Natural Resources Committee on Feb. 28th, 2013

[The Chair, Conservative, Leon Benoit]

Good afternoon, everyone.

We're here to continue our study on innovation in the energy sector. We have with us today several witnesses. First of all, from Bombardier Inc., we have Pierre Pyun, vice-president of government affairs, and Marc Laforge, director of communications with Bombardier transportation and public affairs. Welcome to you both.

From General Motors of Canada Ltd., we have Philip Petsinis, manager of government relations. Welcome.

We have from the AFL-CIO, the Building and Construction Trades Department, Christopher Smillie, senior advisor, government relations and public affairs. Welcome to you, sir.

By video conference from Fredericton, New Brunswick, we have from Atlantic Hydrogen Inc., David Wagner, president and chief executive officer. Welcome to you.

By video conference from Burnaby, British Columbia, we have from the Automotive Fuel Cell Cooperation, Andreas Truckenbrodt, chief executive officer. Welcome to you, sir.

Just before we start the presentations, two members of the committee would like to bring up some motions. I'm told that we can deal with them very quickly, so we will do that.

Ms. Liu, you may go ahead with your motion.

[Laurin Liu, NDP, Rivière-des-Mille-Îles, QC]

Thank you, Mr. Chair.

I will read my motion. The committee received notice on February 15, 2013.

That, pursuant to Standing Order 108(2), the Committee hear officials from the Canadian Nuclear Safety Commission and Atomic Energy of Canada Ltd, no later than on Thursday, March 28, 2013, in relation to the shipment of highly enriched uranium from Chalk River to South Carolina.

I hope that my colleagues will support my motion.

We know that this high-priority mission is of special concern because it is the first time that authorities have attempted to truck highly enriched uranium in liquid form. We know there are many risks attached to the transport of this material. We know there is a risk that a chain reaction of fissioning atoms could cause the rupture of the tank transporting it, releasing the solution into the environment and endangering the health of those nearby. So it's of great concern to us to ensure that this transport is done in a safe and secure way. We would ask that both the Canadian Nuclear Safety Commission and Atomic Energy of Canada Ltd. appear before committee so that we can ensure that the proper security measures have been taken.

We also know that civil society has asked for assurance that it's done safely.

Thank you.

[The Chair, Conservative, Leon Benoit]

Thank you, Ms. Liu.

We have Mr. Anderson on the list. Does anybody else want to be on the list to speak on this? Okay, no.

Mr. Anderson, go ahead, please, and then we'll deal with this motion.

[David Anderson, Conservative, Cypress Hills—Grasslands, SK]

Mr. Chair, we have a schedule for the committee. We'd like to stick to that and we're prepared to go to the question now.

[The Chair, Conservative, Leon Benoit]

Let's go to the vote then on Ms. Liu's motion. Those in favour of the motion? Those opposed to the motion?

(Motion negatived)

Mr. Hsu, you have a motion as well.

[Ted Hsu, Liberal, Kingston and the Islands, ON]

Yes, this motion was put on notice two weeks ago. I'll quickly read it out and explain it:

That, pursuant to Standing Order 108(2), given the concerns raised in the 2012 Fall Report of the Commissioner of the Environment and Sustainable Development, the Committee further study the issues raised in Chapter 1; that the respective Chairs and officials of the two Atlantic offshore petroleum boards (Canada-Nova Scotia Offshore Petroleum Board and Canada-Newfoundland and Labrador Offshore Petroleum Board) be invited to appear before the Committee; and that the Committee report its findings to the House by June 2013.

I think that would be good for the health of the entire oil and gas industry, because something bad that happens in one part of the industry is bad for the whole industry. I think anybody who's worked in business knows that. You shouldn't rejoice too much if your competitor has a problem. I think it would be important for the social licence of the entire industry, if we were careful and found out from these boards how they were responding to the report of the Commissioner of the Environment.

[The Chair, Conservative, Leon Benoit]

Thank you, Mr. Hsu.

We have Mr. Anderson on this as well. Is there anyone else who'd like to speak to Mr. Hsu's motion? Okay.

Mr. Anderson, go ahead.

[David Anderson, Conservative, Cypress Hills—Grasslands, SK]

Mr. Chair, we're prepared to go to the question.

[The Chair, Conservative, Leon Benoit]

Okay, let's go to the question on the motion.

Those in favour of the motion from Mr. Hsu? Those opposed?

(Motion negatived)

I appreciate going through these quickly because we have witnesses here. I know we're all anxious to hear from them, so let's hear from them in the order they appear on today's agenda.

