Proceedings of the Standing Senate Committee on
Energy, the Environment and Natural Resources
Issue No. 13 - Evidence - October 18, 2016
OTTAWA, Tuesday, October 18, 2016
The Standing Senate Committee on Energy, the Environment and Natural Resources met this day at 5:04 p.m. to study the effects of transitioning to a low carbon economy.
Senator Richard Neufeld (Chair) in the chair.
[English]
The Chair: Welcome to this meeting of the Standing Senate Committee on Energy, the Environment and Natural Resources. My name is Richard Neufeld. I represent the Province of British Columbia in the Senate, and I'm chair of the committee.
I would like to welcome all honourable senators, any members of the public with us in the room and viewers all across the country who are watching on television. As a reminder to those watching, these committee hearings are open to the public and also available via webcast on the sen.parl.gc.ca website. You may find more information on the scheduled witnesses on the website under "Senate Committees.''
I would now like to ask the senators around the table to introduce themselves. First, I'll introduce Senator Lang. He is a senator from Whitehorse. He was a runaway for a while, but he's finally decided that he should come back to our committee. We're happy to have you, Senator Lang. It's going to be great that you're here.
Senator Lang: Thank you, senator. I'm a senator for the Yukon. I am very pleased to be back again.
Senator Ringuette: Senator Pierrette Ringuette from New Brunswick.
Senator Runciman: Bob Runciman, Ontario — Thousand Islands and Rideau Lakes.
Senator Seidman: Judith Seidman from Montreal, Quebec.
The Chair: I'd also like to introduce our staff, beginning with the clerk, Lynn Gordon, to my left. We also have with us a clerk in training, who will probably be sitting beside me at some point, Maxime Fortin. We welcome you to our meeting. On my right are Sam Banks and Marc LeBlanc from the Library of Parliament.
Today is the seventeenth meeting on our study of the effects of transitioning to a low-carbon economy, as required to meet the Government of Canada's announced targets for greenhouse gas emission reductions. In the first segment of our meeting, I am pleased to welcome from Electric Mobility Canada, Chantal Guimont, President and Chief Executive Officer.
Thank you for being here, Chantal. Please proceed with your opening statement, after which we will go to a question and answer session. The floor is yours.
Chantal Guimont, President and Chief Executive Officer, Electric Mobility Canada: Thank you, honourable senators and Mr. Chair, for this opportunity. It's great timing to talk about electric vehicles.
If you don't know Electric Mobility Canada, we're the only Canadian non-profit association dedicated to the advancement of electric vehicles in all modes of transportation. We represent 140 members going from the car manufacturers, the charging station manufacturers, fleet managers, public utilities, public authorities and public transit, EV owners associations, universities — we have a broad spectrum representing all of the value chain of electrification.
I think we all know why it is so important to attain the reduction in greenhouse gas. Twenty-five per cent of emissions are in transportation, and about half of that is in light-duty vehicles and passenger cars. I'm here to tell you where we're at right now, what we need to do to accelerate, and why it is time to take charge now.
In Canada we have about 25,000 electric vehicles for individuals on the road, with 50 per cent of those in Quebec, which is a huge chunk, followed by B.C. and Ontario when you compare them in numbers of electric vehicles per inhabitant.
There are three best-selling cars: the Volt, the Tesla and the Leaf. From one province to the other, they change in of ranking, but they are really increasing sales, especially on these three vehicles.
We want to increase them also in car sharing, because we know that the way we travel will never be the same 10 years from now; owning a car will not necessarily be a necessity. We see this in young people. So many EVs are introduced in car sharing, with more to come. Also in taxis — we started to see those.
We're also looking at demonstration projects for buses. There are very few demonstration projects, so I'm working with the public authorities to have a clear understanding of what the barriers are and what we can do for that.
We are starting to see the introduction of transport electrification in delivery trucks. This is starting to come to light- duty vehicles. For the heavyweight trucks, this is another thing. The barriers for the weight and the autonomy to go further for goods and services are different.
In Canada we're blessed with a lot of success factors that make this easier — challenging, but easier. We all know that close to 70 per cent of our electricity is renewable and will increase, so that means fuelling a car with clean electricity every time you leave in the morning is reducing greenhouse gas effects at the same time.
We have many industries that are related to this field of work, expertise and new technology, from fuel cells, to battery materials, to motors, to software, to power trains. We are capable of taking a chunk of what this new area of technology will offer. And when we save in fuel compared to electricity, which can be four to six times less expensive, we spend more in our local goods, so we keep our money in our own country.
Now, how do we need to accelerate? Electric Mobility Canada prepared and published a road map under the supervision of Natural Resources Canada just before the last budget, and we clearly made a pragmatic list of recommendations to get results. We compared; we went to see what was done elsewhere, and we got four key areas of measures where we really need to do more: awareness, incentives, infrastructure and availability. Up until now, mainly three main provinces — Quebec, B.C. and Ontario — have taken up that challenge, providing infrastructure and incentive and looking at all the aspects.
We asked the federal government, in a complementary way, to take awareness and make it something structured and organized. We all know somebody who doesn't have a clue that these electric vehicles exist, or we still hear, "Are these real cars? Can I meet all of my driving needs in these cars?'' Today, there is an electric vehicle for every need. So we need to make sure that people know about them every moment of the year, because every minute somebody is looking at or buying a car, and we need to really make sure they are aware of the technology, that they can try it, and we remove all the misinformation.
