Transport Committee on March 8th, 2012

[Bruce Dudley]

CN is one of our major clients. We've done multimodal transportation protocols for carbon reduction.

[Ed Holder, Conservative, London West, ON]

Thank you.

I wonder, Mr. Frise, if I could ask you to undertake something. Mr. Poilievre asked that you provide a list of the various projects that you've historically worked on and the costs associated with them; I'm going to ask if you could add the value as well.

In other words, when you refer to commercialization, do you have any sense of what the commercialization value in the marketplace today is in relation to all the projects you've undertaken?

[Dr. Peter Frise]

Yes. We had an independent study done of the economic impacts of AUTO21.

It was done by the Center for Automotive Research in Ann Arbor, Michigan, which is a very authoritative group. They're the group that Industry Canada typically hires to do their econometric studies on the auto industry. They're also used by the White House and the U.S. Congress, as well as many industry bodies. We chose them specifically because they were independent of Canada and didn't have an axe to grind for this university or that university and so on.

Incidentally, the funding used for that study was not public funding; it was industry money that I raised.

The study found that a selection of the AUTO21 projects between 2001 and 2009 will create economic benefits for Canada on the order of $1.124 billion when the research is fully implemented. That represented a public sector investment by the people of Canada, through AUTO21, of $52.3 million. That's a 22:1 return on the investment.

I can give you a couple of examples. One of the most obvious ones, actually, is not a technology project, but it's a very interesting project on vehicle theft, which was a very serious problem in the city of Winnipeg, Manitoba. Our research and interaction with the Winnipeg Police Service, the Manitoba Attorney General, and Manitoba Public Insurance is credited with decreasing auto theft in Winnipeg by over 86%.

These kinds of research projects have very strong benefits to Canada when you connect the researchers directly with the users of the knowledge.

We have had that study done. I'd be happy to provide you with a copy of it. Incidentally, they did a supplementary study that projects out to 2020, and it's up in the range of $2.5 billion.

[Ed Holder, Conservative, London West, ON]

Thank you.

[The Chair, Conservative, Merv Tweed]

Thank you.

Mr. Sullivan is next.

[Mike Sullivan, NDP, York South—Weston, ON]

Thank you, Mr. Chair.

Thanks to all of you for some very insightful knowledge, and some questions for us, actually.

However, I have questions for you: how much of Canada's current on-the-road vehicles are fleets?

[David Dennis]

It's roughly 10%.

[Mike Sullivan, NDP, York South—Weston, ON]

Therefore a 50% reduction in the fuel efficiency of fleets will result in a 5% reduction in greenhouse gases, or something like that.

[David Dennis]

That's fair to say.

[Mike Sullivan, NDP, York South—Weston, ON]

My second question is for Mr. Frise. You talked a bit about how the CAFE standards drive innovation to a certain extent—

[Dr. Peter Frise]

That's right—

[Mike Sullivan, NDP, York South—Weston, ON]

—but you said that a regulation forces manufacturers to actually change their vehicles; the regulation stating what their fleet must meet in terms of fuel economy standards will drive, in large measure, what they build next. That in turn will drive some of the innovation that is required to get there, both in terms of weight and fuel efficiency of engines.

However, there are times when regulations get in the way of innovations. I think part of what Mr. Poilievre was asking was, what can we do? I use the example of the ZENN car, which Transport Canada effectively blocked from being sold in Canada. It's no longer being produced. It was an innovative solution to urban transportation. Canada Post, inside the city, could be using ZENN cars for almost all of its stuff, with zero emissions and zero noise, but regulations prevented it, and it has now ceased to exist.

Could you comment on that?

[Dr. Peter Frise]

I would hesitate to comment on a specific company's product. I don't think that's a good role for me personally.

However, I would say that, as I stated in my remarks, the balance between vehicle safety and environmental performance is one I think everyone should embrace; it's not something people should retreat from. The real goal is to have the safest possible transportation system that is also as green as possible, if you like, or with the lowest energy intensity. My suspicion is that the difficulty with some of the very small urban vehicles is a balance between safety and energy efficiency. Again, as an engineer, I can't retreat from that.

[Mike Sullivan, NDP, York South—Weston, ON]

In terms of safety, the North American approach to safety is one not of crash avoidance but of crash survival: put me in a tank with pillows rather than prevent me from hitting somebody else or being hit by somebody else.

[Dr. Peter Frise]

I don't agree with that characterization, Mr. Sullivan, with respect. I think the tank with pillows.... I don't agree with that.

[Mike Sullivan, NDP, York South—Weston, ON]

That's what I feel like when I'm in a big car.

[Dr. Peter Frise]

Indeed you're quite correct in stating that up until now the basic approach has been one of occupant protection, but I sense a shift in the regulatory environment in the United States towards crash avoidance, with a much larger emphasis on sensors to avoid the crash and to warn drivers of hazards or obstacles in their way and so on.

