Evidence of meeting #45 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 technology.
A recording is available from Parliament.
Conservative
The Chair Conservative Larry Miller
We will call our meeting to order. We do have quorum.
I thank our witnesses for being here today. I'll just give you a reminder to keep your presentations to 10 minutes or less. Then we will get into the questions.
From Blueprint Energy Inc., we have Mr. Greg Tarasco.
Greg Tarasco President and Chief Executive Officer, Blueprint Energy Inc.
Thank you, Mr. Chair.
My timing on this came in at 9 minutes and 30 seconds. I've been told there is some technical information on translation, so to read a little bit slower. I apologize if I go over by a minute or so.
President and Chief Executive Officer, Blueprint Energy Inc.
Thank you.
Good morning, Mr. Chair, committee members, and fellow witnesses.
As president and CEO of Blueprint Energy Inc., I am pleased to have been called as a witness and afforded the opportunity to describe our transportation innovation: why it's beneficial, where it adds value, the barriers we face and the support we have received in terms of government regulations, and supportive measures on policy to the committee.
By way of background, I have extensive finance, technology, investment, and business development experience with innovative technologies, typically at the pre-commercial and moving-to-commercial stage. My statement is offered through the lens of an MBA through the University of Ottawa and 20 years of practical experience.
Blueprint Energy is a leader in research and development of flywheel energy storage systems. The roots of the company span over a decade, successfully transitioning from its origins at the University of Ottawa to private sector research projects and now the pre-commercial project stage. Having over 50 projects and totalling $10 million in R and D, Blueprint has a depth of knowledge and understanding of the physics and applicability of flywheel technology that is matched by few in the world.
Our goal is to integrate flywheel energy storage systems into hybrid vehicles and to make them the default energy storage system replacing traditional chemical batteries.
A flywheel, which is sometimes referred to as a mechanical battery, is not a new concept. It's basic in nature and is highly adaptable. Flywheels are nothing more than a disk that spins around a fixed axis. The amount of energy a flywheel can store is proportional to its mass, the square of the speed at which it spins, and the square of its radius. This formula, and a wide range of variables affecting it, takes a simple concept and allows for great engineering latitude.
While the flywheel can be referred to as a mechanical battery, we have to distinguish that there are two different types in how the flywheel receives and releases its energy.
The first type is a mechanical flywheel. Its input and output, if you will, is derived by a mechanical device; that is, a gear attached turns a flywheel and it will spin up the rotating device to store the energy. Conversely, to release the energy from the mechanical flywheel turns a gear, and it in turns moves something.
The second type is an electrical flywheel. Its input and output, as the name suggests, are through electricity or a current; that is, electrical current drives the spinning of the disk to store energy. When energy is released, the output is in the form of electricity, thereby acting like a normal chemical battery.
Blueprint Energy has fully developed, tested, and patented technology for electrical flywheels, and it is this that forms our basis of commercial efforts in integrating flywheels into hybrid vehicles.
So how does a flywheel work in vehicles? What allows a flywheel-based hybrid vehicle to satisfy performance, range, durability, and price metrics without the requirement to change ownership habits or the transportation industry's infrastructure?
Here's how it works. The flywheel simply captures the natural wasted energy produced by a vehicle and stores it until it's called upon by computer modules. We must first understand that the vast majority of wasted energy in fuel consumption in vehicles is in the deceleration, or braking period, and in the acceleration period from a still or near still state to a cruising state—that is, if you will, coming to a stop sign or being in bumper to bumper traffic.
What we do is we capture the wasted energy at the braking process—or heat energy—and convert it into electricity. That in turn spins the flywheel, resulting in stored energy. The vehicle now needs to accelerate, and instead of drawing on the carbon fuel, whether it's gas, diesel, or bioethanol—we're fuel-agnostic—
Conservative
The Chair Conservative Larry Miller
Excuse me. I'll ask you if you could maybe slow down just a hair.
President and Chief Executive Officer, Blueprint Energy Inc.
Sure—and I did get a warning.
President and Chief Executive Officer, Blueprint Energy Inc.
I thought I was slowing down. My apologies to the committee and to the translator.