Even though the provinces offer incentives, we asked the federal government to add a $3,000 rebate on top of every province that would provide at least an initial $3,000 rebate. We have shown in our road map that when we compare ourselves to the United States, which has a lot more electric vehicles per inhabitant, there is a federal subsidy and a state subsidy, and the addition of $3,000 can make a big difference. You reach more people who have the barrier of the first cost because electric vehicles are, of course, still a bit more expensive.
In terms of infrastructure, we asked the government to look into fast charging, and we were very pleased to see the last budget earmark for the first time $62 million for electric vehicles. It was the first time that a budget was allowed for this field. We asked them to look into workplace charging because it is the second place where you would charge your car after leaving home. When you go to your workplace, you can expect to be able to charge an electric vehicle.
We also looked at availability. More and more models are coming. You have heard about the Bolt and the Tesla Model 3, which will have 300- or 400-kilometre autonomy at affordable prices. This will clearly be a change, offering us an important transition period, because they will offer fewer constraints for buyers and they will get more for their money.
We are convinced that bringing electric vehicles for Canadians to buy can be a concrete action for all Canadians to fight against climate change. It is a clear signal that needs to be done.
We all have a role, all of the stakeholders. It's a huge industry. You have, of course, the electricity providers, the governments, the municipal field, the industry itself, the providers of the cars, and we think that the carbon pricing mechanisms that have just been announced and that are flexible for provinces will give them a way of intervening in electric vehicles if they haven't considered it until now.
We've all heard about autonomous vehicles, which will come. We think they will be electric, so we need to keep an eye on that. Everybody is looking at the way to make this transition period faster, better and cheaper so that we can have more cars and have more greenhouse gas reductions and have so much fun driving and enjoying this new technology.
My paper also talks about job creation or how we are going to be able to get those jobs to Canada. It is a competitive market. It is time to market, a very important thing, but we have recommended putting more emphasis on the linkage among universities, the research centres in electrification, which are most important, and industry to focus on what we can be good at and try to get more exports for these jobs.
I have been multiplying many interventions at the federal level. I have met with the staffs of Minister Garneau, Minister McKenna and Minister Carr. Submissions are there for the federal budget, and I reach out to you for your support and to guide me in this. I know some of you have already adopted hybrid vehicles or maybe electric vehicles, but I think the example of the government in this field would be most important to show that these vehicles are satisfying and fun to drive.
The Chair: Thank you very much for those words. We'll begin with some questions, starting with Senator Massicotte.
Senator Massicotte: Thank you. First, I want to apologize for being late. I did not hear the bell. I was in my office waiting for the bell, and the bell never struck, so I missed part of your presentation. Hopefully I won't be redundant.
I read your presentation of October 14. Tell me a bit about Electric Mobility Canada. You said "my paper'' and "my thoughts,'' but I presume these thoughts are also the thoughts of Electric Mobility Canada. What is that organization? Who are your members?
Ms. Guimont: It's an association dedicated to the advancement of electrification. It was created in 2006, well before the first models came out, so it was a whole bunch of believers that this would be important to address.
We have as members almost all the car manufacturers that have EVs, the charging station manufacturers, the public utilities or the vendors of electricity, many universities, fleet managers, cities and EV owners associations. We all sit down and see what needs to be done to accelerate the industry.
We have a lot of networking, a lot of lobbying and representation at the provincial and the federal levels. We hold a national conference every year. Last June we were a co-host of the international electric vehicle conference. So we keep up with what is going on in the world and with our counterparts in the United States, and we try to make this the best transition period to accelerate the number of electric vehicles in all modes of transportation.
Senator Massicotte: But it's electric, not natural gas?
Ms. Guimont: Not natural gas.
Senator Massicotte: What about hydrogen?
Ms. Guimont: We do collaborate with the Canadian Hydrogen and Fuel Cell Association. Of course, they have their own technology. We are technology-agnostic. We don't mind because we think it's the cause, and the technology will do what is needed to be done; it will go fast in terms of evolution. But we are not concentrated only on plug-in hybrids. We are there to represent the industry to accelerate this.
[Translation]
Senator Ringuette: What are the obstacles facing the current network of gas stations — whether Petro-Canada, Esso, Shell, Irving or others — if they want to set up facilities for electric cars?
I understand that they are competing, but they provide this option to cars while providing other services, such as convenience stores. They have everything to gain. What is your relationship with these distribution networks, and what are the issues, if any?
Ms. Guimont: You are right that it would be natural for them to install them, but it is still a matter of volume. They are business people, and for now, charging stations are being set up, but the number of vehicles is still quite limited. The government and private partners have been the main investors in charging stations. Some multi-energy stations are being launched in association with gas stations, but for now we find what are called Level 2 stations in places where people stop for a long time. It takes one hour, two hours or three hours to recharge vehicles at those stations. They are available in the parking lots of shopping malls and supermarkets, and at public transit stations where people leave their cars for part of the day. More and more so-called fast-charge stations can recharge a vehicle in 20 or 30 minutes. Those are found in gas stations. There will be more and more of those, but there are issues of profitability and volume. Those people are not necessarily against the idea, but they are not the first ones to want to project the costs, purchases and installation.
Senator Ringuette: It is a matter of supply and demand. If fast-charge stations are not available for certain distances, electric car manufacturers will have a really hard time. They may well provide incentives of $3,000 at the federal level and perhaps another $3,000 at the provincial level, but if the vehicle owners are restricted by the distance — For instance I travel a long distance between Ottawa and Edmundston, New Brunswick. I cannot fathom that. Even if the federal government gives me $3,000 to encourage me to buy an electric car, I won't buy it. The manufacturers, with the electricity providers, are the ones who have to form partnerships with the service stations to ensure this service.