We'll start with Bombardier. Mr. Pyun, go ahead, please, with your presentation.

[Pierre Seïn Pyun, Vice-President, Government Affairs, Bombardier Inc.]

Good afternoon, Mr. Chairman and members of the committee. Thank you for the opportunity to appear before you and to share our thoughts on the development of energy-efficient technologies.

I'm Pierre Pyun, vice-president for government affairs at Bombardier Corporate Office. I'm joined by one of my colleagues on the transportation side of our company, Bombardier Transportation North America, to be more precise, Mr. Marc Laforge, who is director of communications.

Bombardier is an international company headquartered in Montreal. We have some 70,000 employees around the world, with 23,000 in Canada. We are one of the world's leading manufacturers in the rail and aerospace sectors.

We have a number of facilities in Canada dedicated to production, engineering, services, training, and research and development in the rail and aviation sectors. In Quebec, we have facilities in Dorval, Saint-Laurent, Mirabel, Saint-Bruno and La Pocatière. In Ontario, we have locations in Kingston, Thunder Bay, North Bay, Downsview, Toronto and Mississauga. We have pilot training facilities in Cold Lake, Alberta, and in Moose Jaw, Saskatchewan.

Bombardier is currently heavily invested in research and development. We have a number of new aircraft programs on the go, such as the CSeries aircraft, a new Learjet aircraft that we call the Learjet 85, as well as the new Global 7000 and 8000 aircraft. These are business jets.

We are also working on cutting-edge rail technologies such as very high-speed trains. In fact, this year will be a very critical year for us. We have a number of milestones to meet on the product-development side of our operations with the CSeries and the Learjet 85 making their first flights this year, as well as the entry into service in China and Italy of our very high-speed train technology, which we call the ZEFIRO. It will run at up to 360 kilometres per hour.

At Bombardier, our stated goal is to develop market-astute aircraft and trains that bring about economic and social value while consistently setting the benchmark for environmental performance. We call it the evolution of mobility. That's our brand promise.

The drivers underpinning technology development at Bombardier include the need to minimize the environmental footprint of our products and technologies, to make our products more cost-effective for our customers and operators, and also to make our products more attractive to passengers and riders, in other words, to enhance passenger experience and comfort.

All these drivers or objectives are, as a matter of fact, quite intertwined. At Bombardier we also take a holistic approach to addressing the environmental challenge by focusing not only on the products but also on production processes. We're taking a full life-cycle approach to reducing our environmental footprint. In our aerospace division we have consistently designed the most fuel-efficient aircraft with the lowest noise and emissions in their category. For example, our new CSeries aircraft will be the world's most environmentally responsible commercial aircraft in its class. By making the aircraft lighter, through the use of composite materials and advanced engine technology from Pratt and Whitney, we have given it a 20% fuel-burn advantage compared to competing or existing products.

With an eye on our production process as well, the CSeries plants in Mirabel and Belfast are designed and built to reduce the environmental impacts of their activities, with the Mirabel CSeries test facility earning a LEED certification. For the first time in the industry, Bombardier has assessed the environmental impact of the entire CSeries aircraft by carrying out a full life-cycle analysis. We will issue an environmental product declaration when the aircraft enters into service. This practice will continue for all our future new products.

We are involved in research projects on sustainable biofuel alternatives. Porter Airlines Q400 turboprop aircraft took flight last year in April using fuel from a non-edible oilseed crop called camelina as part of a new biofuel test program. This test program was led by Bombardier Aerospace with partners such as Porter Airlines, Pratt and Whitney Canada, and Targeted Growth, a Saskatchewan-based company. This initiative was also made possible by funding provided in part by the Green Aviation Research and Development Network—the acronym is GARDN—a not-for-profit R and D organization funded through the Government of Canada's business-led Networks of Centres of Excellence.

We not only focus on developing sustainable products but also work with international organizations such as ICAO, the International Civil Aviation Organization and its Committee on Aviation Environmental Protection, to contribute to future standard-setting for aviation.

We're also responding to the overall improvement in the industry by contributing advice towards a comprehensive air navigation system, a system-wide solution through ICAO's air navigation branch. We are doing this because we understand that the production process only accounts for around 10% of the aviation sector's environmental footprint. The rest lies with the operation of aircraft, really.