That, in turn, spins the flywheel, resulting in storage of energy. The vehicle now needs to accelerate, and instead of drawing on the carbon fuel, whether it's gas or diesel—we're fuel agnostic—we draw on the stored energy from the flywheel first to propel the vehicle forward. We only draw on the carbon fuel and the engine when it is optimal to do so. Of course, this is controlled through sophisticated software and computer-controlled modules.
The more a stop-start driving pattern is introduced, the more energy is wasted, and therefore the more energy that can be captured and stored. If you can picture a transit bus driving pattern, a garbage truck stopping at every driveway, and 75% of cars globally that are mired in urban traffic, which equates to 70 million vehicles produced year over year, you can quickly begin to formulate the magnitude of wasted energy, wasted money, and unnecessary emissions.
That answers how it works and why it is necessary.
As for the second part, why flywheels are better suited than traditional chemical batteries, the answer is twofold.
First, the pure physical properties and operational demands, such as high power, short duration conditions, demand a highly tolerant durable technology. As our flywheels were originally designed for space and the Canadian Space Agency, and intense industrial use, we not only meet this demand, we far exceed it.
Typical elements are long life cycles, up to 20 years; high round-trip efficiency; no capacity fade, no power or efficiency fade; a wide range of temperature tolerance—weather is not relevant—low maintenance cost; no end-of-life disposal costs; low cost of ownership, since you do not have to change your batteries—and, particularly from a safety perspective, no high-voltage exposure during operational maintenance or to first responders at the scene of an accident.
Second, it solves the economic barriers that prevent purchasers from buying hybrids, whether it is the fleet operator, such as a transit authority, or a family vehicle. The current economic challenge and barrier to purchasing existing hybrids are price premium, operational expense—which is changing the batteries—and end-of-life disposal fees, all of which have deterred the adoption of hybrids. There is ample proof of this even within this committee's previous witness testimony, mostly by fleet operators.
Flywheel technology is far less expensive to manufacture, which lowers the price premium. There is no exchange of the flywheel, as it lasts the life of the vehicle and reduces operational costs.
Lastly, there are no end-of-life disposal issues, as a flywheel is made out of steel and is 100% recyclable, turning an end-of-life cost into a profit and avoiding further environmental damage by heavy metals that are found in chemical batteries.
There are approximately 100,000 transit buses in the NAFTA region alone that should be hybrid but are not. There are 70 million light-duty vehicles produced year over year. Now 75% of these vehicles demonstrate driving patterns that should be hybrid, and yet there has been a lowly 3.7% hybrid adoption rate over two decades of research and hundreds of billions of dollars spent globally by governments in this industry, with very little result.
As you can see, chemical batteries are not the solution; they are, in fact, the problem. Rising fuel costs and operational costs demand hybridization, and chemical batteries prevent it. In short, the chemical battery is an end-of-century solution to a mid-decade problem. We need a solution now, and we believe flywheels can be that solution.
There are many more and significant benefits for fleet operators, but time today does not allow me to address that in my opening comments. But I am at your service to provide such information that is warranted and appropriate to committee protocol.
With regard to general barriers and allowing our technology to be adapted and to flourish, we take the stance that they are the same for us as they are for any other developing technology in engaging in commercial process; that is, to fight the psychology of preconceived notions in linear thinking.
Auto manufacturers, governments, investors, and scientists alike have all bought into the notion that chemical batteries are the solution. The conventional thinking is that since this battery didn't work, we should try another battery. I liken this to the dot-com bubble, where otherwise very intelligent people were so fixated in a position, they could not see that most of the technology was bunk.
Frankly, our experience with the government has been extremely positive, and we would make two general thematic recommendations. In my attachment, I have gone into more detail.
First, the major problem in Canada is investment in technologies, and private capital is simply not doing the job. The government has gone to great lengths to address this issue, so we have not drawn any conclusions as to the government's need to do more or that private capital is happily willing to let the government do the heavy lifting and then engage when the risk is mitigated. We would support continued government policies that strive to facilitate and foster the introduction of risk capital into developing technologies. This is paramount.
