Transport Committee on March 8th, 2012

[Jamie Nicholls, NDP, Vaudreuil—Soulanges, QC]

This is a question for Enterprise.

The website says you have about 8,000 hybrid vehicles, which I believe is the largest in the industry. You mentioned 60,000 vehicles, so that would make just over 10% of your fleet hybrid. That sounds to me like a pretty good achievement.

Can you tell us what sort of internal decision-making got you to that place?

[Ryan Todd]

That's a North American number, Mr. Nicholls.

[Jamie Nicholls, NDP, Vaudreuil—Soulanges, QC]

Okay.

[Ryan Todd]

The 60,000 is the fleet we carry in Canada today. We have quite a number in Canada, but the 9,000 is a North American number.

The decisions are made monthly and annually through constant negotiation and conversation with our manufacturing partners. They're strictly based on availability and financial viability.

There are plenty of consumers out there who would prefer to rent a hybrid vehicle or an electric vehicle, but the rate is substantially higher than it is for the same size of vehicle burning regular fuel. They don't always want to make that decision.

The difference in cost, from our research in our fleet, is in the $8,000 to $10,000 range. If I have a hybrid vehicle like a Prius and another vehicle like a Corolla, the cost is going to be significantly different, but the size will be exactly the same. That creates a challenge for us on the consumer end. Financial viability is important to us. The demand, the desire, is there at the consumer end; it's just a matter of availability. In the long term, as availability increases, that cost will come down. That will be fantastic for the end-user.

[Jamie Nicholls, NDP, Vaudreuil—Soulanges, QC]

Other than costs, are there any other obstacles, regulatory issues, or challenges that would affect the greening of the fleet?

[Ryan Todd]

We've just begun to build a network of recharging stations in California for electric vehicles. As the Volt and the Leaf become more available, the hope is that we will begin to build this network through our locations in California. That will eventually expand to North America.

Things like that are under way, but we're undertaking this on our own. There's no collaboration. Having a forum where we have these discussions more frequently would provide an opportunity for us to build that network more quickly.

[Jamie Nicholls, NDP, Vaudreuil—Soulanges, QC]

Is there anything the federal government can do to assist companies like yours in improving environmental stewardship? Do you have any ideas?

[Ryan Todd]

Our company, and others in our industry, are committed to it today. It's a matter of whether there is an opportunity for the manufacturers to make vehicles that produce lower emissions. It goes back to what Mr. Robertson said and when the availability might increase.

We're a retailer. We're a fleet owner. We're not involved in research and development at all, but the commitment is there. We're ready to participate as much as we can. We know that if we don't do our part in providing a passenger vehicle that has lower emissions, then the sustainability of our business will be challenged, so the commitment is already there.

[David Dennis]

We talked about there being an absence of regulatory support for standards. I'll give you some low-hanging fruit. If you look at a blender pump for an ethanol blend, there are no standards. Other than E85, there are no standards for other blends that exist in other countries and that are successful. That's the feedback we got from a lot of these people.

Claude Robert is a phenomenal example. He put his hard-earned cash into an infrastructure he really believed in, and he's screaming for some help in developing standards and guidance.

I hope that answers your question, because that's what we're hearing.

[The Chair, Conservative, Merv Tweed]

Mr. Adler is next.

[Mark Adler, Conservative, York Centre, ON]

Thank you, Mr. Chair.

I would like to begin by asking you all to take off your innovation hat for a second and put on your business hat, because at the end of the day you're all business people.

I'd like you to comment on the fact that, as you know, our government has a plan that is squarely focused on a jobs and growth agenda. We've been recognized around the world by a number of international organizations, including Forbes magazine, as the best place to be doing business. We have the number one performing economy in the G-8. I just came back from Washington last week, and a number of the top policy-makers down there are very envious of us. The U.S. used to be a great place to do business, and now Canada seems to be the number one jurisdiction to be investing in and to be creating jobs.

How have the policies we have undertaken, such as lowering the federal corporate tax rate to 15% and creating tax credits for innovation and technology, benefited your businesses and led to your ability to focus more on creating innovations and innovative technologies in the transportation sector?

Do any of you want to jump in first?

[Larry A. Robertson]

I could take a shot at that. Jointly with Dr. Frise's university initiatives, the tax incentives on R and D have made it very attractive to keep research in Canada that has been developed in Canada. It has supported our corporation in an international context too. Our Italian alliance looks to our research centre in Canada as a very strong element in the overall research strategy. The research would be done without those incentives, but not necessarily in Canada.

I can't talk to the value, the numbers, but in a general sense that has brought a lot into the Windsor community and the Canadian community, and it has allowed us to reach out to many suppliers and other institutions in Canada. It has given broad support to our industry.

[Mark Adler, Conservative, York Centre, ON]

So Chrysler and your industry have certainly benefited from the policies of our government?

[Larry A. Robertson]

Yes.

[Mark Adler, Conservative, York Centre, ON]

Thank you.

Dr. Frise, would you comment?

[Dr. Peter Frise]

As I must point out from the academic perspective, I'm not a business person, but I work with business every day, and it certainly drives much of what I do.

The ability of a company to lever costs and to buy down risk in Canada is absolutely indispensable, especially when you're dealing with companies whose headquarters are abroad, and even to a certain extent Canadian companies that have the ability to locate R and D facilities abroad. The ability to buy down risk and lever their internal funding is how they make business decisions. That's why, from my perspective, Canadian program design is so important. It's critical that companies find the skills and knowledge and infrastructure they need to do R and D here, and that the numbers work as well. You can put a microscope in Auburn Hills, Michigan, or Graz, Austria, just as easily as you could put it in Waterloo, Ontario. It's just a purchase order on somebody's part.

