Thank you for the opportunity to be here today to talk to you about natural gas vehicles. I'm here representing the Canadian Natural Gas Vehicle Alliance. We're the national not-for-profit trade association that advocates for greater use of natural gas for both economic and environmental benefits.
With my remarks, I'll address the question of natural gas use for personal vehicles, including home refuelling. I'll comment on barriers, market development timing, and how we see light-duty fitting together with the industry's near-term focus on medium- and heavy-trucks and buses, which committee members will recall was the focus of the deployment road map, and I know you've heard that from a number of witnesses. Finally, I'll close with three recommendations to the committee members regarding how to encourage more use of natural gas in transportation.
Before talking further on the personal side, I'd like to just take a moment to talk about transportation generally.
Transportation is a large consumer of energy. It uses about one-third of all energy used in Canada. But unlike every other sector of the economy, it's uniquely vulnerable because it relies on one energy source to meet of 98% of energy needs, and that's crude-oil-based fuels. Of course the renewable fuel standard is going to change this, given the ethanol and biodiesel mandates, but we're still in a situation where we've seen little change in energy use and no choice for the consumer, despite more than three decades of investment in alternative technologies and fuels.
Looking at the opportunity with natural gas, the real critical question is how we can be successful in transforming the market. How do we ensure that any changes are sustained in the marketplace as we move forward?
Right now in Canada, we've got about 12,000 natural gas vehicles. That represents one-tenth of one percent of the total vehicle population. In the U.S., the penetration for natural gas is also about one-tenth of a percent: 120,000 vehicles out of more than 240 million vehicles.
Why in North America are we lagging behind, when we've seen such tremendous growth for natural gas in other markets globally? First, it's important to understand that most of the growth in the global natural gas vehicle market has involved after-market conversions, which we've had in North America for more than three decades. The reasons the after-market approach has not taken off here are cost and the lack of a broader system to support consumers. A typical natural gas vehicle conversion costs between $7,500 and $12,000 in North America. There are fewer than 15 certified conversion shops in all of Canada and no shops in many provinces and territories. Now, don't get me wrong, the technology performs very well, but the consumer is left without a support system, which can be very problematic, based on our experience in the industry.
After-market conversions certainly work for some high-mileage fleets and for certain consumers who have a payback of less than three years. Following my remarks you're going to hear from Tim Sanford, who is going to talk to you about how a small Ontario business is making this work in their local community.
If after-market conversions are not the primary strategy, how can we get natural gas vehicles for personal use? The single biggest enabler of natural gas for personal vehicles, which can also open the door to home refuelling, is having a choice of factory-built vehicles. Right now there are only two factory-built vehicles that will soon be available in Canada. Both of these vehicles, from General Motors and Chrysler, are pickup trucks that will be sold to commercial fleet owners. In the U.S., GM also offers cargo vans, and there's the natural gas Honda Civic that Tim mentioned. But the Civic only operates on natural gas. It's a dedicated vehicle. Given that in Canada we've only got 41 public stations, this would be a challenging vehicle to own in Canada.
The question of imports, then, if we want to import other natural gas vehicles, really shifts to offshore markets—like Italy, for example. But then we're talking about a lot of changes needed to the vehicle and a lot more complexity to comply with Canadian standards, given that we're fairly harmonized with the U.S. in this direction.
If factory-built light-duty vehicles are the key for the personal transportation market, why aren't the automakers producing more models for sale in North America? In a word, it's infrastructure. They need to see a strong build-out of public stations, as well as home refuelling options. They also need to see a market opportunity that involves Canada and the U.S. Canadian production volumes alone are not enough to justify the investments that would be needed to bring more natural gas vehicles to the market. As corridor fuelling stations are built for heavy trucks, this could provide a renewal of infrastructure to fuel personal vehicles. For example, a Highway 401 service centre that offered liquefied natural gas for trucks could also have a separate pump to offer compressed natural gas for passenger vehicles.
With respect to home refuelling, there's a major initiative under way in the United States involving natural gas producers, utilities, and the U.S. Department of Energy to develop a next-generation home refueller that would have higher output, lower cost, and a longer operating lifetime. You may have seen that GE and Chesapeake recently announced a collaboration to bring such a next-generation home refueller to the market by mid-2013.
The final enabler we see is having the capacity to support vehicle owners and to execute projects in an efficient and cost-effective way. With heavy truck and bus fleets, there are already more than 50 models of factory-built vehicles available with full dealer, parts, and warranty support. And with the current road-map work, industry and government are already jointly addressing the technical barriers and ensuring harmonization with the U.S. where possible. All this capacity-building work is going to ultimately support greater adoption in the personal vehicle market.
We believe that personal natural gas vehicles, including home refuelling, are coming and are coming on a scale that will be accessible to all Canadians. In the meantime, the work that is under way to develop the market for medium and heavy trucks and buses provides an important foundation to support the future use of personal natural gas vehicles.
In closing, we'd like to make three recommendations regarding how the committee can assist and encourage greater use of natural gas in transportation:
First, highlight the role that natural gas vehicles can play in Canada as an innovative transportation technology within the committee's upcoming report.
Second, engage the automakers and seek their input on what is needed to create the right conditions for the manufacture of factory-built natural gas vehicles for sale in Canada and the U.S.
Third, collaborate with the United States, through the clean energy dialogue, to establish north-south natural gas trucking corridors. This infrastructure can become the backbone of a much greater infrastructure build-out that will support personal natural gas vehicles.
Thank you for your interest.