Second, the government has very good programs and sees the importance of post-R and D movements towards commercialization. While these efforts assist greatly, the administration of the program is problematic. I am not referring to the process, as any company should be able to withstand the rigours of due diligence; I'm referring to the timing misalignment between the commercial window of opportunity and the capital requirements of a company. If a company was to be vetted for private capital, the due diligence process typically takes 30 to 90 days to get a term sheet. The government can take six to twelve months, depending on the program, if not longer. For an early-stage company with commercial-ready technologies, this is a challenge. Policies that meet the deployment of capital in a timelier manner would be seen as favourable.
In closing, what we are asking of the committee is to be mindful that there are a variety of solutions that solve transportation issues and not get lost in the noise or pet technology projects. We believe that flywheel energy storage systems will be a core component of successful hybridization now and for decades to come. We are, however, under no illusion that we are the silver bullet. Flywheels will be but one of many new technologies in vehicles that will meet the economic, operational, and environmental issues for all concerned.
On behalf of Blueprint Energy, I would like to take this time to thank you for your dedication and interest in finding real solutions for the transportation industry.
Conservative
The Chair Conservative Larry Miller
Thank you, Mr. Tarasco.
We'll now move to Invotronics Inc. and Mr. Earl Hughson.
Earl Hughson President and Chief Executive Officer, Invotronics Inc.
Thank you for inviting me here today to speak.
After graduating from engineering at Waterloo, I've spent the last 25 years completely in OEM automotive electronics systems and new technologies for a number of large Canadian companies, small start-ups, and so on. I've worked in start-ups, R and D, product development, and high-volume electronics manufacturing facilities. And I've done numerous international joint ventures and technology partnerships around the world.
I'm also now a director of the Canadian Automotive Parts Manufacturers' Association. I was brought onto the board over a year ago, when the association started to realize that the electronics content was rapidly increasing. It's up to almost 30% of vehicles, and it's projected to move to 50%. The association is primarily represented by metal and plastics companies. If we don't get on board with electronics in this country, we're going to no longer enjoy the 17% of vehicle-build content we have, which almost represents our purchases of vehicles. We'll be left well behind in automotive parts as a major global industry going forward.
When I took the board position, they asked me to chair a special committee, which we call the Connected Vehicle Working Group, to try to work with government, academia, and industry to see if we can develop solutions and foster growth in advanced automotive electronics in Canada.
Automotive electronics has changed a lot in 25 years. There was nothing much more than radios back then, and they were normally built in factories that were captive to the OEMs. That's changed. It's a highly competitive, rapidly growing, international business with global competition.
We've seen the electronics content in our cars increase. What many people don't realize is that even where there is a mechanical system, electronic controls have taken over and are running the mechanical systems of the car. This has created a great electronic platform that's really going to support some tremendous growth in vehicle electronics and capabilities over the next decade or two.
I want to talk to you today about two emerging areas of technology where I think Canada can be a key player. And I think the timing to make this happen is now.
The first area is infotainment and telematics, often referred to as the connected car. I think you've all seen navigation systems that came in 10 or more years ago. Then lately we've seen OnStar, Bluetooth, and Ford SYNC. The content of these components is very significant. Sometimes the most expensive components in a car are some of these electronic systems.
I'm not really worried about the people who want to get their e-mails or stock quotes. What's more important is that these systems are starting to communicate about where you are. They're helping people navigate. They're avoiding congestion, which helps reduce accidents and improve fuel economy. And they are going to play a big role in the efficiencies of our highways going forward as they start interacting more and more with the infrastructure of the highway system and the vehicles. Vehicles are going to be talking to each other and the intersections on dedicated frequencies. It's going to really revolutionize what we can do.
From various conferences I've been at, it's clear that globally, highway systems, especially in urban areas, are as big as they're ever going to be. The demand for personal mobility is going to continue. Some of these advanced technologies are going to be the ways we get more people efficiently and safely through the corridors we have in the future.
The second area I'd like to talk about is safety, collision avoidance, and autonomous vehicles. These things are moving ahead very quickly. We've seen over the last number of years airbags, seat belts, new crash zones, intrusion beams, and five-star safety ratings. These have had a huge impact on safety, with tons of societal spinoffs and benefits from reducing accidents.
