Transport Committee on May 1st, 2012

[David Pascoe]

What I would say is that the solutions for all of our fuel challenges are going to be many. Certainly a downsized gasoline engine and some compromises, such as maybe a downsized car, is probably the most economical or quick and easy-to-absorb solution today, because your capital costs are probably lower. It's an upfront reward rather than an upfront penalty. It's easy for people to understand that. In addition to having lower capital costs, you have lower operating costs, because your fuel is less, and people like that, too.

That is going to happen. If we look to western Europe, where fuel prices are significantly more than they are here, cars are smaller, on average. That's what I expect to see here. Cars will become smaller.

Certainly these other opportunities are all part of the solution. The real answer is that we have to do a lot of things, and we have to get going at it right away.

I'm here to talk primarily about natural gas, because I believe it's an important part of the future that we're not addressing as well as we could. That's why I'm highlighting that one today.

[The Chair, Conservative, Merv Tweed]

You have no time left. Thank you.

We'll go to Ms. Morin, please.

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

Thank you very much, Mr. Chair.

You mentioned the cost and said that the consumer will be paying less. Could you tell me specifically how much 40 litres of natural gas will cost when I fill up my car?

[David Pascoe]

When you buy 40 litres, it won't actually be 40 litres. Let's talk about equivalent litres—the equivalent amount of energy in natural gas.

Last year we checked the price at the pumps in Toronto, and it was 69¢ per litre. If you multiply that by 40, that gives you your price at the pump. We made a calculation that if you had your own home refuelling, at 25¢ a litre, that would basically be $10 for your fill-up. That's what drives the payback. The cost of fuel is a lot lower.

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

What are the odds that those prices can be guaranteed to be the same in 20 years? We know that gasoline was cheaper when there was more of it. Natural gas is likely cheaper because there is more of it now. In 20 years, what will happen to the prices?

[David Pascoe]

Twenty years out is hard to predict. I mean, if you're asking me, I would say that on a per energy basis, natural gas will still be a lot cheaper than gasoline or diesel. That's my personal projection, but I'm not an oil industry expert. But what I do know is that we have an enormous and a growing demand on oil. We do not have a lot of ability to pump a lot more out, so the supply is not going to grow so fast and the economics will force the price of oil-based products to continue to rise.

With natural gas, currently, the supply is growing faster than the demand, so there's an enormous downward pressure on natural gas and it's expected to be relatively stable or low, according to articles that I've read, for five to 10 years out. Beyond that I can't comment.

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

Mr. Davies, in making your choice, you compared natural gas vehicles with other kinds of vehicles. You put a lot of stock in the fact that they are cheaper. Besides the price, however, what other advantages did you find that led you to the choice of natural gas buses?

Like my colleague, I see that they are a little greener than diesel, but surely not as green as we can get. What were the other advantages?

[Russell Davies]

A natural gas bus will be marginally greener than a diesel bus right now. But the other benefits we get will be that the bus will be quieter, certainly sitting and idling, as I mentioned earlier on.

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

The electric bus would have been less noisy as well. Aside from the money saved, why did you decide to focus your study on natural gas rather than on electric buses? Did other factors come into play? Electric buses do not make a lot of noise.

[Russell Davies]

By electric bus systems, I assume you mean hybrid buses. Fully electric buses are being developed, but again they suffer from the same problems as the electric car. There's next to no range on them. Hybrid electric buses still have diesel engines in them. When they run, they still make noise just like the diesel bus. All we've seen from the analysis of hybrid electric buses is that you get approximately a 5% improvement in fuel economy. There's not a great deal more than that. A saving economy of 5% for a $200,000 premium on a bus just seems a little excessive. Those numbers came from the engine suppliers. One of them was BAE and the other one was Allison.

Those areas just meant that we weren't looking at the hybrid buses much deeper than that. We have done trials. Calgary Transit has hybrid electric vehicles on a smaller scale, for small trucks and cars to see what we get out of those. The numbers are pretty much borne out, really. It didn't seem to be an alternative that was worth pursuing too aggressively.

CNG did provide a bus that was quieter and possibly even quieter than a hybrid bus at certain speeds. It does have maintenance advantages over a regular diesel bus compared to the systems that are on right now. The environmental code means that a certain amount of exhaust processing has to happen with filters and various other systems that are expensive to maintain and expensive to install. They are not needed on the CNG bus.