Ms. Guimont: That is a good question about the infrastructure. It is always a question of who is responsible for paying for the infrastructure when it is a new product. As you may know, most Canadians drive less than 40 kilometers a day. You are an exception. Everyone travels long distances at one time or another. In general, for an urban person, a fully electric vehicle with 120, 160, and soon with 300 to 400 kilometers of autonomy is more than enough. More and more fast-charge stations are being deployed. There will be hundreds on all major roads. With their financial assistance, provincial and federal governments now have most of Canada covered when it comes to fast-charge stations. That will no longer be an issue. You are right, this takes communication, incentives, infrastructure and more and more electric vehicles. These are the four factors that will increase the popularity of electric vehicles.
[English]
Senator Seidman: Thank you for being here. EV technology has been around for quite a long time, and so it's interesting to speculate why there hasn't been more of an uptake. Do you have something in particular to say about that?
Ms. Guimont: The vehicles, the generation we are talking about right now, have been on the road since 2011. They had three models. There was the Mitsubishi i-MiEV, the Leaf and the Volt, which started with a lot less autonomy, at 65 kilometres autonomy. It's at 85 kilometres right now.
There have been incentives since the beginning, but not much infrastructure to start with, so this was certainly a barrier. However, we are convinced that the lack of awareness is really a missing link in the puzzle. This is said and accepted by everybody, every stakeholder, but nobody really takes charge of that. OEMs do their publicity when they have a new model coming out, and you have some information at the dealership. But you don't know what you don't know. If you don't know that this technology exists and you are looking for an ordinary car, it will be difficult for you to be open-minded and to start looking into how much it's going to save you. Two thousand dollars a year? Oh, that's good.
No, infrastructure is not an issue, because every day you have your charging station at home and you leave with a full tank of clean electricity. You go to work; you come back. If you go out of your circuit, you have charging stations where you can replenish, and more and more with the fast charging.
There is a lot of education to be had. We are convinced that if this doesn't happen now, we won't be able to profit from all the new models that are coming. Of course they will bring attention, because everybody talks about these new models that are coming, but there is a significant effort to talk about the vehicles and the needs that everybody has.
Senator Seidman: In the paper that you gave us, you talk about medium- and long-term objectives:
Some key markets, applications, and stakeholders (municipalities) will play an active part in the future of electrification. They will influence significantly the mid and long term potential of electrification.
Could you explain what that means in more detail?
Ms. Guimont: Yes. We know that the provincial governments are taking a big chunk of the leadership and the public utilities all over. We feel that the federal government has a role, which I did explain. But the municipalities, through their facilitation of installing some charging stations — and they have started, but some are leaders and some are waiting to see how it goes. We think that the more it gets to a local level, the more it can help.
We also need champions to talk about it, or to show, as you all can in the government, to drive these cars and to show them around, and that can make a huge difference.
We would like to have more and more fleet managers introduce those, but it sometimes changes the way you think about the usage of a car, for sure. But it's nothing; a couple of weeks and you get used to charging your car every night and to predicting a little bit more where you're going to travel the next day and where you're going to charge, if you have to charge for 15 minutes going down to Quebec City or to Kingston. But it is nothing compared to the pleasure of saving some money, driving this technology. They are as fast as anything, and you have your own contribution to the environment.
Senator Runciman: I'm a little doubtful about saving money on these vehicles at this point in time.
I've seen a few charging stations, and you talked about taking the car home at night. I saw a bit on TV about a fellow in California taking it home, charging it overnight and using it the next day.
You just can't plug into the charging station outlet in the garage. Do you need to have this facility to be able to charge?
Ms. Guimont: You have options. You have what we call a level one charger, which is your plug in your garage; so you can do that, but it takes a little bit longer.
Senator Runciman: I think he said 12 hours.
Ms. Guimont: It's 110 volts. We always want everything to go faster, so we put a 240-volt station in a garage and then it takes half the time, so three to four hours, which is usually what we find. These are the same as the public chargers that you can find in the public domain. The fast chargers are 400 volts, and they really cut this down to about 20 minutes for the cars that have fast charging capacity.
Now all the cars that are coming with 300-kilometre and 400-kilometre autonomy, like the Bolt or the Tesla Model 3, will all have the fast-charging technology. These fast-charging stations will come with higher voltage to be faster in terms of capacity of recharging.
Senator Runciman: So you're looking at these fast chargers being primarily as commercial outlets? What would something like that cost?
Ms. Guimont: It's expensive to put at home, but let's face it, your car stays parked at home for 8 to 12 hours, and you have sufficient time to get a full tank. It's very rare that you come home and you're completely empty because you do have some autonomy that is going to increase and is already around 120 or 160 kilometres. Therefore you'll never miss any capacity for your needs.
Senator Runciman: I raised at the outset the four to six times less expensive than driving a hybrid or a gas-driven vehicle.
Ms. Guimont: Yes.
Senator Runciman: You mentioned that half of the electric vehicles — 25,000 vehicles and 50 per cent — are in Quebec.
Ms. Guimont: Yes.
Senator Runciman: Would that be primarily because of electricity rates? Have you done a profile of the individuals who are purchasing these cars? I know in Ontario, where there is a subsidy, and I've seen some criticism of this, the people who are buying these, such as a $135,000 Tesla, are wealthy, well-to-do people who are getting subsidized by taxpayers when other people can't afford to heat their homes in Ontario today. These high rollers are being subsidized by the same people to go out and buy an electric vehicle.
I'm just wondering, when you say four to six times less expensive, what you're basing that on. Is that sort of a cross-Canada assessment?