However, the safest vehicle is the vehicle that isn't in an accident, and this is where the automotive industry is going, and this is where some regulatory groups are going.
NHTSA is considering a new five-star rating to promote this way of thinking among the OEMs and to create competition and advancement by looking at five stars of collision avoidance.
We'll start to see technologies like blind-spot detection, radars, rear rollover protection. A number of these things earn stars showing that this car is going to avoid being in an accident in the first place. You're going to see 360-degree vision and sensing around vehicles.
The OEMs are working on developing these technologies as we speak. First you're going to see warning systems, for instance, with blind-spot detection. They'll put a dot on your mirror.
More and more these advanced systems are taking control away from the driver, and I think we're going to see this trend continue.
You already have electronic control of the engine, power train, suspension, brakes, and steering. Cars can park themselves by scanning a parking thing. There are cars you can buy right now that won't let you drive them into a wall, even if you want to.
You may not realize that some of the autonomous systems are already taking control away from you right now. You don't ask the anti-lock braking system to come on; it comes on when it knows it needs to. With advanced stability control, when you finally throw your car totally out of control, it starts moving brakes, adjusting suspensions, and it says “I'll get you back on the road; just give me a second.” It basically takes control away from the driver to prevent accidents.
These are just the beginnings of where this is going.
The other things we're seeing are higher and higher fuel economy standards. Again, I was with my son—he was looking for a car—and we were looking at a new Honda. I touched the body panels, and they were already so thin that you could push them in with one finger. This is going to continue. Cars have to be lighter to improve them. These collision avoidance and advanced technologies are going to be key in providing the safety and protection of the next generation vehicles we're going to see going forward.
We're also now seeing a convergence of the autonomous and advanced safety systems and the connected vehicle. They are starting to work together.
I don't know how soon—the sooner the better, as far as I'm concerned—but you'll be able to get on the highway and link in behind a platoon of vehicles. I drive to Detroit often, once a week or more, and I'm looking forward to linking in behind a platoon, getting onto my e-mail, and disconnecting from the platoon in Windsor.
These technologies are already being developed in Canadian universities and others, and I think this is where it's going.
In the agricultural, construction, and mining businesses, this is already happening. The drivers are being taken out of major mining equipment for safety and efficiency reasons, and it's the same with agriculture and so on. As a matter of fact, tomorrow I'm flying to California to meet with a group specifically on autonomous control of agricultural vehicles.
There's a lot going on. This is an explosive growth period, and the question is, how can Canada be a player in this? The reality is that the core technologies are areas of strength that Canada has from other industries and other investments in R and D over the years. We have a great background in core technology and wireless and telecom. If you look at the connected vehicle, there are some very complex technologies required by the vehicle in the transportation industry right now that are going to be coming from these places.
You already have GPS and cellular coming into your car, which you're aware of, but you also have another RF managing your key fob and another one managing your tire pressure monitoring. We're going to have DSRC radios talking car to car and car to infrastructure. These are very complex wireless telecommunication problems that need to be solved on a massive scale. I think Canada can play a role by transporting the technology it has from other industries into this space.
Similarly, with the autonomous vehicle controls, we're looking for sensors that come from aerospace. We're talking about advanced radars, ultrasonic infrared sensors and more, using MEMS technologies. I know that a lot of this technology exists in Canada, and it's time to apply it to the automotive industry.
The auto manufacturers have been a pretty closed shop on who their suppliers are most of the time, but in my entire career I've never seen them more open to talking to people from other industries—small companies and large companies—to find the technologies they're looking for. They don't exist in traditional automotive electronics suppliers. Even the large automotive electronics suppliers are going to aerospace companies or telecom companies to buy segments of them and participate in this growth market.
President and Chief Executive Officer, Invotronics Inc.
Let me say what Canada can do. I think the highest impact thing we can do is to fund demonstrations of Canadian technologies in automotive applications.
The automotive industry is from Missouri; it's not from Tokyo or Detroit. They have to see a physical demonstration. The most advanced graphs and PowerPoint presentations won't get you in the next meeting. Equipment installed in a car and demonstrated to them will get you a purchase order.
