Evidence of meeting #38 for Transport, Infrastructure and Communities in the 41st Parliament, 1st session. (The original version is on Parliament’s site, as are the minutes.) The winning word was vehicle.
A recording is available from Parliament.
NDP
Robert Aubin NDP Trois-Rivières, QC
Is this 100-year perspective based on current consumption figures, or is there a growth assumption in terms of natural gas consumption related to that 100-year supply guarantee?
President and Chief Executive Officer, Canadian Gas Association
It's based on current consumption levels. However, there are a couple of things to consider. Domestic consumption, for instance, has dropped in the last eight years by well over 10% because we've become more and more efficient in our use of natural gas. Countering the prospect of more market share is the reality of more efficient use. Those don't balance completely evenly, but that is part of the calculus. The assumption is on the basis of current market share.
We're always somewhat cautious when we talk about how much prospective gas there is. When we used to say there was 30 years of gas, we would say that every year. We'd say it every year because more and more of the resource is identified and then more reserves are created. There's a difference between reserves and resources.
As the market price changes up and down, there is more work done on identifying resource and the picture continues to improve. I suspect that in ten years we will still say it will be 100 years. Even if demand continues to go up, I think we'll still be saying it. It's because as demand increases and prices change, producers respond and new resources are identified. The fundamental story is that there is an incredible amount of the resource available.
The last point I'd make is that we talk about conventional resources. Those are the ones we've been using for a long time. The unconventional resources are the shales, the tight gases, the coalbed methanes we've started to recover more recently.
Then there's a third resource base, which is hydrates. We don't even talk about hydrates at this point, although there was an announcement a few weeks ago by the Secretary of Energy in the United States on the prospects for hydrates, and both the Japanese and the Norwegians are doing extensive work on it. The numbers on hydrates run into the hundreds and hundreds and hundreds of years.
Our concern is not on the resource side; it's on the use side.
NDP
Robert Aubin NDP Trois-Rivières, QC
My next set of questions is directed more at Ms. Milner, since it's about vehicles that can be converted. I am especially interested in vehicles used by the average consumers I represent.
A few years ago, I taught geography and was interested in all kinds of green vehicles. When the time came to buy a new vehicle for myself, I did not go green. That's because, in terms of the economy, not only were there no savings to be made, but buying that type of vehicle would not even be on par with buying a conventional vehicle. We are talking about conversion costs from $7,500 to $12,000. Does that allow me to choose the vehicle I want, or do I lose a lot of space by adding a tank in the conversion process? How many kilometres per year are required for this conversion to pay off?
President, Canadian Natural Gas Vehicle Alliance
Mr. Sanford can probably speak to this question better than I can.
You definitely have to be a high-mileage driver. That was a big part of the reason when we did the road-map work, we looked at.... You know, in the past we tried to do it all with natural gas and transportation in Canada. If it had wheels, we were going to do it—on road, off road, whatever. There was a lot of money lost: a lot of government money, a lot of private sector money, and a lot of hard learnings that this is not a one-size-fits-all fuel.
You have to find the niche where it works. The main driver there is the cost of the station, whether it's at the home level or the public level. But you're right in terms of small vehicles—even actually on the heavier ones: the target is still the higher-mileage vehicles.
To give an example, if you want a natural gas garbage truck, that's a very expensive vehicle. The diesel truck itself is about $300,000. If you want a natural gas truck, it's going to cost about $35,000 to $40,000 more. It's about 10% more. But the payback on that truck is in about the three-year to four-year timeframe. It's a working vehicle and it's fixed to a route, so it's much easier to calculate the true payback on that vehicle.
I take your point on consumers. In terms of our perspective, we think this is coming, but we think for consumers it's still not there yet. What we see in Europe, where there's a lot more experience, mostly with Fiat in the lead, is that the natural gas vehicles have now come into line with the cost of a diesel vehicle. But it does take time and it takes scale. Are we there yet? No.
Liberal
Denis Coderre Liberal Bourassa, QC
Thank you very much.
This is a very interesting issue because it is pragmatic. We feel that we may be at a crossroads of what has happened and what should happen, but we do have some perspective on it all. There are photos and examples available. That helps us better understand that something is becoming a reality. Unless I am mistaken, regardless of the government's assistance, that is where things stand.
It's getting there. We have it.
What you basically want is for the government to provide some more incentives in order to change the consumer culture, to make people understand that there are other ways to consume. From your perspective, natural gas is the solution of the future. It is not the only solution, but it should be one of the options. That is my understanding of your statements, Mr. Egan.
Madam Milner, Mr. Sanford, enjoy yourself. It's okay.
Liberal
Denis Coderre Liberal Bourassa, QC
I gave you half an hour more now, since we don't have any motions, so let's talk.
President, Canadian Natural Gas Vehicle Alliance
I think everyone on this panel would agree that, yes, we do see now that we're at a turning point with this fuel coming back into transportation, as you say. It is going to happen. I think the question for Canada is whether we want it to happen in a one-off way. For instance, we have Robert in the east and Vedder Transport in the west and now some St. Lawrence ferries. That's fantastic. What comes with those projects is significant capital investment, and of course jobs involved in making that equipment and installing it.
I think the big question is whether we want this to sort of gradually happen, or do we want a more concentrated buildup of this infrastructure, similar to having other infrastructure built?
We do not see any role for the government in infrastructure. We know that there's a lot of private capital that's ready to move into this market, but the conditions have to be right. In that context, we do not see that the consumer market is right. As I mentioned, we see that as a next phase. We really do see that we have to get going first on the trucks and buses. We have to address those capacity issues, which we're working on right now. And we need to create the right conditions for that private sector investment. It will happen gradually.