The fact is that we've already paid for all that infrastructure. Canada's research infrastructure is among the best in the world. That's with the high rating of our public sector research and development investments over the years. I think we're second, third, or fourth in the world per capita, but somehow or other our program design has not helped drive industry to invest in Canada as effectively, possibly, as it might have. It's not because industry's stupid or not interested in R and D, or not interested in innovation. It's a program design issue, I think.

Again, I don't want to pound this drum too hard, but I think AUTO21 has really hit upon the way to do that. We're continuously oversubscribed. We leave industry money on the table all the time. I think we could use that as a model for how Canada could go forward in a much more effective way.

[The Chair, Conservative, Merv Tweed]

Thank you.

I'm going to end the round with Mr. Richards.

[Blake Richards, Conservative, Wild Rose, AB]

Thank you. I appreciate your all being here. You're a very knowledgeable group of people up there today, without question.

I'll start with you, Mr. Robertson, from Chrysler. Mr. Sullivan made some comments a while back about looking at our vehicles. His comment was that no work was being done on crash avoidance. It was directed at Dr. Frise, I believe. I thought it would be nice to give you a chance to respond, because I'm sure you would have some examples from your company in terms of some of things you have done.

It doesn't seem that long ago that anti-lock brakes were a new thing, for example. I think of how far we have come since then. I know there are sensors and various other things that are being done. I'd like to give you an opportunity to share some of the innovations and improvements you've seen in your vehicles over the last 10 to 15 years.

[Larry A. Robertson]

There are several areas of innovation, some of which were so innovative that the U.S. safety administration has taken them on as regulations to make sure that it was a level playing field for all—for example, in electronic stability control. You had anti-lock braking before, but with the computerization, you could actually program the vehicles to have crash avoidance capability in some bad driving situations.

That is one extension above the crashworthiness. You want to avoid the crash as well as protect the occupants. It is multi-faceted. At Chrysler in Windsor, we have a development tunnel for headlighting. There's a specific research facility there. You can expand the technologies of high-intensity lighting—patterning, efficiencies, even new technologies. That is being looked at there.

Another one that seems to be coming fast, in my view, and being talked about more in the U.S. than in Canada, is autonomous vehicles, vehicles that drive themselves. This is good for improving congestion on highways, where vehicles can talk together, work together, and mass-move transportation together most efficiently, with lower crash risk. There are a lot of things out there.

The technology's there. The issue is now just in how we are going to package it and what the research capabilities are to find out what we need to do in a North American context. This is an exciting area we're getting into.

Yes, there are lots of areas.

[Blake Richards, Conservative, Wild Rose, AB]

There's been a lot of talk about hybrid vehicles and electric vehicles.

I'd like to ask you this, and Mr. Todd as well, from Enterprise's point of view. For you, it's Chrysler. The Ram pickups that are natural gas-powered were mentioned, which you are developing, or I think you may have already put them on the market.

[Larry A. Robertson]

Yes, there was a market announcement.

[Blake Richards, Conservative, Wild Rose, AB]

I wonder if there are any other examples you have or that are coming, in terms of other fuels, whether it'd be natural gas or propane or otherwise, and why or why not.

I'd ask the same question to Enterprise. In your fleet, are you using other fuels such as natural gas or propane, and why or why not?

[Larry A. Robertson]

On a company perspective, our job, as well as the job of other companies, is that we have a fleet performance obligation. It is not per vehicle; each vehicle has to meet standards, yes, but we also have to look at how our fleets perform. There are going to be incremental changes across a lot of vehicles right now, such as eight-speed transmissions or nine-speed transmissions, which will make incremental improvements to the fleet, but that will give the benefits of huge changes, game-changing technologies, for a few vehicles. We have to get in that first.

On the fleet perspective, as Dr. Frise mentioned, we have this CAFE or GHG obligation of almost 54 miles per gallon in the future. That is the manufacturing obligation, but in the whole scheme of things, you also have to look at the fuel itself.

We can run on gasoline or natural gas or whatever it is, but what is the life cycle of that fuel? Is there a better way to process that fuel? You can make diesel from biomaterials. You can make methane from biomaterials. How can we do ethanol with second-generation? It's a very encompassing view on how we bring that technology out there, and there will be those increments.

For hybrids and electric, given the standards, we have to get there in some form. It could be a range-extended electric vehicle still having small gasoline power to it. It could be electric vehicles; we've announced a Fiat 500—

[The Chair, Conservative, Merv Tweed]

I have to stop you there. Your time is up.

We're going to go one more round of five minutes for each party.

Mr. Nicholls is first.

[Jamie Nicholls, NDP, Vaudreuil—Soulanges, QC]

My next question is for Mr. Dudley.

Your company has a strong record helping governments, regulatory bodies, and intergovernmental agencies to design and implement climate change policies. We often talk about the health of Canada's current economy, but we see through international organizations such as the World Economic Forum—perhaps not as shining an example of an international organization as Forbes magazine—that Canada's competitiveness is falling year over year. If all our international partners all of a sudden start to move toward greener choices for their economy and Canada doesn't make those changes, we could be left in the lurch.

Can you give us a sense of what types of recommendations often give the biggest impact for the least effort in the transportation sector? Is there any apparent low-hanging fruit that usually jumps to mind when dealing with government bodies? Further, what are some of the main challenges for government organizations in implementing climate change policies? Finally, can you talk to us about the North American climate change regulatory jurisdictional review for CN in 2009, and what kind of recommendations you made for it?