In our rail division we have also spearheaded green technologies in the industry. Rail operators around the world face volatile energy costs, as you know well. Bombardier is currently the only rail manufacturer offering a comprehensive and flexible portfolio of green rail technologies to address these challenges. We introduced a portfolio of what we call ECO4 solutions, services, products, and technologies in 2008. You have in front of you some information in that regard.

ECO4 stands for economy, energy, efficiency, and ecology. It includes a series of energy-saving solutions developed by our rail division. We have many examples of those technologies, but I'll highlight two of them that are either being developed in Canada or being tested in Canada.

One example is a wayside energy storage system that we call EnerGstor. This technology was developed at our Kingston site, in Ontario, where we have an engineering centre. Essentially, it captures and stores wasted braking energy from trains and recycles it back into the system. Currently we're working on a pilot project with TransLink in Vancouver to test this system.

The other example I wanted to flag to you is our PRIMOVE technology, which is really a groundbreaking technology. It's a contact-less, catenary-free, and emission-free energy induction transfer technology that has bus, truck, train, and car applications. Again, you have some information on that technology in the package we have distributed to you. Essentially, the electrical supply components are hidden under the vehicle and beneath the truck, thus eliminating the need for overhead wires and poles. Currently we're in the process of concluding an agreement with Montreal Société de transport and Hydro-Québec for a pilot project to test the PRIMOVE technology in Montreal.

In closing, we need to continue working closely with our stakeholders to ensure that Canada has an ecosystem, an environment, and policies conducive to innovation in energy efficient technologies for transportation.

We'd be very happy to take questions from you later.

Thank you.

[The Chair, Conservative, Leon Benoit]

Thank you very much, Mr. Pyun, from Bombardier.

We'll have everybody make their presentations and then we'll go to questions and comments.

Next we have from General Motors of Canada Ltd., Philip Petsinis, manager of government relations. Go ahead, please, with your presentation for up to seven minutes.

[Philip Petsinis, Manager, Government Relations, General Motors of Canada Limited]

Good afternoon, I appreciate the opportunity to address the committee today.

I'll start by providing some background on important energy and technology issues facing the automotive industry, then provide you with GM's energy and technology strategy and close with some recommended policy initiatives.

Today petroleum accounts for just over a third of the world's energy needs, yet transportation is 96% dependent on petroleum. GM believes that continuing to rely exclusively on petroleum to power personal transportation is not a sustainable strategy. Next, greenhouse gas emissions have become a regulatory focus of many developed nations. The U.S. and Canada have recently implemented landmark regulations focused on dramatically reducing vehicle greenhouse gas emissions, regulations that will require the most significant introduction of new vehicle technology in more than a generation.

For the first time, these new regulations will establish specific greenhouse gas emission standards for each size of new vehicle, and the greenhouse gas emissions allowed will be reduced every year by 3.5% to 5% up to the year 2025. Cumulatively these reductions will result in vehicle fuel consumption improvements of up to 60% by 2025.

Given these factors, GM's energy strategy, simply put, is to displace petroleum use through accelerating the rate of efficiency improvements for gasoline vehicles, as well as introducing vehicle technologies powered by a diverse range of more sustainable and renewable energy sources.

We strongly feel that there is no single silver bullet that will address the transportation energy challenge and, therefore, it is imperative to have a portfolio of alternative propulsion technologies that use a variety of energy sources that are more sustainable and, where possible, renewable.

As mentioned, the fuel efficiency of gasoline vehicles will continue to improve through a variety of technologies like lightweighting, cylinder deactivation, and direct injection systems. But again, only focusing on improving gasoline and diesel engines will not be enough.

Renewable biofuels like ethanol and biodiesel offer the best near-term solution to reduce transportation's dependency on petroleum and vehicle greenhouse gas emissions. This option has minimal incremental vehicle and refueling costs. GM is a leader in providing these types of vehicles that thanol and biodiesel.

Compressed natural gas and liquid petroleum gas also have benefits, and GM offers vehicles that use these fuels. Compressed natural gas can cut CO2 emissions by more than 15% and there is an abundant supply. Liquefied petroleum gas is currently the third most commonly transportation fuel and it's cheaper than gasoline.

Vehicle electrification has been a large focus recently and GM believes that this path offers the best long-term solution for sustainable personal transportation. We have an expanding number of hybrid electric vehicle models that effectively improve the efficiency of gasoline vehicles, but we've also introduced plug-in electrical vehicles like the award-winning Chevrolet Volt and have announced additional new plug-in electric vehicles like the Cadillac ELR and the Chevrolet Spark. We continue our development of fuel cell electric vehicles as well.