Conservative
The Chair Conservative Larry Miller
Okay, I'm going to have to....
You'll be able to add more as questions come. Thanks, Mr. Hughson.
We'll now move on to HD-Petroleum. We have Mr. Todd Habicht and Jack Winram.
Todd Habicht President and Chief Executive Officer, HD-Petroleum Inc.
Good morning, Mr. Chairperson and committee members.
Thank you for the opportunity to present to this committee. Our presentation today will follow the outline requested by this committee and provide answers to the three questions.
In brief, HD-Petroleum is a company that recycles waste motor oil into diesel fuel. This technology was brought in, via my grandfather, back in 2006, and it has given me the opportunity to develop and commercialize it. Each day, every oil change done on an industrial or commercial basis—in the cars we may have driven to work today...each day that oil is changed adds to the ongoing problem.
The diesel fuel that we at HD-Petroleum produce is not a biodiesel. It is a pure petroleum product. We simply take a hazardous petroleum material and truly recycle it into a green, reclaimed source of energy.
On what innovative transportation technologies are important to our business and why, HD-Petroleum has an innovative technology that substantially reduces harmful sulphur emissions compared to current waste oil processing practices. We're a Manitoba company that has developed and commercialized a micro-refinery technology that recycles used crankcase oil into valuable transportation diesel fuel.
The HD-Petroleum process can remove up to 96% of sulphur from waste oil, ranging from approximately 3,500 to 5,000 parts per million, and reduce the amount below 100 parts per million of sulphur content. This meets the low sulphur requirements.
When this project was initiated, the standard in Canada was the LSD, or low sulphur diesel, fuel. Recently, Canada and most of the world has adopted the ultra-low sulphur diesel fuel requirements, which is 15 parts per million or less. In many parts of Canada and the world, used crankcase oil, if it happens to be collected, is often burned as an unrefined industrial process fuel. Statistics on the amount of used oil that is burned is unclear; however, it is safe to assume in Canada that it is the hundreds of millions of litres.
What we do know is that in 2011 Canada consumed 1.1 billion litres of lube oil, of which approximately 196 million litres are currently being refined, with the remainder lost in use, burned as an unrefined fuel, or simply inappropriately disposed of or inappropriately stored.
HD-Petroleum's recycling technology, while bringing value to a used, non-renewable hazardous resource, also substantially reduces harmful emissions like sulphur and greenhouse gas, as well as displacing emissions and costs associated with the production of fuel from crude oil.
The summary of this micro-refinery technology simply brings the solution to the oil, rather than bringing the oil to the solution. As waste motor oil is distributed to all parts of Canada, including the northern communities, we can provide a locally generated source of energy while cleaning up a locally generated source of contamination.
The second question is what barriers are facing users of these technologies or the entrepreneurs of the companies.
Despite reducing sulphur emissions by up to 96% in the case of HD-Petroleum, users of this technology are faced with a limited fuel market because the economic costs to reach ultra-low sulphur diesel fuel requirements using a conventional hydro-desulphurization process is cost-prohibitive on a micro scale.
Not only is this a barrier to advancing sulfur-reducing technologies, but also the burning of waste oil as a dirty fuel continues to be the foremost alternative for many industry users.
For years, Canada has incrementally moved towards reducing sulphur emissions, and rightly so, due to the extremely harmful impact on health and emissions in the environment when sulphur is emitted into the atmosphere. However, the fuel regulations did not, nor could they, consider waste oil as an industrial fuel source, which has excessively high sulphur concentration, as I previously noted.
In addition, a regionally based, cost-effective technology to manage recycling and waste oil did not exist until now. Today, HD-Petroleum has technology that is capable of substantially reducing Canada's overall sulphur emissions from the existing waste oil use, and it is anticipated that, over time, additional inventors, innovation, and entrepreneurs will continue to discover new technologies in this area.
However, the current regulations requiring less than 15 parts per million of sulphur content for diesel fuel creates a substantial market barrier for those technologies.
