Transport Committee on Feb. 28th, 2012

[Geoff Munro]

They're certainly trending lower.

[Pierre Poilievre, Conservative, Nepean—Carleton, ON]

—and an enormous, ubiquitous supply all over North America. Given the growing supply and a price advantage of 20% to 25%, why is the use of natural gas-powered vehicles in a decline over the last decade in North America?

[Geoff Munro]

Infrastructure would be my first response. There has not been an investment in infrastructure in North America—in Canada and the U.S., and in Mexico, to a degree—that would make it as easy to fill up at the corner station as you can now with your conventional gasoline-driven internal combustion engine.

The cost advantage and the supply advantages that you're talking about are also relatively new. As recently as five years ago, we did not have 100 years' worth of natural gas supply, but new technology has been created that allows for access to natural gas that was not economically accessible in the past. That has helped to drive the price down.

It's a combination of those factors that makes the equation you create very viable and perhaps will help motivate the shift. It certainly is in the work we're doing with the return-to-base and corridor vehicles.

[Pierre Poilievre, Conservative, Nepean—Carleton, ON]

Two parts of your answer need to be converged as we look into the future.

You talk about the absence of infrastructure. You talk about the recent nature of the price advantage. Shouldn't we be worried about absorbing a large infrastructure cost, given that the price advantage is a new phenomenon and therefore might not be permanent? That is to say, we change the infrastructure to make it possible to use natural gas-powered vehicles to take advantage of a 20% price advantage, but then that price savings does not last, and we've spent all this money on infrastructure. Is that money then wasted?

[Geoff Munro]

That is a potential scenario, for sure, but it's to lessen that risk that we have focused on return-to-base vehicles and corridor vehicles. We're not, in the context of what we're doing now, looking at putting natural gas filling stations on every corner in the way gasoline filling stations exist today. If you're a return-to-base, you'll just do that. You'll return to base to get filled up, so you're talking about one installation. We already have fleets on the road that do that.

I'll take as an example the Windsor-Montreal corridor, or all the way to Quebec City, where there is an awful lot of heavy fleet traffic. If we do decide to go with infrastructure, you would strategically locate the infrastructure. It doesn't escape my notice that both marine and rail tend to follow that same corridor, so if and when other modes get to that same use of that product, maybe we would have a multiple gain for a limited infrastructure investment.

To respond to your question, we're not proposing a huge investment in infrastructure similar to the one we have now for gasoline or diesel, but there are challenges associated with the equation you create.

[The Chair, Conservative, Merv Tweed]

I have to stop you there and go to Mr. Holder.

[Ed Holder, Conservative, London West, ON]

Thanks very much. I appreciate that, Chair.

I didn't have the opportunity to speak to our guests from the National Research Council. As I was looking through your document and trying to understand better the work you do, I looked at your presentation. In terms of responsibility, it said things such as “undertaking, assisting, or promoting scientific and industrial research”. You said, “we develop and deploy business-based technology”. You said later on that you actively engage with industry. In another part you said that you conduct approximately so much in terms of research—$55 million, in fact—and you work with more than 300 companies.

I'm just going to take it to the end, sir, where you say that you develop and deliver vehicle mobility technologies. You also say that you develop, validate, and deploy lightweight and advanced materials technologies.

I think what I'm trying to understand, just for my purposes, is NRC's role. Where are you in this chain? Are you the folks who provide the funding for industry to do this? Do you provide the scientists who work with various companies to help them develop?

Can you explain NRC's role in that? I'm a little bit confused.

[Dr. Ian Potter]

The answer is, in short, yes, yes, and yes. It's one of those clever things about NRC. NRCan has a similar sort of model, in some respects.

NRC has IRAP, the industrial research assistance program, which helps, as I mentioned, over 8,000 companies a year. That is a funding mechanism for those companies, small to medium enterprises, to get their technology moving in the marketplace, but it's not just funding; it's also the advisory part of it. I like to call them the hand-holders, if you like. A lot of it is managerial advice, market advice, and that sort of thing. They are fundamental business practices. Money doesn't solve all the problems, unfortunately, although money helps.

I have 1,600 people who work in the engineering group. There's a life sciences division and a national frontier sciences group, as well. Our role is really to take that science and transpose it into practical technologies the industries have a need for. Some of that is working with them to develop their own areas. Some of it is helping them through future policy development challenges by using a lot of the infrastructure we have.

[Ed Holder, Conservative, London West, ON]

Is that independent of the moneys that I heard about in your presentation earlier? You had a statistic about investing some 40% into various enterprises in 2010. That's independent of your staffing and all the rest.

[Dr. Ian Potter]

Those are the NRCan numbers.

[Ed Holder, Conservative, London West, ON]

Right. Well, I'll come back, then. Beyond the staffing support that you provide, do you become the funding mechanism as well?

[Dr. Ian Potter]

No, we don't, not in the direct science and technology. The money that we use drives our own staff. We also lever that against industry funding and other government funding as well. If I'm looking at a strategic direction, that may be 100% internally funded. If I'm looking at something that is needed by industry today, they will pay 100% for it.

