Transport Committee on May 1st, 2012

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

Would you include that as part of your capital costs?

[The Chair, Conservative, Merv Tweed]

I have to move on.

Monsieur Coderre.

[Denis Coderre, Liberal, Bourassa, QC]

Thank you, Mr. Chair.

Thank you, gentlemen.

My first question goes to Mr. Pascoe. I am going to play the devil's advocate.

If we go by what a number of people say, natural gas is the best thing since sliced bread. If it gets set up, they say, everything will be fantastic. So why don't we have it already? Is it because of some vested interests? Is the petroleum lobby that strong, for example?

Being able to use natural gas would be fantastic. But would that mean that a number of garages and facilities would be lost? It would have a big economic impact. People would also be forced to change their way of doing things. In that sense, there could be losers from an economic standpoint. On the one hand, individuals might perhaps come out ahead, but on the other, and more widely based, a large number of interests are at play.

[David Pascoe]

A big part of the reason it doesn't exist has to do with how we built up our infrastructure in the country over the last 100 years. We have diesel and gasoline stations. To move to a new fuel costs money and the question becomes: who's going to pay for the new infrastructure?

I think the oil-based companies are probably happy selling oil-based products. They have their own infrastructure that they've paid for already. If we turn around and tell them that they have to set up natural gas at a portion of their filling stations, it means they have to make a new investment. Doubling up an investment in fuel stations is the same as having two sets of telephone lines or two sets of cable. For them, it's not a logical, easy step.

I think if we look at the situation that we're in, in Canada and in the world, with regard to the future of oil, we have to start doing something now to take the pressure off. I was talking to somebody from India who said they were going to set up 50 new international airports in the next several years. Each of those airports is going to have 100 or 200 airplanes associated with it, and they'll all spend 75% of their time hanging in the sky and have to be fueled. If you go to China or Brazil, with all the expansion that's happening, the pull on oil is becoming greater and our capacity to deliver is not really growing. It's going to become a huge issue. We have to find an alternative.

I hope that answers your question.

[Denis Coderre, Liberal, Bourassa, QC]

I agree with that, but the issue is that there's a lot of interest at play here.

So okay, we want to make it happen. What we need is probably a public-private partnership, of course. So we have the industry on one side, but we have the issue of the capital cost, as Mr. Davies mentioned.

This is for both of you. What should the role of the federal government be? Should it be based on policy? Should there be a new infrastructure program? What kind of partnership do you feel the federal government should get involved in? And then I'll ask Mr. Davies.

[David Pascoe]

Thank you.

I think one area we need to encourage or incentivize is home refuelling, because a big part of the infrastructure is already there. It's a cheap way to get started, and it's a way to get the ball rolling. There are home refuellers out there. I think there are new types coming that will be even less expensive and that will make a lot more sense from the point of a personal business case for owning a refueller and a natural gas car.

As well, in my opinion, there needs to be some legislation or a requirement so our fuel providers will, for starters, have a certain small percentage of fuelling stations that have natural gas available. Whether it's done through encouragement or law or whatever—I'm not a policy-maker—there needs to be something there to make it start happening.

As I mentioned before, we have examples globally of countries that have a big natural gas infrastructure in place, and it works. We need to start doing that.

[Russell Davies]

I can't speak too much for the residential areas, but in terms of larger vehicles, if we I look at the U.S., they have significant federal support for new green vehicle procurements. I believe at the moment that green buses in the U.S. are funded by the federal government to the tune of around 80% of the value of the bus. That's one of the reasons, I think, that hybrid technology in the U.S. is being pushed very hard, because it's essentially funding the battery technology market.

With regard to new vehicle procurement, I think there needs to be a greater stress put on green vehicle funding. I believe the U.S. federal government has done something on this and that it is now at the stage where 25% of the buses procured in the U.S. next year will be CNG based.

I think the incentive they are providing to the vehicle buyers is that if you buy green technology it will benefit you and you will be able to transition your fleet a little more quickly.

[Denis Coderre, Liberal, Bourassa, QC]

I would like to talk a bit about our “smart regulation” and the issue between Canada and the United States, because of course when we're talking about procurement, we're talking about a commercial relationship. Are there any issues between Canada and the States related to the parts or to the procurement as a whole that we should improve?