Electricity holds many benefits as a transportation fuel. It's produced domestically, is inexpensive relative to gasoline, and there's significant off-peak capacity to fuel vehicles. Electric powertrains are much more energy efficient than gasoline or diesel powertrains and have dramatically lower fueling costs for consumers, of approximately one fifth the fueling cost compared to a gasoline vehicle.

Canada is a global leader in producing clean low greenhouse gas electricity. When used in plug-in electric vehicles, vehicle greenhouse gas emissions can be virtually eliminated in many provinces like B.C., Manitoba, Ontario, and Quebec.

GM also continues to advance the development of hydrogen fuel cell electric vehicles, which offer the promise of potentially eliminating vehicles' dependence on fossil fuels and provide customers driving ranges and fueling times that are very comparable to those of gasoline vehicles.

As you can see, a diversity of future vehicle technologies and associated energy in fuels will be critically important going forward. As a global vehicle manufacturer, GM is prepared to meet this drive towards a diversified and sustainable personal transportation.

So what does this mean for Canada?

The current reality, unfortunately, is that Canada lags behind most developed countries in policies that support the development of alternative refueling infrastructure. That has resulted in the extremely limited availability, or even non-existence, of these new green fuels. Policies to support establishing alternative fuel pumps and stations have been implemented in other countries and need to be considered by Canada.

A good example is the United States' alternative fuel vehicle refueling property credit program. It provides a 30% tax credit or up to $30,000 to offset costs of establishing a fueling pump for E85 ethanol, B20 biodiesel, CNG, LPG, electric recharging and/or hydrogen.

The U.S. Department of Energy has also been providing funding to support private and public sector initiatives to expand alternative fueling infrastructure.

Retail fuel price support measures are also an important factor. Many other jurisdictions also provide these types of fuel tax reliefs or eliminate fuel taxes for lower carbon alternative fuels to increase consumer demand as well as increase the commercial viability of bringing these new more environmental fuels to market. Canadian fuel excise tax and many provincial fuel road taxes continue to be applied to some green alternative fuels in Canada. This effectively undermines the initial commercial viability of some of these advanced green alternative fuels.

In order to increase the adoption of these new vehicle technologies and fuels, Canada should increase consumer demand for these green fuels by exempting them from federal excise fuel tax as well as provincial road taxes in the early stages of these fuel developments.

With that I'll close my comments.

Once again, thank you for the opportunity to address the committee today.

[The Chair, Conservative, Leon Benoit]

Thank you very much, Mr. Petsinis, for your presentation.

We'll now go to the Building and Construction Trades Department of the AFL-CIO's Canadian office, and Christopher Smillie, senior advisor in government relations and public affairs.

Please go ahead, sir. It's good to have you at our committee again.

[Christopher Smillie, Senior Advisor, Government Relations and Public Affairs, Building and Construction Trades Department, AFL-CIO]

Thanks very much.

I just had to sign a liability waiver from the clerk there, so I'm not sure....

[Voices]

Oh, oh!

[Christopher Smillie]

I'm just joking.

Thanks for inviting us back. We are the Canadian building trades. We represent, at last count, I think close to 550,000 skilled trades workers across Canada, in every province and territory.

Today I will talk about innovation in the energy sector—I call it “employment innovation”—and I'll take you through some of the things that are actually helping industry and helping skilled trades workers across Canada.

The energy sector in Canada is actually putting people to work. There isn't too much construction going on in the manufacturing sector. The infrastructure work is largely done, although there are enormous issues arising out of infrastructure renewal in large cities and towns. Except for some big municipalities—Toronto, Vancouver, Ottawa—there isn't too much in the hopper, so to speak, for the people we represent other than in the energy sector. No other sector puts as many of our members to work. On any given day, about half of our national membership is working on a job site that's related to energy.

To the building trades, innovation is about going to work. It's about the place to train the cohort of highly skilled workers who will replace the members of the baby boom generation who are starting to leave today. The energy sector saved Canada, quite frankly, during the recession, especially with our workers, and we hope to continue.

If you look at my testimony from the finance committee of November 19, you will see some additional statistics around the members we represent and actual work volumes, etc., in the energy sector. I wanted to get to some other things today, but that is there.

Construction projects associated with oil sands and pipelines and other energy products certainly are game changers for construction workers. These are national megaprojects that require a national workforce.