Ms. Guimont: It's the range from four to six because electricity prices are different in B.C., Ontario and —
Senator Runciman: Highest prices in North America.
Ms. Guimont: — Quebec, but the price of electricity is so low compared to fuel that it is not that sensitive. If you save $400 in Quebec and you save $300 in Ontario because the usage is so low, it doesn't make a real difference.
You're right when you talk about the Tesla syndrome and paying a lot of money. That has been adjusted in Ontario with a cap. It can be done through your income tax or just limiting the cost of the car to not necessarily give to expensive cars. There are ways to do that.
I have heard a lot that electric vehicles are not aimed at the middle class, and I think that is not true. When we consider a Leaf, after subsidies that is around $18,000 to $20,000. I say that an electric vehicle is affordable today, and I'm not doing any publicity, but take a Chevrolet Cruze compared to a Volt, which is the same car but one is electric; you deduct the subsidies, and you get savings of $2,000 a year in gas, plus there are no repairs. And insurance companies are giving rebates to electric drivers because they're more sensitive and are considered less risky, so you come to the equivalent of an ordinary car.
More and more information is needed to do that because it is a choice of investing a little bit more up front and saving over a period of two, three or four years. I think this is good because we are saving that money further down the road and we are contributing to the reduction of our greenhouse gas effects.
Senator Runciman: If it's four to six times less expensive, the commercial folks who produce these vehicles should have a selling case right there, and I don't see why government has to subsidize to accomplish that, but I just alert you to the fact that the Transport Committee of the Senate, once they finish their pipeline study, is going to undertake a study of electric vehicles.
I sit on the Transport Committee, so I want to give you a heads-up that I think you can count on being grilled about these costs and the subsidies to the elite in this country, and those kinds of issues. We can talk about other issues; especially in Ontario, when you look at the exorbitant cost of electricity, it's a tougher sell, and you have to be able to address those kinds of questions as well.
Ms. Guimont: It is certainly a factor, but if each province had a secret formula of knowing what goes better in Quebec that could be transposed elsewhere, I think they would, but it's a combination of factors that is sometimes difficult to spread.
Senator Runciman: That's something you should perhaps do some research on.
Ms. Guimont: Infrastructure has been taken care of by Hydro-Québec to deploy more charging stations than anywhere else. B.C. is really going well also, but they had taken the lead, so it may be reassuring. Subsidies were the same in Ontario and Quebec, but now Ontario has given up to $14,000 for an electric vehicle; in Quebec it's $8,000, and in B.C. it's $5,000. So you have different scales, but some results are comparable and some are not.
I was at a consultation yesterday in Toronto with Ministers Murray, Duguid and Del Duca to see what it will take in Ontario to have the uptake with all of the important investment they're making, and we discussed that.
Senator Massicotte: Just a brief supplementary: On the issue of economics, I want Canadians to buy electric. I'm pro-electric. I see practical circumstances where you nearly have to have two cars, one to go to work, one to take trips or go see your grandchildren or whatever. On the economical stuff and the numbers I saw, when you look at the extra capital costs and the travel costs, yes, you save, and I think you're 46 cents cheaper on the operating level. But I only saw that you could justify economically buying those cars on an economic basis only if you're a taxi driver or you do a lot of kilometres per year. Maybe it's changed, but I wish it was economical, even with the subsidy, and I encourage people to buy electric, but the economic argument is not very good in my opinion at this point.
Ms. Guimont: Well, I would be glad to send the committee some more facts on that and comparisons that are all over the market to show you. Of course if you drive 5,000 or 6,000 kilometres a year, it's not profitable, or maybe it's just not a good investment to have a car if you drive so little. But the numbers are there, and it's been demonstrated, even with the low prices of gas today, that you need to be at least around 15,000 to 18,000 kilometres a year, but you are adding $500 for sure in terms of non-maintenance, and you would be surprised on the insurance.
Senator Massicotte: If you could send us those numbers, I would much appreciate it. It would be useful.
Ms. Guimont: I will send them to you.
The Chair: Through the clerk and then we all get it.
Senator Lang: I'd like to go back to your organization and your activity generally. You set out in the paper we have before us a number of pragmatic recommendations. I would like to go back one step in the chain of events for energy and the question of the development of energy. You talked about 70 per cent renewable energy being available in Canada, and I think we can be very proud of that.
Ms. Guimont: Yes.
Senator Lang: But the reality is that our population is expanding, the utilization of our energy resources is becoming more and more elaborate, as well as being exhausted because of each and every one of us individually at home with our computers, our BlackBerrys and our iPhones. We plug all these various devices in every night, which we didn't 10 years ago. That doesn't sound like much until you get about 5 million of them going, and then all of a sudden you're talking about a fair volume of power, which is generated electricity.
As an organization, and recognizing the numbers of individuals and organizations that you represent, are you active as an intervenor in these public hearings that are for the purpose of promoting future hydro power developments? We only ever hear those who are opposed, and I would think you would be concerned about supply.
Ms. Guimont: To support hydro development or renewables?
Senator Lang: Yes.
Ms. Guimont: Organizations are dedicated to that, but we are fully for renewables. We think it is —
Senator Lang: The question is are you active as an organization intervening to ensure that your voice is being heard so that there is that positive voice being heard at some of these hearings?
Ms. Guimont: No. We are close to the Canadian Hydropower Association, the Canadian Wind Energy Association and the Canadian Solar Industries Association, but we each have our niche. We support them in any way we can, but we are fully dedicated to transportation electrification.