There's a bit in between where there's shared risk. In this case, we try to actively encourage what I call pre-competitive consortia, whereby companies come together and all give a little bit of money; it's not a high risk, but it's a high reward if it goes right. We try to get those consortia working together and we act as a facilitator, a catalyst, and a research organization to do that, again working with our colleagues in other departments.

[Ed Holder, Conservative, London West, ON]

I appreciate that clarity.

There are two things I would ask. First, how do you pick the winners? Second, could you and NRCan explain the collaboration between NRCan and NRC in terms of how you do work collaboratively for the Canadian greater good, if I might be so broad?

[Dr. Ian Potter]

Picking winners is always a tough one. The casual response is that markets dictate at the end of the day, so we look at the market for a particular technology and try to understand the markets.

The difficulty is the long-term market. Where is it going? Even then, sometimes technology doesn't go the way you think it's going to go. The VHS and Betamax video formats were a classic example of that in technology selection.

In sum, we try to work with companies.

[Ed Holder, Conservative, London West, ON]

Which did you pick?

[Dr. Ian Potter]

It pre-dates my time, allegedly. I was on a ship in the middle of an ocean somewhere. I didn't even have a video.

We try not to pick. I think we try to focus, and that's different. We try to focus resources. Geoff was talking about not being able to do everything. There are lots of things to do out there, so we have to focus. I wouldn't call that picking; I call that cycling.

For this particular round of programs, we'll have a three-to-eight-year program tranche, and that will be continuous, so the programs we do today won't be the same as the programs we do in five years' time. It's a continuous evolution.

[The Chair, Conservative, Merv Tweed]

I have to end it there. I'm sorry.

I have to go to Ms. Chow.

[Ed Holder, Conservative, London West, ON]

Can I direct, through you, Chair?

[The Chair, Conservative, Merv Tweed]

On a point of order, you can ask me a question.

[Ed Holder, Conservative, London West, ON]

Could I ask you, then, to please direct our guest to provide us with some summary of the companies they've worked with? I'm trying to get an assessment of how you determine their effectiveness and the results associated with their great work.

[The Chair, Conservative, Merv Tweed]

I'm sure they've heard the request. Please do so through the chair.

Go ahead, Ms. Chow.

[Olivia Chow, NDP, Trinity—Spadina, ON]

I'll ask a question through you, Mr. Chair.

Once you've built the infrastructure, you have to maintain it, and then there's the operating cost. On this question of diesel refuelling versus natural gas, natural gas buses or trains are maintained in ways completely separate from diesel buses and trains. In the experience of the Toronto Transit Commission, which tried the natural gas buses, there was a huge amount of operating cost associated with them. Once the infrastructure is built, it needs to be maintained so that it has a state of good repair.

If the federal government starts off with the capital budget, would your research also then calculate the dollar amount needed over a 20- or 50-year life cycle for the state of good repair plus the separate operating costs in order to service the fleet? Using TTC as an example again, they rebuilt their buses. You would have to hire the people and train them to rebuild those natural gas buses. You have to maintain them to make sure they don't fall apart, or when they fall apart, you have to know how to upgrade them or fix them.

Does any of your research calculate all of that cost to show what the operating life cycle is, plus the impact it has, say, if it's a private trucking industry or a transit authority?

[Geoff Munro]

The simple answer is yes, but it's not just us; it's the consortium we work with. In the development of that technology, or at least the deployment road map on natural gas, there was a component of detailed business modelling done to assess, analyze, and rank potential end-use vehicle applications. It was a full life cycle of the end users' needs associated with everything you've talked about. What is the infrastructure cost? What's the maintenance? What highly qualified people are necessary to be able to do the repairs, etc.?

As we go into implementation—and we are starting into it—we're using the same full-spectrum consortium, so that when we have an example of a trucking firm that has chosen to shift to natural gas, we can get real-time value information associated with that company and actually apply it then in a more generic way.

[Olivia Chow, NDP, Trinity—Spadina, ON]

The trucking companies are saying that something as simple as having Transport Canada allow them to install an electronic recorder so that the truckers don't have to.... Right now everything is on paper. It's very outdated. Not having that tracking system really hurts the industry. They've been pushing for several years now to have something on the trucks so that they can track electronically. If they don't even have that, how would you be able to...?

Transport Canada is very behind in allowing, or in pushing forward, something as fundamental as tracking devices so that there is voice recording and all that, so that things are not recorded just on paper. European countries have had them for a long time. If they don't even have that, how would you be able to work with them in order to track efficiencies or how much money would be saved?

[Geoff Munro]

The early fleet investments are relatively small. There are long-haul truck investments. We have a company that has chosen to switch to natural gas. There are also cases in which an individual municipal garbage truck has been purchased, or more than one, so we're not talking about massive amounts of information yet, but I would support your call for a more sophisticated way of collecting that information.

We're doing the same with the electric vehicle agenda for the same reasons. What is the actual range associated with given conditions, given vehicle weight, etc.? The only way you can do that is through some kind of automated system.