I'll mention some things we are working on. First is an emerging drug and alcohol policy. We're doing one test with multiple employers in Alberta. It means getting to work faster and for less money for the worker and the company. This is innovation at work in the building trades: getting to work faster. It's the same as aligning the welding tests from province to province. On energy projects, we are able to test policy that affects training, and we're able to streamline some of the testing requirements to get onto job sites.

We are working on safety training across the country. Large energy projects, especially in Alberta, are an opportunity to test those policies.

There are other unique training opportunities. I talk about northern Alberta, or about a nuclear project; they generally act like a large classroom for training construction apprentices. Let's say there are 2,000 journeypersons on a job site. It means there can be three times as many apprentices learning a construction trade on that project.

We are also working on things like Helmets to Hardhats. In that program, we're helping veterans transition from the military into the skilled trades. I think we have over 1,000 files right now that we're working on. In the military there are trades parallel to those in the civilian workforce. When those folks are done—the average age of military members when they leave is decreasing—we're able to put them to work in high-paying jobs.

In terms of other innovation, in Windsor, Ontario, there isn't too much economic activity, so we're doing practical things to make sure that the people who are in Windsor have the training to go to other places to work. In Windsor we're training to Alberta, Newfoundland, and Saskatchewan standards so that members can get on the plane and go and work on large energy projects.

As you can see, the impact of the energy sector is national, and the impact is large on our organization.

For areas that have the ability to train, like northern Alberta for pipeline jobs, people who are unemployed need to have access and opportunities. These projects give those people opportunities to go to work.

People travel to support their communities at home. If you ask someone in Fort McMurray where they're from, more than half of them will say they're from somewhere else. So these projects really are opportunities for the entire country.

I have a few other things. I don't want to diminish their importance by their placement in my remarks.

There's the mobility of apprentices, and how young people from anywhere in Canada can go and get hours on their apprenticeship on any project. Let's say a pipeline project is approved. There is an opportunity for the apprentice from New Brunswick or from Nova Scotia, where there isn't a lot of work, to be able to go out there and work for a few summers on that pipeline.

What else is innovative? We're talking about things such as the diversity of workplaces. We're working with our contractors on aboriginal engagement in our workplaces. Traditionally these groups haven't been able to access work. Large energy projects provide the opportunity to put under-represented people directly to work.

Can I talk about U.S. politics? I don't want U.S. politics to drive Canada's success. There is a lot of noise about pipelines going to the west coast. I think those pipelines are important to diversify our markets. We already have 11 governments in Canada regulating where people go to work, etc. We don't need another one. The diversity of markets is important for Canada.

The east-west pipeline going from Alberta to Montreal or further points east is also important. That's sort of a nation-building exercise that we should seriously consider. It's probably the CP rail system of the next century.

That's pretty much it. I'd like to stop there, and if you have any other questions, I'd be happy to address them.

Thanks for the opportunity to come to speak.

[The Chair, Conservative, Leon Benoit]

Thank you very much, Mr. Smillie, for appearing before our committee once again.

We will go now by video conference to Fredericton, New Brunswick, to Atlantic Hydrogen Inc. We have David Wagner, president and chief executive officer.

Go ahead, please, Mr. Wagner.

[David Wagner, President and Chief Executive Officer, Atlantic Hydrogen Inc.]

Thank you.

Good afternoon, everyone, and thank you for inviting me to speak to the committee today. My name is David Wagner and I am the president and CEO of Atlantic Hydrogen, which is based in Fredericton, New Brunswick, and is a clean energy technology company that for the last 10 years has been conducting research and development on a technology that we have branded the “CarbonSaver”.

I think the topic of today's meeting, innovation in the energy sector, is what the focus has been for Atlantic Hydrogen since the day the company was created back in 2002. Today, we are a privately held, investor-owned energy company, with 25 full-time staff made up of scientists, engineers, technicians, and a professional management team.

What I'd like to do in the next few minutes is tell you what it's like to develop and build a technology company based on innovating technology for the energy sector. I'm going to start by giving you a bit of background on how the company was created.

It started at McGill in 2002, with a very good idea from a chemist, and an entrepreneur who had money. The whole idea was to apply plasma science to disassociating carbon and hydrogen molecules in natural gas. In other words, they were trying to make hydrogen by removing carbon from natural gas. The project started at McGill and eventually moved to the University of New Brunswick in 2004. Since that time, we have grown to the full complement of 25 people, as I've already mentioned.

