Transport Committee on May 1st, 2012

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

In terms of the goal of reducing our greenhouse gas emissions, natural gas is merely a stopgap; we have to find some other way. Either people don't travel, or they travel in Calgary's natural gas bus fleet rather than their personal cars, or they travel in electric vehicles that are theoretically zero emission. But to get there we have to take provinces like Alberta and wean them off coal. Am I right?

[David Pascoe]

That's correct, we would have to do some very severe things to get to a 75% reduction. I think in Canada we have a pretty good energy mix with regard to electricity generation, so we would significantly reduce carbon dioxide emissions by movement to pure electric vehicles. The challenge in going to pure electric is the price to the public. What we're seeing out there now is that the OEM automaker planning volumes on electric vehicle sales aren't being realized—in Canada, in the U.S., and in other countries like China, which had a big electric vehicle plan—because the take-up by the public is not as big as one would have hoped. That's because the on-cost of the electric vehicle is still a little bit prohibitive for a number of people. So economically, the challenge back to you would be how do we get there in a way that people can afford to buy these vehicles en masse, right?

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

So liquefied natural gas hasn't been in either of your discussions. I'm assuming that's because it's prohibitive.... I know that there are trucking firms that are trying to do this.

[David Pascoe]

I think liquid natural gas could make sense for larger vehicles—trains, ships, and trucking. You have to manage it, really, because one of the challenges when you go to liquid is that you have to cool it down to extreme cold temperatures. So in a car, if you can imagine, you drive to the airport, you fly away for a week, and the whole time the tank is warming up. It has a vent, and now you're venting fossil fuel, which is a really strong greenhouse gas, into the atmosphere, and it's not really the right thing to be doing.

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

I understand.

But the infrastructure is the issue. You said earlier that you want to move to CNG vehicles, but right now there isn't a refuelling infrastructure out there. So the suggestion is that we create a refuelling infrastructure, either through home refuelling or through mandatory provision, but it's temporary. Electricity is the ultimate refuelling is it not? It's there in every home, as far as I know.

[David Pascoe]

That's a good point. It's temporary but it's practical, because in the interim before we have solutions that can be broadly applied.... It's going to be probably a long time. It's indeterminate. Even if we get the cost of batteries down to where they need to be for pure EVs, they won't likely be in all vehicles in a short period of time. So we have to have a bridge, and the length of the bridge is unknown.

On the electricity point, it's curious to note that there's an awful lot of new natural gas peaker plants being put up to manage electricity, because it's relatively clean and it's probably the lowest capital cost solution to generating additional electricity as far as setting up a new plant is concerned.

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

That's true.

Mr. Davies, you talked about the availability of natural gas, and there's a hundred years of it, but if we converted every vehicle in Canada to natural gas, we wouldn't have a hundred years, would we?

[Russell Davies]

That hundred years is based on current usage today, and without finding any more gas at all. And we know that's not a likely scenario.

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

But if we were to convert every vehicle in Canada to natural gas, as opposed to oil, would we still have a hundred years of—

[Russell Davies]

All indications we've had from the gas suppliers is that they know there is considerably more gas out there but it's just not economical to get it just yet. If the demand increases because of the increased number of vehicles, then they'd be willing to go look for the rest of it. They have no doubts about the availability of gas being sustainable in the very long term.

[David Pascoe]

If I can say so, there are lots of other sources of natural gas. In the ocean, there's frozen methane pockets and that sort of thing that probably would provide many tens of years of additional supply if we were to tap into it. These are things that we have to look to in the future.

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

It's not economical to go get the natural gas. That reminds me of the tar sands—sorry, oil sands—when they first started, and at that point it was $30 a barrel to get it out of the ground and the price at the pump was $9 a barrel. They went ahead and did it anyway with a lot of government support, because the theory was, once we figure out how to do this, it will get cheaper. So now it's $9 a barrel to get it out of the ground, and it's $130 a barrel at the pump. So hurray for them. I guess the same could be true of the natural gas world, right?

[David Pascoe]

Sure it could, yes. The potential going forward is that it's almost a certainty that oil is going to continue to go up in price to the extent that the economy can tolerate it and absorb the new prices. We've made huge strides in natural gas over the last decade or so with the cost of extraction and stuff, to the extent that in terms of a dollar equivalent we're at about $11 a barrel for natural gas today. During this calendar year, it may go as low as $5 or $6 a barrel, and it's expected to remain relatively low for the foreseeable future, so it's an opportunity.

[The Chair, Conservative, Merv Tweed]

Thank you.

Mr. Adler.

[Mark Adler, Conservative, York Centre, ON]

Thank you, Chair.

Mr. Davies, I'm just curious, you mentioned earlier that you had looked at a number of other jurisdictions. Could you please just go through what your findings were in various other cities, like Boston and New York, etc., and what you learned, good and bad, from those experiences?

[Russell Davies]

There's a big difference. I mentioned earlier on, in 2007 a new engine came out from Cummins Westport, so from a bus perspective that was a real step change in terms of performance and in terms of what people saw from CNG buses as a fleet. So for the older buses the performance was okay, fuelling times were never particularly quick, and the engine was so-so. It was okay, but we found that among agencies that were still using CNG and were using the newer engine, it was almost transparent to the operator the type of bus they were driving. In terms of reliability it was certainly comparable, and in terms of operating performance, it was comparable.

Probably the biggest lesson that we learned from speaking to all the other agencies was: don't convert. So really they were saying, don't take a diesel bus now and convert it to CNG; buy a bus that's CNG-ready from day one. The same was true for the facilities as well. Don't retrofit your facilities, build a CNG facility and give the project a chance to work.

[Mark Adler, Conservative, York Centre, ON]

Which of those jurisdictions that went to CNG told you not to convert? Which ones had that experience?

[Russell Davies]

Do you mean who told us not to convert?

New York told us that the costs were very prohibitive. And there were a lot of unknowns. Particularly in Calgary Transit, all of our facilities are probably 30-plus years old. The older buildings meet with older building codes. To do a retrofit now to CNG would be a little problematic.

[Mark Adler, Conservative, York Centre, ON]

They adopted CNG.

[Russell Davies]

In New York they've taken an order of 200 CNG buses, just this year, I believe.

[Mark Adler, Conservative, York Centre, ON]

Okay. How were they funded?

[Russell Davies]

I think the fact that they are willing to order these numbers, on top of their existing fleets, says that they're still comfortable with it.

[Mark Adler, Conservative, York Centre, ON]

Mr. Pascoe, maybe you could answer this. A number of people have commented to me that when they are looking for a new car, for example, they can buy a traditional gas car or they can go with diesel or they can go with natural gas or a hybrid. The deals on the hybrid or the diesel or natural gas aren't as good, and the costs tend to be higher. There is an offset in terms of what they would save on energy, but they pay more up front.

Could you comment on the cost prohibitiveness of that?

[David Pascoe]

Sure. The answer is that diesel and hybrid and natural gas all cost more to make, so the car companies are passing the costs on to the customer with the hope that the customer can connect the fuel savings with the on-costs. The numbers are significant. There's not a good way to absorb that, right?

[Mark Adler, Conservative, York Centre, ON]

If there is no demand out there, why have these sources of supply that we're calling for to be set up?