Transport Committee on May 15th, 2012

[Jonathan Burke]

—you could do it.

[An hon. member]

That would not be this man.

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

I can work a BlackBerry—sometimes.

[Jonathan Burke]

It would be a very significant challenge for a consumer to do today.

[The Chair, Conservative, Merv Tweed]

That loud noise you would hear would be Pierre filling up his vehicle.

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

That's right.

[The Chair, Conservative, Merv Tweed]

Mr. Watson.

[Jeff Watson, Conservative, Essex, ON]

Thank you, Mr. Chair.

Thanks for the reference to MacGyver there—nothing but a piece of chewing gum and a bandana and you'd have a natural gas vehicle, I guess.

I want to understand the structure of your company a little bit. You were spun off, I understood you to say, from UBC, or at least a UBC researcher. For your research and development, do you use UBC facilities and researchers? Do you have your own in-house labs and engineers? Or do you simply provide personal expertise for private companies that have their own in-house research and development capabilities?

[Jonathan Burke]

Once again, it all depends. We do continue to do some work at the University of British Columbia, and we do work at some other universities throughout North America. The bulk of our research and development is done at our own facilities for the early research work and the early testing work. As we get closer to commercialization, we'll typically share some of that development work with our private company partners, but the bulk of the work is still done at our facilities. In Vancouver, in fact, we just did a major expansion of our research and development facilities, with tens of millions of dollars' worth of test cells to be able to run these engines for extended periods of time.

We hire from around the world. We've actively recruited from Canadian universities, but also we recruit engineers from companies throughout the world, depending on the kinds of skill sets we need.

The bulk of the investment is done with our shareholders' dollars and in partnership with our partners—Caterpillar, Cummins, and others.

[Jeff Watson, Conservative, Essex, ON]

Yes, I was going to ask how you built your research capabilities or your facilities, your manpower. Is it exclusively with private dollars, or have you tapped into any of Canada's granting councils? Or is that model something you stay away from?

[Jonathan Burke]

No, we definitely do not stay away from it. Technology Partnerships Canada many years ago was a supporter of Westport. We've returned those dollars and significant returns to the government on that investment.

We did one program with Sustainable Development Technology Canada, part of NRCan, in 2005. That was the demonstration with Challenger Motor Freight that I mentioned.

Now we're doing a partly SDTC-funded program with CN Rail and Gaz Métro to demonstrate a transcontinental locomotive on liquefied natural gas.

[Jeff Watson, Conservative, Essex, ON]

In terms of the experience with government granting programs, how much of your investment would you say comes from government funding versus private funding?

[Jonathan Burke]

In 2011—I don't have the exact number here—approximately $3 million of a total of $36 million was government money, so funded sources.

For example, this money last year partly came from Los Angeles County's South Coast Air Quality Management District, which has a funding program to fund the development of cleaner technologies for trucks and buses and other equipment. So that's where some of that funding came from. As well, in the past we've received funding from the U.S. Department of Energy on deployment and demonstration projects.

So it comes from a myriad of sources, but the bulk of the funding, the lion's share of it, has been our shareholders' and our partners' investment, so private capital.

I can say that government funding does bring, when it comes to attracting new partners and bringing collaborative development programs like CN Rail, Gaz Métro, and the Electro-Motive project, a certain amount of cachet to the project. It also brings a certain rigour to the standards of the project in that there's an extensive evaluation process that really brings the best projects out.

[Jeff Watson, Conservative, Essex, ON]

How do you find the approval times for granting programs? Do they take too long before they finally approve? I've heard some of that criticism from those in the manufacturing sector, for example. Is the paperwork too much, the auditing functions, and all that stuff on the back end?

Apart from the cachet it brings in terms of leveraging, is it really worth your time and your money to go the government route? One-twelfth of your funding isn't a whole lot. Is it worth the trouble sometimes, I guess is what I'm saying? Do we have to improve turnaround times for approving? Do we expect too much in terms of the paperwork on the back side of it?

