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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.

On the agenda

MPs speaking

Also speaking

Timothy Egan  President and Chief Executive Officer, Canadian Gas Association
Alicia Milner  President, Canadian Natural Gas Vehicle Alliance
Tim Sanford  Director of Sales, Compression Technology Corporation

9:35 a.m.

Conservative

Pierre Poilievre Conservative Nepean—Carleton, ON

They are strictly natural gas?

9:35 a.m.

President, Canadian Natural Gas Vehicle Alliance

Alicia Milner

Yes. They are bi-fuel. They will start on gasoline, switch over when the engine reaches the right temperature, and then operate on natural gas.

9:35 a.m.

Conservative

Pierre Poilievre Conservative Nepean—Carleton, ON

Can they run exclusively on gasoline?

9:35 a.m.

President, Canadian Natural Gas Vehicle Alliance

Alicia Milner

Yes, they can. That's where maybe it wasn't clear. The Honda Civic, being dedicated, can operate only on natural gas. Typically, bi-fuel is the way you go.

9:35 a.m.

Conservative

Pierre Poilievre Conservative Nepean—Carleton, ON

This is the problem. If I want to install a home refuelling system and run my vehicle principally on natural gas, in the existing Canadian distribution environment I can do that as long as I have the option to switch over to gasoline when necessary.

For example, in an average week I could fuel my car with natural gas at my home, drive myself to work and back and wherever else, and always be able to refuel at home without the necessity of relying on a public filling station. But if I decide I'm going to drive to Saskatchewan to visit family, I cannot guarantee I'm going to find natural gas stations all along the way. As a consumer, I would need to have the possibility to run on gasoline as a bridge fuel until the infrastructure for the distribution of natural gas is broadly in place.

Why don't you see that happening? Why aren't the OEMs recognizing the need to bridge between gasoline and natural gas by offering a hybrid product?

9:40 a.m.

President, Canadian Natural Gas Vehicle Alliance

Alicia Milner

I think they're starting to get there, now that we see availability from GM and Chrysler. Ford is also working with Westport to offer a product. I think it's coming, but for them it's strictly about cost: x amount to engineer the product, yamount to manufacture it, and they've got to make sure they're going to sell enough units to make that worth their while.

Now that they are seeing interest in the producer community around North America, I think they are starting to see sufficient interest. But the other thing is that these guys work in thousands of vehicles manufactured per month. They don't want to talk about hundreds. This is the other challenge with the automakers: getting to that zone where, to them, the numbers make sense.

9:40 a.m.

Conservative

Pierre Poilievre Conservative Nepean—Carleton, ON

Economies of scale.

Mr. Sanford, I have a question for you. Would it make sense for your company to approach the OEMs and discuss a package for the consumer that would include a natural-gas-powered vehicle and an installed home refuelling station, at an all-in-one price? Potentially, it would be financed over a defined period, and perhaps include the natural gas retailers in a fixed-price contract that would survive over the duration of the financing, so that the consumer could really price in the cost of a natural gas vehicle, the home refuelling station, and have a constant price over a five- or ten-year-period to show the financial benefit, guaranteed.

9:40 a.m.

Director of Sales, Compression Technology Corporation

Tim Sanford

It's an excellent point, and we've been addressing that with a couple of the gas utilities, and potentially approaching Chrysler, for example, GM or Ford—the OEMs—on that specific topic.

It's funny, I go back to our success in the forklift market. We have roughly 3,000 or 4,000 forklifts operating in the greater Toronto area. What we've done there is to work with the forklift dealers to convert forklifts to operate on natural gas, and supply the refueling stations through a financing package. It makes the economic case very, very strong. Workers benefit from the health and safety benefits in emissions, and the company benefits as well from an economic savings that is very substantial.

In this case, we're looking at approaching the OEMs to ask for their assistance through their financing mechanism. So when you purchase your vehicle, in the trunk, for example, would be the fill. You simply take that home and any local HVAC contractor could install that; it's a simple installation. But by having that rolled into the financing package with the vehicle, now you're looking at something that may be much more affordable because it's done through a monthly payment.

On the fixed rate for natural gas, that is something the homeowner could look into with a gas marketer or the utility, to lock in the rate for a length of time so they're guaranteed a price over three to five years, say.

May 17th, 2012 / 9:40 a.m.

Conservative

Pierre Poilievre Conservative Nepean—Carleton, ON

I think they need to have that price predictability, because the average consumer is not a commodity economist. You might tell them that natural gas prices are lower and there are 100-year supplies and so on, but that doesn't really mean a lot to someone who sees natural gas as having a mercurial price behaviour, as they see their gas bills differ from year to year, etc. The simpler you make this for people, the better it is. If you're asking them to go to their natural gas retailer and negotiate a contract, it's just not going to happen.

Now, imagine this: I walk into my Honda dealer and the dealer sits me down and says, “Listen, we have this whole package for you, it's all on one sheet, one piece of paper. Here's the cost of your natural-gas-capable vehicle, here's the cost of your home-installed filling station, for which we will arrange installation, here is the agreed price over a five or ten-year period with Enbridge for your natural gas, and we roll it all into one price. You sign on the bottom line, you buy your vehicle, and when you have this vehicle at home we will have your filling station installed, your price set, everything is finished, you just have to drive the car.” That is the kind of simplicity that would compel a motorist to take the risk of early adoption.

