's all about: bridges and roads. Basically, that's how we refer to infrastructure, but when you say “now”, I don't know....

Howard, would you comment on that?

[Howard Mains, Canadian Public Policy Advisor, Association of Equipment Manufacturers]

Thank you.

With any of these projects, the need to move forward is important. Of course, an infrastructure project like the Champlain Bridge in Montreal, which I was over last week, is a long long-term project--upwards of 10 years, from what I understand.

But the important thing on infrastructure, whether it's a bridge or an icebreaker like Mr. Bowie referred to, is that the timeline for developing these things is so long that you actually need to make a decision now so that you can get the project planned and under way and so that 10 years from now you actually do have a bridge or a new icebreaker or whatever it may be. The important thing is the timeline associated with these major projects.

[Hoang Mai, NDP, Brossard—La Prairie, QC]

Thank you.

I've heard today from two presenters the term “clean energy,” one presenter from the solar industry, one from the natural gas industry.

First to the Solar Industries Association, what is your definition of clean energy and how do you think your proposal would help the environment?

[Patrick Bateman]

I think there are numbers of different definitions of clean energy. They all apply to future sources of energy that have a less harmful impact on the environment through their use and through their extraction. Solar energy fits very well into that definition and can also be called renewable, as the resource is not finite. We believe that solar energy has a particularly good value for inclusion in Canada's clean energy future.

When in operation, solar energy creates no emissions, no pollution, no surface water run-off pollution, and no emissions to air. In operation, it's 100% clean energy with no harmful impacts. Manufacturing processes are being improved at present, and the energy payback, the amount of energy that's put into creating these technologies, is often currently recovered within about three years, and that is currently being reduced as well. If that solar technology is in operation for 30 years, then that's 27 years of pollution-free and clean renewable energy.

[The Chair, Conservative, James Rajotte]

You have 30 seconds.

[Hoang Mai, NDP, Brossard—La Prairie, QC]

Quickly, maybe we could have your version of clean energy, Mr. Shaw.

[Sam Shaw]

First of all, certainly when you start looking at the electricity regulation that's proposed and coming out, it looks at lower carbon dioxide using combined natural gas cycle generation. But clearly when you start looking at transportation, it's not only carbon dioxide, but nitrous oxide, sulphurous oxide, mercury, and particulate. That's certainly one of the key components in the U.S. with their Clean Air Act.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Mai.

We will go to Mr. Van Kesteren, please.

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

Thank you all for coming to beautiful downtown Windsor. I don't think you will get a prettier sight than looking at Detroit through the glass here. This is our stomping ground. Brian and I have worked on industry for quite some time, and we are very pleased to have you all here.

I wish I had enough time to ask you all questions. I am going to zero in on the natural gas people. It is no secret that I have been a strong advocate of the natural gas industry, specifically with the transportation. Alicia, maybe you will have a chance to tell us at some point about the natural gas truck that is going to be coming to Ottawa so all of us can view it. I think that is happening in November.

We've been looking for ways to improve and to introduce a natural gas vehicle into the marketplace. There was a provision for $50 million to develop transportation sector regulations and next-generation clean transportation initiative. Can you maybe just comment on that quickly? I have some more questions too. Were you able to tap into that? What are some of the things you could do with that?

[Alicia Milner]

Thanks to the Government of Canada, we were successful in getting a $1.4 million capacity-building initiative in budget 2011. This will help with codes and standards as well as education and outreach to the market.

One of our challenges on natural gas is that it has been around a long time. We have a lot of users out there who tried the early technologies. The municipal sector especially had a difficult experience, and we really need to update in terms of what the technologies are capable of now. We are currently working with Natural Resources Canada on that initiative over the next 18 months, and that is going to be very helpful too in terms of levering the private sector investment that is happening on the ground and also learning from these early projects so that not every project has to be a trailblazer. We can learn from the Robert project, for instance, and spread that knowledge across Canada.

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

You've mentioned the Robert project, and I think it is essential that you point out and tell the committee how the transportation community is beginning to look seriously at natural gas. Maybe you could just talk about a company like Westport. The technology is cutting edge. This is a Canadian company. The former mode of natural gas was an add-on. This is an engine that is designated for natural gas. Maybe you could tell us about the interest in the transportation industry in natural gas transportation.