Senator Lang: I just have one other question about energy utilization. Do you have any projections on to the renewable resource energy fields that are available to you now? If you were to take 50 per cent of the vehicles that are on the road right now, would enough energy be available directly through the various means, whether hydro, wind or otherwise, for the purpose of fuelling these vehicles?
Ms. Guimont: Yes. That was a big question many years ago, but it's been resolved. The quantity of energy that is necessary for, say, 1 million vehicles, which would be a huge part of the market, is about three terawatt hours, which is very small compared to the capacity that all the utilities have. The utilities say clearly now they have no problem delivering renewable electricity to support electric vehicles. They stand on that. They all have surpluses, so they are all looking for markets to sell their electricity, and they welcome electric vehicles. These are our members, and that's what they say. I can reassure you on that.
Senator Patterson: Thank you for the presentation. You mentioned the United States and the fact that they have more electric vehicles than Canadians.
Ms. Guimont: Yes.
Senator Patterson: I wonder if you could talk about other countries' EV development — perhaps if they are ahead in EV development, whether they provide government incentives and whether they have high gasoline prices or low electricity prices. Are there some observations you can make about that?
Ms. Guimont: Yes, there are three types of countries. There are the ones that are not doing much. They are mostly non-G8 or -G20 countries, like China, Japan, not that much Russia, but Germany, France and Italy. Everybody's in the same second section, I would say, of countries — so the ones that are not doing much.
The ones doing like us — and we're not very far apart in terms of results — in this second group, the U.S. is the leader because they have two times more electric vehicles per inhabitant than Canada. California is way ahead. We know that.
Then we have Norway and Sweden, which give so many subsidies for electric vehicles and penalize so much the cost of an ordinary car that it's a no-brainer to buy an electric vehicle. They've decided to subsidize to that point. They have what we call a bonus-malus system. They penalize, and they give the carrot if you buy an electric vehicle. That is really worthwhile, and it's making a huge impact. It is costly, but they've decided to do that.
Electricity prices are not adjusted to whether you decide to support electric vehicles, but they can help, like in Norway, where the prices are quite affordable.
So you have those three chunks of countries. We think we need to get a quicker start. We have compared to the United States. We know what they do right to get these numbers, and they are tackling more than we are the results of reducing greenhouse gas effects in transportation.
Senator Patterson: I wonder further if you would have any comments on carbon pricing in relation to stimulating the purchase of new electric vehicles. It's well known that Canada has announced a price of $10 per tonne in 2018, followed by increases up to $50 in 2022. Does your organization endorse carbon pricing for Canada? Do you believe it would stimulate the purchase of electric vehicles?
Is there a price per tonne that you would recommend that would be helpful in enticing consumers to switch?
Ms. Guimont: We have already spoken about our support for carbon pricing. I made that statement to the Minister of Transportation and copied the Minister of Natural Resources, so we did that. It's a flexible mechanism, which we think is very good. The devil is in the details of how it will be adjusted, but we support that.
Any impact that will have a kind of a tax on gas prices will help electric vehicles, and it's usually very incremental. So if the carbon tax were higher and had more impact on gas prices, it would help people do the math that we are talking about and have a better calculation on that.
Senator Patterson: One quick final question, if I may. There is increasing federal regulatory pressure to reduce greenhouse gas emissions on gasoline engines and fossil fuel engines, automobiles, light- and heavy-duty trucks, and we're keeping up with the U.S. in this respect.
Ms. Guimont: Yes.
Senator Patterson: I wonder if your organization would have a view on this. Particularly, it amazes me how the internal combustion engine is becoming more and more efficient.
Ms. Guimont: Yes.
Senator Patterson: Is this a good thing, and would it make it harder for alternatively fuelled vehicles, such as EVs, to compete in the marketplace?
Ms. Guimont: We have to do both. As you just said, the offer of a more efficient technology for gas vehicles is there. It's a challenge for the manufacturers, but they are getting there. Some people will always choose ordinary vehicles, and they will at least have the least impact.
We still think that electric vehicles have their real place, even with the low-fuel standards, and they will grow because technology will be better there, too, and prices will be lower. It will come. Some countries have already said, "We're going to ban ordinary-fuel vehicles by this time, this year or in 2030 or more.''
Senator Patterson: Which countries?
Ms. Guimont: Some countries, mainly in Europe, have said it, and they are really serious about it. They want hydrogen or plug-in hybrid with batteries, but if we can get these technologies at affordable prices and the constraints are not there, we should look into it. The technology will be pushing, and it will be available.
Senator Ringuette: I have a supplementary question to Senator Lang's question regarding the electric utility capacity. I don't understand, because they come in front of us and they say they need to increase their capacity in order to meet current and future short-term demand. But now you are here saying they currently have the capacity to supply a million electric cars.
If you have any kind of confirmation they've given your group, we would certainly like to have a copy of that, because there's an issue here of the chicken and the egg, and we need to clarify that.
Ms. Guimont: I must make a nuance. When I say they have the capacity, they have the energy, but all utilities are managing the peak load. In Ontario, for instance, they want the cars to be fuelled at night for free. That's because they have surpluses and they want to manage load. If everybody comes home at five o'clock and plugs their cars in, they will have a certain impact on the peak, but it is manageable and not a reason for not welcoming electric vehicles.
An electric vehicle is the equivalent of a hot water heater, which is a lot more than just plugging in your cell phone or computer, unless you have many kids, but it's usually not that big of an issue. Utilities have the mandate to satisfy demand, and they can manage it well.
Senator Ataullahjan: I'm not a regular on this committee, but I have a few questions on the demographics. Who is buying these cars? Is it a certain age group?