I will take a moment and summarize our answer to question number two. In this room there are certainly some members who are very smart. Then there are...the rest of us. After all, when we think back maybe to grade 11 and taking home a report card, it wasn't all of us who took home a report card that had a 100% mark. But if we think of taking home a report card that had a 96%, I know how proud my parents would have been. Quite frankly, they'd have been more shocked and surprised. Report cards with 96% were not something that I brought home.
What we're proposing today, what we currently have, is a 96% solution to the problem. We will get to 100%. The improvement is coming. We just require the support of this innovative and green technology to allow us to economically pursue this.
In summary, we're at 96%. It is net-cost neutral. There is no cost input and no cost output required from the government. We create a micro-refining process in the community where the haz-mat material is generated, offsetting the need for importing a portion of diesel fuel into that community.
As to the third question of what we would like the Standing Committee on Transportation to consider, our recommendation is that, in the case of recycling technologies relating to petroleum waste plastics or waste oils, the conversion to a marketable transportation fuel like diesel should be permitted to meet the less demanding, low-sulphur designation, rather than the ultra-low sulphur designation, wherever the overall net emission reduction is significant. This recommendation meets the intent of the low-sulphur fuel regulation to reduce Canada's emissions.
We recognize that technology development is a constantly evolving process and is impossible to anticipate through specific policy changes. Therefore, we believe that the best method of making policy-makers aware of technologies showing a net reduction in sulphur emissions is to consider them on a case-by-case basis, through an exemption process to the appropriate regulating body. This approach brings a solution to the barrier without negatively impacting existing users in the industry that are currently relying on the burning of unrefined and untreated used motor oils.
The Canada that we're all so proud of happens to be really big, and the business of transportation creates a terrific amount of waste motor oil. We don't live on a small island. We're not in a European community where cities are all relatively close together. To move something from our inland ports to our coastal ports, to the people who need it, requires a terrific transportation network. The generation of this vital piece to our society happens to generate one of the most significant sources of waste motor oil. We at HD-Petroleum are confident that there are many opportunities for green technology to advance with the support of the regulatory considerations we are requesting.
Thank you for your attention to this matter.
Conservative
The Chair Conservative Larry Miller
Thank you very much.
We'll now go into questions.
With that, I turn it over to Ms. Chow.
NDP
Olivia Chow NDP Trinity—Spadina, ON
I know that HD-Petroleum received a community adjustment fund of close to $500,000. Are you receiving any other federal funding? And I ask the same question to the other two witnesses.
President and Chief Executive Officer, HD-Petroleum Inc.
At this point we have no additional requests for funding.
President and Chief Executive Officer, Blueprint Energy Inc.
For Blueprint Energy—a little history—of the $10 million cited in the R and D, a significant portion of that was from NRCan for the Canadian Space Agency, IRAP programs. These were pure R and D plays that satisfied one-off projects for the Government of Canada. So there was economic value in that. It was not just an R and D exercise; they were for specific projects.
We are in the process of finalizing an Automotive Partnership Canada, APC, request for $1 million, for which we have to do 50-50 matching. My preference is to use the capital markets; however, the landscape drives us to use the government as much as possible.
NDP
Olivia Chow NDP Trinity—Spadina, ON
To be precise, the original NRCan is about $1 million, and you're looking for $500,000—
President and Chief Executive Officer, Blueprint Energy Inc.
No, the original $10 million of projects over a decade, where this science and technology was developed, was for projects that benefited the Government of Canada and Canadian entities. NRCan was a large part of that, but that was overall projects. Specifically for the commercialization of flywheels into the transportation industry, $500,000 of the $1 million projects is coming from Automotive Partnership Canada, and we are in partnership with the University of Windsor on that.
NDP
President and Chief Executive Officer, Blueprint Energy Inc.
That's in the final stages, not received yet.
President and Chief Executive Officer, Invotronics Inc.
Currently my company isn't receiving any government funding. I'm licensing two technologies from a Canadian university and a third technology in advanced sensing from another Canadian company, and I'll be looking for funds to assist me there.
On behalf of the APMA and the Connected Vehicle Technical Committee, we've requested FedDev funding of $1.3 million, which would be broken down to support 10 to 15 Canadian technologies to prototype their technologies for demonstration to automotive manufacturers.