9:45 a.m.

Director of Sales, Compression Technology Corporation

Tim Sanford

I agree fully with that. I previously experienced this with a fuelmaker myself, in California, when I was working with Honda dealers. We had a program in place through the U.S. in some specific states, California being one, where the actual Honda dealer would provide the turnkey service, just as you've stated there.

9:45 a.m.

Conservative

Pierre Poilievre Conservative Nepean—Carleton, ON

What was the outcome of that?

9:45 a.m.

Director of Sales, Compression Technology Corporation

Tim Sanford

It was very successful. However, there were some incentives, so I can't tell you if it was just related to the turnkey package or whether it was incentive-related. I'm sure the two came together.

9:45 a.m.

Conservative

The Chair Conservative Merv Tweed

Thank you.

I would suggest, as a former automobile dealer, that we wouldn't want to take all that other responsibility on. Our job is not to market gas or installations; it's to sell cars. I think it's a great idea, but I don't think the consumer is there. I think the example would be the electric car. The consumer is not there yet, no matter what you do for them.

Mr. Holder.

9:45 a.m.

Conservative

Pierre Poilievre Conservative Nepean—Carleton, ON

The technology is not there with batteries. The technology is there and the economics are there with natural gas.

9:45 a.m.

Conservative

Ed Holder Conservative London West, ON

Thank you, Chair.

I'd like to thank our guests for a very compelling presentation and discussion so far.

I think the debate between the chair and the parliamentary secretary is more about price point, quite frankly. I think that becomes the issue for the consumer. If I could interpret what Mr. Poilievre said from my perspective, just make it easy for the consumer. That's what we're talking about. I don't think I would be suggesting that the car dealer has to sell the package. I think if they want to sell a vehicle that incorporates this kind of technology, the package has to be there just to make it easier to use.

I have several things, and I'm going to work through this if I can, please.

First I have a quick question for Ms. Milner. This is my ignorance, so you're helping educate me. When you mentioned before about the need to have natural gas and gasoline for those times when.... I would never drive to Saskatchewan. No disrespect, but it's just a little farther than I would want to drive in a vehicle. But you noted the importance of having both fuels, how it would be important if you had that. I presume you need two tanks. The weight of a tank is fairly significant without the fuel in it, so I'm just wondering what impact that has on efficiencies and all, and how practical that really is. I guess it's the only way to do it, but can you just briefly comment on that?

9:45 a.m.

President, Canadian Natural Gas Vehicle Alliance

Alicia Milner

There is a weight impact. Typically for a consumer we hear the weight and the payload issue is much bigger on trucks, of course, where volume and payload matters to them. One of things we find too in the more evolved markets, like in Europe, is that the OEMs will have a gasoline tank on there but they'll engineer it down to be a very small gasoline tank. That helps offset the weight you're adding with a natural gas fuel system. Right now in North America we're just sort of having both the normal size. However, I'm not sure if it's the GM pickup or Chrysler, but I believe one of them is going to scale down the gasoline tank.

9:45 a.m.

Conservative

Ed Holder Conservative London West, ON

In terms of litres of capacity, what might that be?

9:45 a.m.

President, Canadian Natural Gas Vehicle Alliance

Alicia Milner

I'm trying to remember with the North American OEM product. I think it's maybe about 10 or 20 litres for the pickup truck.

Do you know offhand?

9:45 a.m.

Director of Sales, Compression Technology Corporation

Tim Sanford

It's in around the 20 litres.

9:45 a.m.

President, Canadian Natural Gas Vehicle Alliance

Alicia Milner

Yes. It's about a 20-litre tank.

9:45 a.m.

Conservative

Ed Holder Conservative London West, ON

That would be painful for Mr. Poilievre to go all the way to Saskatchewan with a 10- or even a 20-litre tank, I'm thinking. He needs to stop a lot, for different reasons that I'll let him comment on.

9:45 a.m.

A voice

That's on the record.

9:45 a.m.

Conservative

Ed Holder Conservative London West, ON

First I have a question for Mr. Egan. I think there are a couple of costs. There is the conversion cost, and I've heard you say $7,500 to $12,000. Is that the number I heard you quote, or was it perhaps Ms. Milner? If you stand by that as a range, $7,500 to $12,000, what would you imagine the cost to be if it were in general production, if an OEM were producing this and it wasn't a conversion, so it was just part of the vehicle itself? What would you guess the cost to be?

9:50 a.m.

President, Canadian Natural Gas Vehicle Alliance

Alicia Milner

I can tell you that on the GM and Chrysler pickup trucks, they're both going to come in at about a $9,000 premium. Pickup trucks these days are fairly expensive vehicles, so that's 20% to 25%.

9:50 a.m.

Conservative

Ed Holder Conservative London West, ON

Where did you get your $7,500 figure?