Our technology, the CarbonSaver, is a proprietary plasma-based system. The whole idea here is to reduce the carbon footprint by removing carbon, pre-combustion, from natural gas and thereby creating hydrogen, so what we really are is carbon capture for natural gas pre-combustion. The carbon is sequestered in rubber products like tires or in molten metals used and found in the foundry industry.

Our CarbonSaver is addressing worldwide markets and those potential customers who need hydrogen for applications such as fuel cells or industrial applications like refineries or electricity generation. It truly is a very large worldwide market. Our value proposition of the CarbonSaver is to be the lowest-cost producer of hydrogen without producing any CO2 in the process. This is quite unique in the industry.

I mentioned that we have been developing this technology. We are now in the commercialization stage. To date, we have raised in excess of $35 million, about 60% of that via selling shares in Atlantic Hydrogen. We have received about 20% in loans and about 20% in grants.

What I'd like to do is take a few minutes to give you an idea of what that story has been, what the road we've travelled has been like, and, quite frankly, where we are today. The fact is that we would not be here today had it not been for the support from some programs the federal government offers. I do want to make note that for a small company and for a start-up company like Atlantic Hydrogen, these are critical in our growth.

As I mentioned earlier, it starts with a good idea. In our case, it started at McGill and eventually was moved to the University of New Brunswick. The primary reason that the technology of the project was moved to the university is a program called the Atlantic innovation program that was offered back in 2004 by the Atlantic Canada Opportunities Agency. With the support of angels and the AIF program from ACOA, we effectively proved the concepts of disassociating carbon and creating hydrogen in natural gas.

That early success really allowed us to begin trials and leverage that success to raise more money—more angel rounds, and more friends and families. Really, the success in building on the early trials allowed us to create a scale system, which we called our beta system.

Success really does validate the plans, and it also allows us to gain access to federal programs like the ones that are offered by Sustainable Development Technology Canada, or SDTC; IRAP, and ecotrust. I have already mentioned ACOA's AIF program. All of these programs have been critical because we are very high risk at this early stage.

What that also allows is corporate investment, which is also prepared to invest in innovation and new ideas. Atlantic Hydrogen was very successful in attracting some of the largest Canadian energy companies—Encana, Cenovus, and Emera—to invest in our company and to allow us to demonstrate the technology we built.

Where are we today? I'm happy to report that Atlantic Hydrogen, in the fall of 2012, closed a round of capital that is going to be used to construct our first industrial-scale plant. What this will do is demonstrate and validate the use of our technology to produce clean hydrogen and fit-for-use carbon.

AHI has also been able to attract investment from some of the largest energy companies in Canada. Those companies include Emera, Encana, and Cenovus, and we have just recently attracted investment from the largest oil and gas producer in the world, which sees value in our carbon-saver technology.

In summary, I want to tell the committee that Atlantic Hydrogen would not be here today without the financial support of the federal government and programs like the SR and ED program, IRAP, SDTC, and the Atlantic Canada Opportunities Agency's Atlantic innovation fund. We would just not be able to exist without the support of those programs.

Do these programs make us more competitive with other countries? I think the answer is yes. Without them we would not be able to raise enough early stage high-risk capital to do this kind of innovation.

I think the real challenge now is stepping up and making our innovation initiatives, from a country perspective, even stronger than they are today.

I'll end it here and I would like to thank the committee.

[The Chair, Conservative, Leon Benoit]

Thank you very much, Mr. Wagner, from Atlantic Hydrogen Incorporated.

We go now by video conference to Burnaby, British Columbia.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Hear, hear!

[The Chair, Conservative, Leon Benoit]

We have with us, from the Automotive Fuel Cell Corporation, Andreas Truckenbrodt, chief executive officer.

Go ahead, please, sir, with your presentation, for up to seven minutes.

[Dr. Andreas Truckenbrodt, Chief Executive Officer, Automotive Fuel Cell Cooperation]

Mr. Chairman and members of the committee, thank you very much for the invitation to meet with you today to talk about how we can accelerate zero-emission automotive hydrogen fuel-cell technology to mass-market commercialization.

My name is Andreas Truckenbrodt, and I'm the CEO for the Automotive Fuel Cell Cooperation. AFCC is a private company located in Burnaby, British Columbia, and is owned and funded by Daimler AG and Ford Motor Company. The company was organized and grown from Ballard Power Systems' automotive fuel-cell operations.