[Jonathan Burke]

For the most part, we have found the Canadian programs to be very good. Sustainable Development Technology Canada has a very good process for vetting programs, for the follow-on as the project proceeds, and then the follow-up on the commercial validity of the project. We always like shorter and less rigorous approval processes, but it's been a good process so far.

[Jeff Watson, Conservative, Essex, ON]

Would you say your research in commercialization is industry driven to solve their particular needs, or curiosity driven because as researchers you just want to look at this idea?

[Jonathan Burke]

We certainly have curious researchers, but our shareholders demand that all of our research be market driven and customer driven.

In our early days, when we came out of UBC, I think everyone wanted to build a really cool mousetrap, but ultimately, in a very short period of time, we realized we had to develop products that were targeted at markets that would adopt them.

We've evolved over time. Initially our products were very much focused on jurisdictions in the United States and around the world, for example, that did not meet air quality attainment standards, so that was our target market.

Today our target market is on industries that are under increasing pressure from rising petroleum prices and are looking for economic alternatives. Many of the alternatives out there have not been economic, but natural gas is one of the few that provides a very economically superior alternative to petroleum under the right circumstances.

[Jeff Watson, Conservative, Essex, ON]

No further questions.

Thank you.

[The Chair, Conservative, Merv Tweed]

I have one. When you talked about the fleets you're switching or that are contemplating this, are they doing it purely for economical reasons, or are they doing it as part of their reach out to improve the environment? Is there a motivation?

[Jonathan Burke]

Sure. In the early days, in the late 1990s and early part of this century, many of the bus fleets, some of the refuse transfer fleets, etc., were doing it for environmental standards, because in some of these jurisdictions, like Los Angeles, or Beijing in the Olympics, for example, they were under very strong pressure or they had mandates to reduce their emissions footprint.

More and more, companies are choosing this because of the green advantages, but the principal reason for making the switch is the economic advantage. The green comes with whatever intangible value it carries in North America today, or in some cases if they're in jurisdictions like California, which has the low carbon fuel standard and other things like that. There is also the tangible value of reducing their greenhouse gas emissions and their carbon fuel use.

[The Chair, Conservative, Merv Tweed]

Ms. Chow.

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

Are there any natural gas corridors?

[Jonathan Burke]

Sure. In Canada today our very own natural gas corridor runs along Highway 20 out of Montreal and then transitions into the 401 corridor to Mississauga. Today that's our principal natural gas corridor with Transport Robert and their fleet of LNG trucks.

We very soon expect to have corridors emerging in British Columbia and Alberta. Shell Canada has announced their intention to deploy refuelling infrastructure between Calgary, Red Deer, and Edmonton. That would produce our second corridor. Then Vedder Transportation in southern British Columbia has a cardlock fuelling facility at their yard in Abbotsford. We hope with fuelling installed somewhere, perhaps in Kamloops, we could create a corridor between Calgary and Vancouver. Then with the huge amount of liquefied and compressed natural gas fuelling infrastructure that exists in southern California, and in northern California for that matter, we hope to create a corridor along the Interstate 5 corridor from southern California all the way up to Vancouver, British Columbia.

The important thing about transportation in Canada is that the bulk of our trade is either along our 49th parallel or north-south into the United States, so it's not a long step to get to some very well-populated corridors of goods movement on our highways.

If you think Mississauga, the next stop is Detroit, and then through Windsor, and then there's a lot of north-south transit through that corridor. There are tremendous opportunities.

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

On the one being used in the Montreal-Mississauga corridor, which company did the refuelling infrastructure? Was it your company or Robert?

[Jonathan Burke]

No, it was Gaz Métro from Montreal. It's the gas utility that delivers gas to residential and commercial customers in southern Quebec. They formed a separate company called Gas Métro Solutions Transport. They installed the refuelling infrastructure for Transport Robert. They are planning a third station in Quebec City in the near term.