We did look at an alternative of LNG.

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

I have one last question for you.

Among the obstacles you faced, you said that there are perceived problems with safety and with the operation of the motor in cold weather. What are you going to do to address those perceived problems with the public? What is your action plan to convince people that everything really is fine from the standpoint of safety?

[Russell Davies]

In terms of safety, we have already seen a number of videos from various CNG suppliers that show CNG tanks on buses that have been shot, that have been set fire to, that have been driven into walls, and there is zero explosion with these things. In terms of safety, CNG in many ways is probably safer than diesel. CNG has a very specific ignition point. It has to have a mix with air of about 5% to 15% for it to ignite. Anything outside those realms, it doesn't do anything. It just disperses into the atmosphere, unlike diesel. If you get a leak in a diesel tank, all the diesel spills onto the floor and mixes within the environment. As for CNG, if it leaks from the tank, it evaporates.

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

You can compare the situation with the perceptions people have of nuclear power plants. I can show people nuclear plants that do not blow up, but that still doesn't mean they won't be afraid.

What specifically are you going to do to make people understand that it is safe to have a natural gas tank in their homes?

I am not sure that showing people a bus that does not blow up will help them feel any safer.

[Russell Davies]

I'm sorry. I can't speak to the home fuelling station. That's not an area I've been looking at.

[David Pascoe]

That's a good question. I think ultimately there will have to be some education. If Magna gets involved with home refuelling, we'll make sure we start educating people. Home refuelling is an area we think about.

In order for natural gas vehicles to get going in normal automobiles, we have a chicken-and-egg situation. If we make the cars and there's no infrastructure to fuel them, we can't sell them. So we need to do something. Also from a company perspective, let's say home refuelling is on our radar screen. If we get involved we'll make a big point of educating the public on the safety aspects of it.

[The Chair, Conservative, Merv Tweed]

Thank you.

Before I recognize Mr. Holder, has propane ever come into the discussion as an option, particularly for Calgary? If not, why not?

[Russell Davies]

I think there are probably more safety issues with propane than with CNG. We tried propane some time ago I believe for smaller auxiliary vehicles, but not on our actual fleet. We can buy smaller buses that are propane powered, but CNG has the benefit, in terms of fuel supply, that you can basically have a pipe come into your facility for fuel, whereas propane, LNG, still has to be to be delivered by a truck. You still have problems with reliability of the fuel supply. Propane is something we haven't really considered.

[David Pascoe]

Propane is a very small constituent of the fossil fuels that are pulled up, so it's not as widely available. If we want to go to broad use, there's simply not enough of it to do that.

[The Chair, Conservative, Merv Tweed]

Thank you.

Mr. Holder.

[Ed Holder, Conservative, London West, ON]

Thank you, Chair. I found this sufficiently interesting that I wanted to have another round, so thank you for the accommodation.

To be clear, Mr. Davies, you're not considering nuclear as an option. I wanted to double-check that's not what you're considering.

[Voices]

Oh, oh!

[Russell Davies]

No.

[Ed Holder, Conservative, London West, ON]

Let the record show our guest said, no.

I thought I heard you talk previously about looking at CNG versus LNG, and I'd like you to elaborate if you can. Was that a comparison you were going to bring to the group? Maybe for my education, could you explain the differences as they relate to your business?

[Russell Davies]

Sure. The only difference between LNG and CNG is the level of compression. CNG is compressed to a certain level, and LNG is compressed more to take it to a liquefied state. To keep it in that state it has to be kept cold.

The only reason we didn't really look at LNG is the delivery of fuel. For LNG to be delivered to one of our facilities to fuel our buses it would have to come by truck, the same way that diesel fuel is delivered today. If we use CNG we basically have a pipe in the ground. The CNG is compressed, and we can fill the buses that way. So in terms of a fuel delivery system, CNG is far more effective and reliable.

[Ed Holder, Conservative, London West, ON]

I don't know how long you've been in the busing industry, but it's probably long enough to know that in the old days, when Mr. Coderre was a bit younger and so was I, either the urban myth or the reality was that buses would run twenty-four hours, because it would cost more to turn them off.

What does that mean? I have no idea. Is that an urban legend? That makes absolutely zero sense to me.