Transport Committee on May 15th, 2012

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

If there were three things we could do to allow you as a business to succeed in expanding this technology, what would they be?

[Jonathan Burke]

Harmonization of codes and standards with those in other jurisdictions would be a big help. The second thing would be for the government to vocally support alternative fuels by having government agencies that actively promote alternatives to consumers become more active in supporting all alternatives and presenting all alternatives.

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

That would be through more information and—

[Jonathan Burke]

That would be through information and outreach.

Then lastly, certainly we could benefit significantly from a short-term incentive program for specific targeted industries to adopt this technology, much like the one in the United States.

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

One generally cost-neutral method is capital cost allowance, because it's actually not a tax cut; it's a tax deferral. Businesses pay more later on. Their tax bill doesn't go down. Their writeoff is moved to the front end and then they have less to write off at the back end.

[Jonathan Burke]

Exactly.

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

Would that kind of deferral help spur the industry?

[Jonathan Burke]

I think it would be a very significant help to the industry.

[The Chair, Conservative, Merv Tweed]

Thank you.

You talked about the Honda's availability in Canada. I think it's important to point out that my experience has been that in a lot of instances, automotive companies make technical changes so that the product can't move from one country to another. I was previously a car dealer living right on the border, and I found that I couldn't sell cars into the U.S. because of one technical thing that was different, and it created a myriad of problems. That has been reduced, but obviously now there's a new technology we have to address.

[Jonathan Burke]

I think the question around the Honda Civic would have to be addressed directly to Honda. That's my understanding from a number of gas utilities that have brought these vehicles in what they call the grey market.

[The Chair, Conservative, Merv Tweed]

Absolutely, yes.

Ms. Michaud, welcome.

[Élaine Michaud, NDP, Portneuf—Jacques-Cartier, QC]

Thank you very much.

Thank you for your presentation.

I do not have the opportunity to sit on this committee very often, so I find this very interesting, especially because in Quebec we are very interested in the question of natural gas—more because of the shale gas issue, but still, it's being discussed a lot in our province. I find it very interesting to have a new perspective on that issue.

In your presentation you were telling us that most of your R and D activities, if not all, are done in the U.S. Is that right?

[Jonathan Burke]

No. The majority of our R and D investment and the majority of our research and development employees are actually here in Canada.

[Élaine Michaud, NDP, Portneuf—Jacques-Cartier, QC]

Okay. Good.

[Jonathan Burke]

But we do research and development jointly with our partners in other jurisdictions, whether it's with Volvo in Sweden or with Weichai in China. So there is research and development per se going on in those jurisdictions as well as in the U.S., but the bulk of it is still done here in Canada.

[Élaine Michaud, NDP, Portneuf—Jacques-Cartier, QC]

Okay. Great.

What I found really interesting was what was mentioned about biogas, that renewable source. How much of the research being done in your facilities is oriented towards those renewable sources?

[Jonathan Burke]

Given the fact that we are selling this product both on its economic merits and on its environmental merits, we've put a lot of effort into making sure that all of our engines meet the minimum requirements or limits set by biogas producers as well.

So all of our engines are biogas-compliant, in that so long as the fuel at the nozzle meets certain minimum standards, we can use biogas in our vehicles. That has been an important part of our product in places like California, where biogas and renewable natural gas has been an area of focus because of things like the low carbon fuel standard. We've focused a lot of our attention on making sure the engines and the vehicle systems meet the requirements of being able to accept biogas.

[Élaine Michaud, NDP, Portneuf—Jacques-Cartier, QC]

Are there more costs involved in extracting the gas from more traditional sources or in going towards the biogas avenue?

[Jonathan Burke]

It depends. For example, in some jurisdictions, it may be less costly to use biogas because of the alternative cost of the fugitive methane emissions and what they need to pay for those. It depends on what the total value proposition is for that particular project.

For example, if you operate a large landfill in California, you're going to be paying some cost for your methane emissions. So by offsetting those methane emissions, capturing them, defraying the cost of diesel fuel, and instead using that fuel in your vehicles, it may be more cost effective than just doing some alternative method.

[Élaine Michaud, NDP, Portneuf—Jacques-Cartier, QC]

What's your evaluation of the situation in Canada for biogas?

[Jonathan Burke]

I don't know the upstream side of it terribly well. That would be best posed to someone in the production side of biogas. For example, Gaz Métro, FortisBC, and some of the other gas utilities are involved in that.

I do know that there are some challenges around reinjection of biogas into the existing natural gas pipeline infrastructure, but I think that's being resolved for the most part at the provincial level, under the utilities commissions in each province.

I think there has been widespread acceptance of biogas and the use of it, so there has not been much opposition. At the federal level, I don't think there have been any regulatory issues with regard to biogas.

[Élaine Michaud, NDP, Portneuf—Jacques-Cartier, QC]

How much time do I have left?

[The Chair, Conservative, Merv Tweed]

Two minutes.

[Élaine Michaud, NDP, Portneuf—Jacques-Cartier, QC]

My colleague touched a bit on the shale gas issue. How big in the market do you think shale gas could become in the next few years with the state of the market right now?

[Jonathan Burke]

At the end-user side, I can't speak to what the end product will be going into the vehicle. That's a bit of a challenge, although unconventional gases, be it shale, tight gas, or other unconventional gases, are starting to represent a larger share of the market.

I can't speak to what the end-user share or proportion of the market would be, because we have natural gas coming into North America from several different streams. We have it coming in through import LNG terminals. We have it coming in from conventional sources—for example, northern Alberta and elsewhere. It's hard to determine where that specific molecule comes from that goes into the vehicle in the end use.