[Russell Davies]

I don't see any barriers there right now actually. That's certainly not anything we've experienced.

In terms of the buses, there are only really four major bus manufacturers in North America, two of which are in Canada, so that's been okay for us.

[David Pascoe]

I don't see a big problem with procurement issues coming back and forth across the border with the U.S. on that. I'm happy that there are companies in Canada that are involved, such as Westport. I hope Westport is successful. But to answer your question, I don't see a big problem.

[Denis Coderre, Liberal, Bourassa, QC]

Do you believe that if we are among the best in the world, if we have that residential fuelling, it will have an impact on the infrastructure itself in that we'll have more cars? If we have more cars, are we going to have a problem in cities, because now you can have your own little fuel section? Do you believe it will have an impact on public transport or that people will have an opportunity to buy more cars instead, and then you might have another kind of problem even if it's supposed to be clean energy?

That's another good question.

[David Pascoe]

It is a good question. The question is whether we will have more cars because we make it more economical or easier to own cars. There are a hundred ways to limit the number of cars that people drive. Should one be that fuel is too expensive? I think the answer is no.

What we need to do is make vehicle ownership reasonable for those who need to own vehicles, because certainly a lot of our infrastructure today is built up around owning cars. I live in the suburbs, and if I look at life without an automobile, my quality of life would go down an awful lot, just in trying to get around. Even using public transportation in the suburbs is difficult because of timing and the distance to bus stops and the cold weather, etc.

I think we need to make owning a vehicle as simple and reasonable and inexpensive as possible for those who need it. If we need to limit cars, that should be done another way, not because of fuel prices or because of something that's out of our control.

[The Chair, Conservative, Merv Tweed]

Monsieur Poilievre.

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

I was expecting to hear about Magna's lithium battery, and I didn't hear a lot about that. Is there a reason?

[David Pascoe]

That's another interesting question. I took care of Magna's lithium battery activity in North America for about a year and a half when we were launching that. Right now we're in a development phase, so we've happily set up a new factory in Canada. It's a pilot facility and we invested about, I believe, $30 million setting that up to develop new battery chemistries.

Magna's strategy at this point is to work on electric vehicles and plug-in hybrids. I would say Magna E-Car Systems—which is a joint venture with Stronach and Magna, thus the company—they want to do EVs and PHEVs. That's their strategy. That really is the most difficult place to play from a battery perspective, and that's why we set up a pilot facility to develop a new next-generation chemistry to ensure that we have something that's going to be economical and competitive performance-wise, or better than what's out there today.

Really, if you look again at batteries, they are suited for power applications like hybrids where they can be taken off-line if they're too cold, or they can be managed in a way that you don't demand energy from them when they don't really want to give it. Batteries are kind of like people, right? They have a personality and you have to treat them properly. With electric vehicles, you only have one choice, that's to use the battery, and if you want to go, it has to give you the effort. There are certain times—

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

But how long do you expect it will take before these lithium batteries become economical compared to gasoline?

[David Pascoe]

That's a very good question. I've been around the world. I've been to Japan—

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

Excuse me, but I'm very tight on time.

[David Pascoe]

Okay, I'll give you a quick answer.

The answer is that—

[The Chair, Conservative, Merv Tweed]

Excuse me, I just have to stop you. I have a point of order from Ms. Morin.

[Isabelle Morin, NDP, Notre-Dame-de-Grâce—Lachine, QC]

The mike is off.

[The Chair, Conservative, Merv Tweed]

I've lost mine too.

Sorry about that. Go ahead.

[David Pascoe]

I've been around to a lot of battery companies, and our own, and right now the answer is that nobody knows.

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

But you seem to be more optimistic about natural gas and its capacity to match or exceed the economy of gasoline and diesel. Is that true?

[David Pascoe]

Natural gas on the short and medium term has a much bigger potential to be broadly applied. So electric cars will see a small percentage of the vehicles—a very small percent—and natural gas can potentially be a larger percent and have a bigger impact.