Ms. Guimont: Yes. For the moment it's still mainly men with a high income and high level of education and who are more open-minded to technology, but it is changing a lot. When we talk about 7,000 cars being sold a year, I think there's a lot of space where we can get more people to look at it and to educate them.
Senator Ataullahjan: Is a certain age group buying more, or would you not have those figures?
Ms. Guimont: Oh, yes. They have a better salary, so they are usually a little bit older. Young people don't really consider buying a car a priority these days. It's mostly a question of older people. More mature, I would say, not old.
The Chair: We have a couple senators who are on second round, but before we go there, I'm noticing the time and I just want to ask a few questions.
I guess when you say younger people are not buying cars, it depends on where you live.
Ms. Guimont: Of course.
The Chair: Let's qualify it with what really happens. I don't see that where I live, to be perfectly honest, but in the cities it could be true.
Ms. Guimont: Yes.
The Chair: Younger people are staying at home longer, no doubt about that. Mostly it's economics, I guess, or mom and dad just make such good food they stick around.
Would you agree with me, then, that it is actually maybe in the centre of the city where they've grown up, maybe even without a car in their household at all, so that would actually make them not look at buying one? Could you help me just a little bit there?
Ms. Guimont: Yes. You're right, it's mostly in urban centres where we find car-sharing areas, but you've all seen the shared economy grow and people questioning the fact of owning a car when it is an expensive decision. Borrowing cars, lending cars, there's a lot that will change. Autonomous cars will change that too, not having the obligation to drive.
It will come slowly, but it is a tendency that we see coming in larger than urban areas. You are right that it's mostly urban for now.
The Chair: I realize vehicles are more money nowadays than they were 10 years ago, but car manufacturers are building more cars every year, so somebody is buying them. They're not just getting parked somewhere. Those vehicles are getting purchased. People are buying —
Ms. Guimont: And larger.
The Chair: — more vehicles and larger ones. That's at least all the information that I've ever received.
Can you tell me just a little bit about batteries? That has always been an issue with electric cars, the disposal of those batteries. I remember that when the first hybrids came out, there was a lot of talk about the cost of either replacing the battery after a certain amount of time or disposing of it.
Ms. Guimont: Some companies are starting to recycle these batteries. They will become more important with more batteries to recycle. If there is a demand, there will be an offer; that is for sure.
When we say that a battery has an end life of nine years, for example, it doesn't mean the battery stops working. It's just that it's a little bit less effective, but it is still there. There is more and more secondary application for those batteries in storage and in other components, but we are not there yet. We have to see what they will be valued at when we see more electric vehicles being used, so there doesn't seem to be an issue with that.
The cost is coming down on the manufacture of batteries. This is why the cost of electric vehicles is becoming more attractive. The volume is also a big issue. When you see the gigafactories that are being constructed — of course the more you make the more you will be able to cut down cost. But it's more a production component than a chemistry component of the battery itself. The evolution through the lithium ion battery, which is the actual generation, is optimal in that chemistry, but it's mostly the generation of the batteries that will be the component that continues to bring down the cost.
The Chair: Can you tell me what a fast-charging station would cost to install?
Ms. Guimont: The prices have gone down for about two or three years. You can now have a fast charging station for about $30,000. We're talking about fast charging, right?
The Chair: We were just in B.C. — actually, I'm from B.C.
Ms. Guimont: Yes, of course.
The Chair: Our committee was just there, and I'm going to have the staff help me here a bit, but I think it was $100,000 per installation.
Ms. Guimont: With installation.
The Chair: Pardon me?
Ms. Guimont: With the installation costs.
The Chair: Yes, for a charging station.
Ms. Guimont: Sorry, I was talking about $30,000 for the purchase of the fast charger, and the installation costs can vary a lot. Are you close to the electric entrance where you're going to plug it in? All the civil engineering, the wiring and the capacity of the installation are variable and can come to $100,000.
The Chair: Okay. They told us that was the average cost. I think where I live in the northern part of British Columbia there won't be a lot of electric cars because people have to travel a long way and it's a colder climate. It will come in time. I'm not saying they shouldn't, but I guess I would contribute to the environment, even though I will drive a fossil fuel car, by hydro putting in those stations at $100,000 a pop, which are reflected in the rate costs that I pay for the electricity where I live. So everybody contributes a little bit in some way, correct?
Ms. Guimont: Of course.
The Chair: You don't actually have to drive an electric car to contribute to keeping the environment clean. Would you agree with me?
Ms. Guimont: Well, if you drove an electric car it would be better. If you drive it in B.C. or Quebec where there's 90-something hydro, of course it's good. If you drive it in Ontario it's still good but not as much, because it's better to use electricity in the car than it is to use fuel. Electricity in a car is 80 per cent efficient. When we talk about efficiency of a fuel car, it's 25 to 30 per cent already.
The Chair: I appreciate that. It has its good points and it has its drawbacks. I'm not disputing it at all. I'll just make one last comment, and then we'll go to two quick questions.
Comparing Sweden and Norway to Canada is not apples to apples. I had it checked. Norway has less than 100,000 kilometres of road and Canada has over a million. So there is quite a difference. You can take Norway, 5 million people, and you could put it in the place where I live, and you wouldn't find it.
It's a whole different kettle of fish when you start talking about countries the size of Canada. Our climate, how people get around and our sparse population in many areas — all those things have to be taken into account. They certainly have their place; don't get me wrong.