We develop hydrogen fuel-cell technology for commercialization in affordable, high-volume, and mass-market Daimler and Ford fuel-cell vehicles. Complementing our R and D efforts, Daimler opened its fuel-cell manufacturing research laboratory and manufacturing plant in Burnaby in 2011. Just recently as another major step, Nissan has joined Daimler and Ford in a joint fuel-cell program centred here in Burnaby. We have approximately 300 employees in Vancouver and are intending to introduce full-capability affordable zero-emission fuel-cell vehicles to the market beginning in 2017.

Today I'd like to give you four messages:

Number one, the automotive industry is committed to zero-emission vehicles, and hydrogen fuel-cell vehicles are a key element of our propulsion-technology portfolio.

Number two, critical to getting to commercialization of fuel cells are innovations in three technical areas—fundamental understanding, manufacturing, and hydrogen production and distribution—as well as a capable supplier network, consistent regulations, and the development of a hydrogen-fuelling infrastructure.

Number three, Canada has had a leading position in zero-emission, hydrogen fuel-cell technology and should not give this up.

Number four, critical success factors for Canada in this dynamic, high-tech and fiercely competitive global environment are a clear commitment to zero-emission technologies and long-term collaboration between government, academia, and industry.

I'd like to go a little further into those four points.

First, all major automotive vehicle manufacturers, in coordination with their home governments, are investing heavily in hydrogen fuel-cell technology and hydrogen-infrastructure development. This is not only a result of regulatory pressure for reduced automotive emissions; it's also an industry-wide recognition that pure-battery electric vehicles, while needed for urban mobility, have limited consumer appeal due to vehicle range restrictions and long recharging times. In order to have a high volume of vehicles deployed in the market, those vehicles need to be able to compete with today’s internal-combustion-engine-powered vehicles in terms of performance, range, and cost. The hydrogen fuel cell is the zero-emission technology that can achieve this.

To the second point, I would characterize the current state of research, innovation, and technology development in fuel cells as technically demanding, quickly expanding, and extremely globally competitive. Fuel-cell vehicles are now moving beyond small demonstration fleets to true high-volume global commercialization. No longer is the challenge that all of us companies in this sector face to prove that fuel cells work in automotive applications. That's been done, for instance, through the few hundred fuel-cell cars in customers' hands that we have out today.

The goal now is to reduce the cost of fuel cells to levels that make them competitive with today’s internal combustion engines. While we know how to get there, there are still innovations required in tools, in processes, and in human capital in three critical technology areas: the first is fundamental understanding and characterization of fuel-cell materials; the second is high-volume fuel-cell manufacturing technology; and the third is hydrogen-fuelling infrastructure on both the production and the distribution sides. I can expand on these areas, of course, later if you want.

In addition to those technology challenges, the automotive fuel-cell sector is lacking a mature automotive supply base and consistent regulations in the form of policies, codes, and standards. Government policy that encourages supplier investment in Canada could be beneficial in developing Canada’s global competitive technology advantage.

The promotion of high-paying technology innovation jobs in Canada, and protecting against a possible Canadian brain drain, is tied directly to research funding and government laboratory-industry collaboration.

My third point concerns the role of Canada. Canada and the greater Vancouver area, including its universities and research institutes, have a long, successful history in proton exchange membrane fuel cell technology since the first days of Ballard's fuel cell development initiated in 1983. Today, Vancouver is arguably the global centre of excellence in fuel cell technology.

The Canadian government has historically had a significant role in partnering with industry and academia to advance fuel cell technology. One specific example for us is SDTC, which has been contributing to AFCC's development with $11.5 million from 2010 to 2013, which is 22% of our project expenses. The financial and non-financial support provided to innovative technologies through SDTC makes Canada a globally attractive destination for industrial investment, which, at the end of the day, has been demonstrated by Nissan joining this effort here in Vancouver.

Fourth, the Canadian federal government has historically been a strong and capable partner to industry and academia in the initiation of Vancouver’s automotive global fuel cell centre of excellence. However, very frankly speaking, recently that support has waned to dangerously low levels. Unfortunately, to us it feels like the current federal government has given up on the technology. Evidence of this is clear, either with the lack of a clear strategy, cancellation of programs, cuts to overall funding for supportive clean technology funds, or even the last minute removal of funds to R and D projects already committed to.

Today’s high-efficiency, low emissions internal combustion engines have been developed for more than 125 years. By comparison, the technology development progress in PEM fuel cells during the past 30 years is really impressive, but it's still not complete.

Long-term commitment in the forms of a clear strategy, government collaboration with industry and academia, scientific research funding, and tax and incentive policies will be a significant factor in determining if Canada and the Canadian industry can remain competitive in this sector’s dynamic, technologically advanced, and fiercely competitive global environment.

