Madam Speaker, I join in the debate today with a mixed message. Very few things we encounter in Parliament and in life are entirely black or entirely white. They are usually a shade of grey, with the notable exception of the ongoing pension debate which is fairly direct in black and white. One is either on the side of the angels on that one or not. Today we are talking about Bill S-7, the alternative fuels act. In my opinion it is not quite so cut and dried.
Our party is basically a free enterprise party. Our position is that if it can be done in the marketplace by the marketplace that is probably where the motivation and the determination for what happens in life should be made, primarily if we are talking about things commercial.
The legislation is typical of government's desire to somehow manipulate the market or determine what is best for Canadians rather than let the marketplace decide what is best for Canadians.
On the other side of the coin is the fact that most people are very much aware that some alternative fuels, specifically propane and natural gas, are far less polluting to the atmosphere. They are in great supply in Canada and are relatively cheap.
If we could induce the marketplace to convert to propane or to natural gas, we would definitely be in a win-win situation, especially if the inducement for the marketplace to convert was of a moral suasion nature rather than an inducement by having to spend taxpayers' money to do it.
Other aspects of the bill on alternative fuels are not so benign. My colleague who spoke before me raised the point about electric cars. There is a possibility that electric cars put more lead into the atmosphere than people had anticipated. When we talk about converting to ethanol we have to look beyond the immediate where it makes sense to use ethanol as a replaceable product. We can grow it. We can get it from the farms. It is not a depleting resource. It makes sense, especially if it is mixed with gas. However, as we dig into the ethanol situation we discover the cost to the environment to produce ethanol is not so benign. It has to be fertilized. It costs a fair amount to grow the crop. Then resources have to be put into the refining of ethanol. The cost relative to gasoline is substantially higher.
The bill is not quite so easy. While part of it deals with alternative fuels which are readily changeable to and are very good for the environment, part of it also deals with other alternative fuels that may not be.
I should like to put on record a few thoughts about what happened in Brazil's mandate to move to ethanol:
Brazil's ethanol program is the world's largest and most ambitious government initiative supporting alternative motor fuels. In 1979, Brazil's passenger car fleet was comprised almost exclusively of gasoline vehicles; a decade later, about 30 per cent of its vehicles were built to run on ethanol. In the period 1975 to 1979, ethanol was blended with gasoline as a fuel extender in a 20 per cent ethanol-80 per cent gasoline blend.
In 1979, as a result of large oil price increases, the government decided that a new fuel-96 per cent ethanol-was needed to replace gasoline at the fastest possible rate. This decision meant that new fuel and automotive infrastructures were required. A large expansion of ethanol production capacity was needed to meet the government's new target of 10.7 billion litres by 1985. This changed the cost and character of the program: until 1979, ethanol production had been increased by using existing distilleries at sugar refineries; the 1985 ethanol production target could only be met by building new free-standing distilleries dedicated to producing ethanol. There were also new demands placed on the fuel distribution system. For example, local fuel stations needed to add pumps dedicated exclusively to dispensing ethanol fuel.
Consumers who had converted vehicles to take advantage of ethanol prices encountered problems with poor quality conversions. Also, after 1980, consumers faced higher fuel prices when the government increased ethanol prices [previously as low as 40 per cent of the price of gasoline].
This begs a question. We were going through the effort then to convert to alternative fuels that are cheaper today. What will happen when the market supply is such that suddenly there is enough demand? The price is likely to go up and we will not have a price advantage. That is the way the marketplace tends to work.
The quotation continues:
Consumers reacted rapidly, and ethanol vehicle sales fell to less than 10 per cent of total vehicle sales by July 1981.
The government then renewed its support for the program by holding ethanol prices at 59 per cent of gasoline prices for two years and extending ethanol vehicle purchase incentives. Auto makers improved ethanol vehicles by using corrosion resistant materials, adding a small pump to inject gasoline to reduce cold starting problems and improving ethanol vehicle warranties. Public confidence in ethanol vehicles steadily recovered, with purchases peaking in 1985 at about 95 per cent of the vehicle sales.
Ethanol demand began to outstrip production as early as 1986. From late 1989 to early 1990, there was an acute shortage of ethanol, and consumers with dedicated ethanol vehicles waited in long fuel lines. Ethanol vehicle sales dropped from over 50 per cent of the 1988 market to less than 4 per cent of vehicle sales in
mid-1990. Most cars made in Brazil now are designed for ethanol/gasoline blends rather than neat ethanol.
That was a long quote, but I thought it important to refer to the fact that once the government gets into the marketplace by regulating either the gasoline that can be sold, or the types of vehicles that should be sold, or in one way or another artificially changing the cost of a particular fuel, it sets up an intrinsic, automatic adjustment in the marketplace. The marketplace will be its own master. No matter how beneficial or how benign the intent behind a government motion might be, we cannot automatically assume that the result in the marketplace will have the same benign reaction.
As I said earlier, there are conversions which on the face of them make great sense: the conversion to propane or to liquefied natural gas, particularly the conversion to propane in Canada. I believe there are over 3,000 stations in existence today in Canada that will allow people to fill up their vehicles with propane. Propane is significantly lower in price than gasoline. It has wide acceptance in fleets of taxis. It has wide acceptance in other industrial fleets. It is a consumer recognized good product.
There is really no need for the government to provide any particular incentive for people to use common sense. We as a nation do not have the money any longer to be inducing consumers or changing the marketplace at our whim.