Senator Lang: I'll be brief. I want to bring to your attention the question of the carbon tax and your statement that you supported that. I should make you aware that if a carbon tax is put in in the North, because of how we access all our goods and any of our purchases from the South, it's going to increase the costs to every homeowner and everyone that resides up North. So that tax is going to be very injurious to the day-to-day lives in the places that Senator Patterson and I represent.
I just want to bring that to your attention. It's one thing to say it's okay to have a carbon tax in Toronto or Montreal, but it's another thing to have it in rural Canada. I would like your organization to maybe rethink that and maybe look at the North, what has been requested, as an exemption from a carbon tax. We are already paying for the carbon tax because it's already been levied and then sent to us, and we pay for that.
Ms. Guimont: We are a highly taxed country; that's for sure.
[Translation]
Senator Massicotte: California is often cited as an example of being renowned internationally for the extraordinary environmental awareness of its people. What is it so special about it? Are there any lessons to be learned?
Ms. Guimont: In the U.S., the federal government provides a grant of $7,500. Some states give a minimum of $3,000 extra. Right now, California gives $10,000 in tax credits. The charging infrastructure has been deployed everywhere. If you look at the map of California, you will see the points that show where charging stations are located. They did not wonder whether installing charging stations was profitable. They just did it. They decided to find a solution and to remove barriers. They are very in tune with the environment. Quebec is always compared to California for its leading role in protecting the environment.
Senator Massicotte: We have been hearing for a long time about California as an example. What is the volume of electric car sales in California?
Ms. Guimont: California has four times more vehicles per capita than we do.
Senator Massicotte: What is the percentage of vehicle sales?
Ms. Guimont: It's about 3 per cent of sales. Currently we have reached about 0.4 per cent of sales.
Senator Massicotte: Why is it a global example if it is only 3 per cent?
Ms. Guimont: It takes time. This does not happen overnight. It takes about 10 years for a fleet of vehicles to be renewed.
Senator Massicotte: California has been talking about environmental awareness for 20 years.
Ms. Guimont: No. The vehicles arrived there at the same time, in 2011. There were no electric vehicles before 2011. So it has been five or six years. We must continue to work in that direction. They are way ahead, and the solutions we have mentioned work. The four factors I mentioned earlier have proven their worth at that level too.
[English]
The Chair: Thank you very much, Chantal. That was very interesting, and there were some good questions. I think the senators got some good information. The things that were asked for, if you could send them through the clerk, that would be much appreciated.
For the second segment, I'm pleased to welcome, from the Canadian Trucking Alliance, Jonathan Blackham, Policy and Government Affairs Assistant. Thank you for joining us. You will make a presentation, and then we'll go to questions and answers. The floor is yours.
Jonathan Blackham, Policy and Government Affairs Assistant, Canadian Trucking Alliance: Good evening, honourable senators. First of all, I'd like to say that our senior vice-president was originally hoping to be here to present to you, but I'm very happy to be here in his place and communicate the perspectives of the Canadian Trucking Alliance.
By way of background, the CTA is a federation of the nation's provincial trucking associations. We represent a broad cross-section of the industry, around 4,500 carriers and industry suppliers. We have our head office in Toronto, with provincial association offices across Canada, including Vancouver, Calgary, Regina, Winnipeg, Montreal and Moncton.
The Canadian Trucking Alliance represents the industry's viewpoint on national and international policy and regulatory and legislative issues that affect our industry. I'm pleased to be here today to speak on the topic of transitioning to a low-carbon economy.
I plan to keep most of my comments focused on the incoming Phase II GHG regulations for heavy-duty trucks. However, today I arrived a little bit early; and as I often do, I scribbled down some thoughts on natural gas as well, so I'm happy to continue to talk about that afterwards if there is interest here. If not, once I conclude my comments on Phase II, I'm certainly open to answering questions.
With that, I would say that at no point in history have the trucking industry's economic goals been so closely aligned with society's desire to reduce emissions. If I were to put this simply, reducing fuel consumption is good for the environment and it's good for our carriers. It's good for their business.
For this committee's part and for this study's part, as I understand it, part of the mandate is to identify areas of concern and in turn make all the necessary recommendations to the federal government to help achieve greenhouse gas emissions targets in a manner that is sustainable, affordable, efficient, equitable and achievable. This is very much the line that I have tried to tailor my comments along.
At the hundred-thousand-foot level, I would say CTA very much agrees with these goals. In Canada, the next major event to occur on this path will be the introduction of Phase II regulations for heavy commercial trucking slated to begin in 2018 for standard trailers, and 2021 for tractors and engines.
South of the border, the U.S. EPA has already released their Phase II GHG regulation with a reduction target of 1 billion metric tonnes. In Canada we're still working on our Phase II regulation, but we expect the target to be somewhere around 1 million metric tonnes. Again, this is a good thing for society. I think it's a good thing for the trucking industry as well. CTA does support this target and this process.
Having said that, we must ensure as we're doing this that the purchasers of this regulated equipment, that is Canada's trucking companies, are purchasing technology that is tested and proven to operate safely, efficiently and in a manner suitable to Canadian operating conditions.
In Canada, like in phase 1, which began in 2014, we know the EPA's Phase II rule will be the blueprint that we use here. The key to the EPA's regulation is that GHG reducing technologies will be prescribed to industry. Only the GHG savings assigned to the technology on their prescribed list will be accepted here as part of the rule as well.
In turn, Canada has a history of harmonizing standards with the United States, often simply by adopting their rules, especially in this area.
In our industry, harmonization with the United States is often a good thing given the amount of cross-border traffic, but in this case CTA is really stressing a made-in-Canada approach to Phase II. We have unique operating conditions here in Canada. We have a unique geography and a unique climate. We really stress that we need to come up with a made-in-Canada approach here or be prepared to approach this way or deviate from the U.S. blueprint in key ways.