Thank you very much for your attention.

[The Chair, Conservative, Leon Benoit]

Thank you, Mr. Truckenbrodt, from Automotive Fuel Cell Cooperation.

Thank you, all, for your presentations.

We'll go now directly to questions, starting with Mr. Trost for up to seven minutes. Go ahead, please, sir.

[Bradley Trost, Conservative, Saskatoon—Humboldt, SK]

Thank you, Mr. Chair.

My first question is for Mr. Truckenbrodt, in Burnaby, and also for General Motors here.

One of the things I found interesting in the last few years is what's been changing in regard to transportation fuels. Electrical fuel cell technology has been out there and talked about for years. But a couple of years ago the natural gas guys came to us and said they needed help with a pilot project to change trucks over to natural gas. We thought about it but nothing happened on the government side, and then they came to us later and said, don't worry, it's moving so fast that we're converting from diesel to natural gas all over the United States and Canada.

We've talked about things like electrical and talked about fuel cells—great, wonderful technologies—but the technology that seems to be capturing the market, taking away from gasoline and diesel, is something that no one really talked about. It has really started to move in because of changes in the supply of natural gas. Prices have plummetted and it's been able to move in. Supply creates its own demand, and that's what has fundamentally changed it. In some respects it has passed fuel cells and electrical in the race for the next generation of automotive fuel.

With that in mind, here is my question for both gentlemen. I like what both of you are doing as far as electrical and fuel cells are concerned, but why should the government or anyone pick and choose one particular technology over another? Why has natural gas started to become the direction in which we're seeing innovation and a new transportation fuel that is going away from gasoline and diesel, and why hasn't it been electrical and fuel cells, which, candidly, seem to have had more government involvement?

I will go first to General Motors, and then to Burnaby

[Philip Petsinis]

Thank you for that question. It's a good question.

Governments shouldn't pick technologies. They've never shown a track record of actually making the right decisions in that regard. The reality is that you will need all these technologies, because when you really look at how they are used, both in different jurisdictions of the world, which have energy biases....

For example, some jurisdictions have significant amounts of natural gas. The U.S. has actually been able to unlock significant amounts. Other areas that don't have that availability may have biases to other fuels, such as biofuels, potentially. As a global manufacturer, I need the complete portfolio to satisfy the broad range, both within jurisdictions and across the world.

What you'll also need to understand, too, is that these technologies, the different ones that I spoke of—advanced gasoline, biofuels, CNG, LPG, electric vehicles, hydrogen vehicles—all have pros and cons, and are more or less applicable to certain types of vehicles and how they use them. Let me give you an example.

For an urban vehicle, where 80% of consumers travel less than 65 kilometres on their daily route, a Chevrolet Volt allows them to complete that trek on pure electricity at one fifth the fuel cost of a gasoline vehicle. We are now the leaders of plug-in vehicle sales in Canada. The “con” of an electric vehicle is range. That's why we put an extended-range engine in the Volt, so that it can actually generate its own electricity if you need a longer drive. They're very well suited to smaller vehicles, because as I increase the vehicle mass, I need more and more battery to propel it. So it has very good application in an urban setting.

Natural gas is an example. It's a very cheap fuel now, which is increasing the interest in that area, but I need significant volume to store the natural gas on that vehicle to travel at a distance comparable to the gasoline vehicle. So there's the tankage that I have to do it at.

As an example, we sell trucks and vans that are capable of running on natural gas in Canada. You have to store the natural gas at 7,000 pounds per square inch and have twice the volumetric size of a tank to carry the same amount of energy to travel as a gasoline or diesel vehicle. That's very expensive. These tanks are carbon-fibre tanks, and cost tens of thousands of dollars.

As well, I need the room. If I have a compact vehicle, trying to squeeze these natural gas tanks into the vehicle is a compromising situation. They're more suited to larger vehicles, such as heavy-duty trucks, etc. They have ample volume in the vehicle to actually store that energy.

Secondly, the vehicle technology to run that gas is not as easy as some people think. In the past, there have been garage-type conversions, let's say, converting a gasoline vehicle to natural gas. That is no longer the case today. These vehicles are actually quite expensive. So you need to have a duty cycle that drives a lot of mileage to regain....

You have a price difference, that is, it's cheaper fuel, but the vehicle-cost technology is so much more that you need to be dropping $40,000 instead of $20,000.