I can tell you anecdotally that we are working on precisely those issues. We have an absolutely world-beating radar. This is really top-notch. We have radar development ongoing right now, and also ultrasonic blind spot detectors that would enable the future vehicle to avoid collisions with stationary objects or other vehicles. We also are developing lightweighting technologies that will help with vehicle structural integrity. The goal is zero crashes, but realistically I don't think it's achievable. It's like saying there's an unsinkable ship.

I think there will always be a difficult.... It's a very challenging engineering issue. Mr. Robertson and his colleagues at Chrysler Canada and all the car companies spend a huge amount of effort on making their cars as safe as possible, besides providing systems to help drivers avoid collisions in the first place.

[The Chair, Conservative, Merv Tweed]

Thank you for that.

Mr. Toet is next.

[Lawrence Toet, Conservative, Elmwood—Transcona, MB]

Thank you, Mr. Chair.

I want to touch on the ATEC solution you were talking about. I'm intrigued by the idea of different industry sectors coming together and working together for a common purpose. In your presentation you outlined a lot of things that show great benefit to the private industries themselves in going forward with this proposal.

Could you expound upon those benefits and also correlate that subject with the whole notion...? In your ask, you were saying that you want us to say we'd be open to sitting down with this group on a regular basis, because otherwise they're not going to do it. Does it not have merit on its own, such that it would stand on its own without that kind of response?

[David Dennis]

It does. As I identified before, this is not our core business, and we've been navigating this with our own funds from a benevolent perspective. Part of our social commitment in terms of sustainability is realizing that this conversation hasn't happened to a meaningful extent. We know that's true because the senior leaders—captains of industry and influencers in this area—are telling us it's not happening.

Specific examples in terms of the value for the private sector could include bringing the availability component, such as Canadian Tire, to the table and working with a government fleet that one could make available with biofuels, for instance. Then Canadian Tire could secure a return on its invested capital through a volume commitment, since the government fleet wouldn't have to invest in its own dispensing of that particular solution. Then there's a cost benefit immediately to the government.

One of the things the people participating in this dialogue say is that there's frustration. They say, “We put an immense amount of resources into our conversations with policy-makers.”

I don't want to put words in the mouth of Larry or Ryan, but I've had many conversations with amazing leadership. They say that we need to get our own house in order. We will benefit among ourselves, but the trifecta has to include policy. It has to. Policy-makers have to be at the table. Then we will fund it ourselves.

We'll do this thing because it makes all the sense in the world. We will ask for nothing other than the policy-maker's ear if it's essentially this idea that ATEC is representative of a majority of a community in a variety of different segments, whether biofuel, natural gas, electrification, or you name it.

I've heard a lot of conversations about the minutiae of different technologies. That's one of the frustrations I hear from these captains of industry, so let's take a step back and acknowledge that all of these solutions are imperfect and have to develop. They're at different stages of commercial viability. They will all serve a purpose through utility and geography and all those wonderful things. In the private marketplace, natural selection is amazing, because part of sustainability, which a lot of people don't like to talk about, is economic viability.

The private market is the place to go to understand how that works, so we're pushing for some level of commitment from the members here in order to hear whether or not there's value in that, because we can't continue to navigate this on our own dime. We owe it to the stakeholders who have participated in the conversation to say that if the policy-makers are interested in participating, we'll go ahead. We'll take it across the finish line. We'll hire the appropriate leadership to put in place, and then you'll have your ATEC.

[Mike Greene, President and Chief Executive Officer, Fleet Advantage Inc.]

If I may just interject, a great illustration of what we're talking about is what got us into this project in the first place, which was E85 and working with Canadian Tire. The original concept was pretty simple, because there are a lot of E85 vehicles produced by the automakers every year. What we found was an infrastructure problem, because essentially in order to service the E85 vehicle, the fuel had to be blended at the blender or a tank had to be installed at the service station so that there would be a blend of the two fuels. Canadian Tire was quite prepared to do that. However, that brought us to the situation where the cost of E85 was such that it would be prohibitive to the consumer.

After some discussion, what we came down to was E30. That was cost-effective, and it would work. It would reduce greenhouse gas emissions, and all that good stuff. What we then found—and I think this is fair to say, Dave—is that there is no standard relating to E30 in Canada, so it couldn't be done. If this sort of forum existed—one where private and public sector people could talk about various problems and how to get around them and could organize things to the advantage of the community—that sort of problem could have been taken care of relatively quickly, and we would have E30 refillables.

[David Dennis]

We created the video accounting because we could barely believe the conversations we were having, to be honest.

[Mike Greene]

Exactly. It's incredible.

[David Dennis]

We felt as though we had to document it as evidence to support the notion that there is a void here, and a huge appetite to participate.

[The Chair, Conservative, Merv Tweed]

Thank you.

Go ahead, Mr. Nicholls.