I'll give you another example. The other interesting opportunity here is marine, particularly in the Great Lakes and on the west coast. We know that investment in an LNG facility can serve both heavy trucks and marine. But right now a lot of the players are sort of waiting to see how the pieces are going to fit together. Natural gas in marine, in particular, has significantly lower emissions compared to the very high sulphur fuel used in the vessels now on the Great Lakes and in the St. Lawrence.
Liberal
Denis Coderre Liberal Bourassa, QC
Exactly. We don't need government investments in infrastructure. I do have some questions about that, as we also have a role to play in ensuring that municipalities get involved as well. In my opinion, we have a role to play in the existing infrastructure program.
The government's primary role is to harmonize our standards with the international ones, especially in the north-south corridor. Another role of the government is to incite consumers to invest by providing them with another option when it comes to purchasing a car. Is that what you are recommending today?
President, Canadian Natural Gas Vehicle Alliance
No, we are not asking the government to incentivize consumers. What we've learned in the past is that the time has to be right. The three legs of the stool are the factory-built vehicles, a model to get infrastructure to the market, and capacity to support the end-users.
For consumers, we don't have that one big leg, which is the OEM vehicles, so there is no ask in the space related to consumer vehicles. We think you have to focus on the bigger vehicles, on the trucks and buses, and then build it from there. That's the foundation.
Director of Sales, Compression Technology Corporation
Just to go back to that earlier point on how many kilometres you would have to drive to make this worthwhile economically, you're looking at roughly 35,000 kilometres per year. So yes, it is a more heavily used vehicle.
I've been in this industry 22 years now, and this is the highest level of interest I have seen. When we look at the deltas between the two fuels, we have the most prime conditions for people to convert their vehicles to run on natural gas. With the availability of natural gas, if there were a way we could receive more OEM vehicles, and the federal government could promote it, it would be a tremendous benefit. More choice out there would align itself with the growth of this marketplace, most definitely.
President and Chief Executive Officer, Canadian Gas Association
As an industry, we don't say natural gas is the answer to everything. We say right fuel, right place, right time. There's a place in our energy economy for a host of technologies and a host of fuels. We think that the consumer should have as much choice as possible. We think that the changes in natural gas supply and consequent changes in affordability should present a significant opportunity for consumers.
What can government do to facilitate that? There's an educative role for government. There is a codes-and-standards role, because many of those are set nationally. Even if the federal government may not have a role, there are significant provincial standards. There are municipal issues. There's a need for bringing the three levels of government together to talk about how those things can be addressed. There's also, I think, a continental dimension, because the transportation market is so integrated between Canada and the United States.
Liberal
Denis Coderre Liberal Bourassa, QC
When we talk about the standards vis-à-vis Europe, you're asking to have kind of a normalization. How's our standard in Canada in comparison with the others? Do we have to lower our standards? Do they have higher standards? There's an issue of what we mean by a standard.
Secondly, j'ai une question un peu néophyte, a question like back to the future.
Is waste conversion, whose goal is producing gas, part of the strategy going forward? We do not need to dig holes; we can convert waste. There is plenty of gas in Montreal. You will not have any trouble obtaining waste.
Could recycling be part of a green approach? I remember the Miron quarry, which contained some biogas; it was appalling. Is that also part of the gas-related strategy?
President, Canadian Natural Gas Vehicle Alliance
We are harmonized with the U.S. on vehicle emission standards. Transport Canada has its own requirements but will recognize the American standard for purposes of compliance. Continentally, it is well harmonized. But if you look at Europe, it's very different. Even the structure of the emissions standard is different in Europe.
President and Chief Executive Officer, Canadian Gas Association
On the waste question, I had to burn through this presentation very quickly, but I did make one quick reference to renewable natural gas, which includes methane recovered from waste disposal facilities, from landfill. There's significant work under way in Quebec to do that. Gaz Métro is active in this area.
We have recently created and will be launching at the end of this month a road map on the use of renewable natural gas. It will look at what needs to be done to bring more natural gas into the system. You're absolutely right: it's a source of methane, and natural gas is methane. So long as the means are there to keep it as clean as the methane coming out of the ground—it's often less clean—then you can put it into the system and it can be a key part of the mix.
Conservative
Pierre Poilievre Conservative Nepean—Carleton, ON
Thank you very much for the excellent testimony today. We appreciate it.
If I wanted to purchase a Honda Civic natural gas vehicle today, what would stop me in Canada?
President, Canadian Natural Gas Vehicle Alliance
You'd have to do what a couple of utilities have done: you'd have to buy it from an American dealer and bring it across the border. As soon as you do that you void the warranty. You'd also have to meet Transport Canada's requirement for daytime running lights, which a dealer here could do. And you'd have an odometer that's in miles. The main risk for you as a consumer is that you void your warranty, because that's how the OEMs work.
Conservative
Pierre Poilievre Conservative Nepean—Carleton, ON
What would stop a local Honda dealer from selling the natural gas Civic in Canada?
President, Canadian Natural Gas Vehicle Alliance
My understanding is that all the dealers have a contract with corporate. They would have to have in their dealer agreement that they're able to sell the vehicle, and they would have to staff up to be able to maintain them in parts, etc. There's a whole suite of things, but they have to have that contract with corporate.
Conservative
Pierre Poilievre Conservative Nepean—Carleton, ON
Is that an issue internal to Honda, or are there regulatory obstacles that render it so?
President, Canadian Natural Gas Vehicle Alliance
It's strictly a commercial issue with Honda.
Conservative
Pierre Poilievre Conservative Nepean—Carleton, ON
All right.
Are you aware of any hybrid gasoline-to-natural-gas vehicles that the major car companies are contemplating, other than the two trucks, the GM and Chrysler trucks? Are they hybrid?