For starters, I think it's important to note here that the Canadian fleet, in terms of GHG and emissions, is already far ahead of the American fleet. We are much more productive than they are without doing anything. When potential payload is taken into account, the average Canadian tractor-trailer has a 22 per cent advantage over the average U.S. tractor-trailer in both the amount of fuel consumed and in the amount of GHG emitted.
To explain that a little more, in the U.S. 6.2 kilograms of carbon dioxide are created to move 1 tonne of payload per 100 miles. In Canada, only 5.1 kilograms of carbon dioxide are created. The reason for this advantage is that Canadian jurisdictions have much more productive weights and dimensions regimes, which have allowed the industry to innovate over the past 40 years.
In essence, the U.S. industry operates two standard truck configurations. In Canada we operate 10 standard configurations. When looking at the GHG — the second phase — we must take this into account.
We also caution that in the past, particularly between 2003 and 2010, progressively more stringent air quality emissions were introduced. These are distinct from GHG. They were phased in for heavy-duty trucks, resulting in the near-zero-emissions truck that we have today, since 2010. Emissions of certain air pollutants such as particulate matter and NOx that contribute to poor air quality and smog were virtually eliminated from heavy duty trucks.
The societal benefits of this were obviously quite substantial, but it also came with many unintended consequences. As this technology was mandated and brought into the industry, it negatively impacted the fuel economy of our trucks. So as you were giving with one hand, you were taking away with the other in a sense. It also had detrimental impacts on the reliability of the equipment.
What happened here was that essentially we had technology that was proven in the lab to work. A societal benefit was assigned to it and it was regulated. However, when it was brought into the Canadian operating conditions in our winters, when it was put to the rigours of being on the road, doing 200,000 kilometres a year, which a usual truck will, it didn't work. It broke down all the time, and as a result drivers were being stranded all over the place. We heard from fleets that upwards of 20 per cent capacity in terms of vehicles had to be added to some fleets to deal with downtime. So when we talk about regulating for Phase II in a different way, these are really the types of issues that we're trying to avoid.
I brought with me — I think it has been made available to all of you — CTA's white paper on the introduction of Phase II regulations. There is much more detail in there on some of those concerns.
But with all this said, I would like to reiterate that CTA and the Canadian trucking industry support the goals of reducing GHG. Again, increasing fuel economy and efficiency is good for our business. It's also good for the environment, and we wholeheartedly support that.
As I have been mentioning, Phase II is the primary way we expect our industry will be addressed when it comes to greenhouse gases. It was brought up earlier, so I'd like to take this opportunity to also make a few brief remarks on the prospect of a national carbon pricing mechanism.
There has been a lot of debate on whether this is the right thing to do. Are you for it? Are you against it? There is some acceptance within our industry and within society in general that in some way likely some sort of price will be assigned to carbon nationally. If that's the case, be it in a carbon tax or a cap-and-trade system, what is really key from the CTA's perspective is that the pricing mechanism is properly structured, it's easily understood, it's transparent, and it's administered effectively.
In this, government also has to do their part. Right now there are many regulatory barriers that face our industry. Essentially, this is GHG-reducing technology that might be allowed in one province and might not be allowed in another province or not at all. It's proven technology, and in many cases lots of carriers are eager to use this technology but simply aren't able to.
Most importantly on that, any pricing mechanism has to be revenue-neutral. Any funds generated from it have to be ploughed back into industry to help continue to spur investment and to enable carriers to keep on purchasing this new generation of equipment.
Those are my comments relating primarily to Phase II. I have also prepared some on natural gas. I am prepared to keep going if you would like, or I can stop there.
The Chair: How long?
Mr. Blackham: Five or six minutes.
The Chair: That's great.
Mr. Blackham: From the perspective of the trucking industry, I think this is probably well understood but worth mentioning. Their prime focus is delivering goods. They need to feel confident in the fuels that they're using and the technologies that they're using. This is their core business. The trucks have to move.
Yesterday, when I was reviewing some comments from previous speakers, I noticed a gentleman from, I believe, the Conference Board of Canada who talked about the hesitation of the freight transportation sector to adopt alternative fuels, particularly natural gas. He was saying something to the effect that even with positive price signals there is still some hesitation. I'm not quite sure what that hesitation is, but I would say he is absolutely right. There is hesitation on the part of the trucking industry to adopt alternative fuels — in this case, natural gas.
But context is everything. Moving freight is their business. Drivers stop at the same fuelling stations. Carriers have deals with fuel providers.
They know the life cycles of their vehicles. They know that if they purchase a diesel engine tractor with X, Y, Z technology they can run it for five years and sell it on the next market. It enjoys its next life, and that person buys it at a price then sells it on to its third life. These are all things that factor in when you're buying technology. The technicians they have in their service bays know how to service diesel engines. They are familiar with that.
There is a whole host of considerations that lead to that hesitation. So switching fuels is not a trivial matter for a trucking company. It very much speaks to the core of their business and what they do. It's not just buying new equipment and putting it on the road.
With that, there are at least four key things that need to come as part of any package to really deal with this in a comprehensive way. This might be a little bit simplistic here. There are always other concerns, but at the very least, the purchase of alternative-fuel trucks by trucking companies needs to be incentivized. The trucks cost more than diesel. In some way, shape or form, there needs to be some sort of funding mechanism or incentive for carriers to make that investment.
The second is the development of fuelling infrastructure. It needs to be expanded, particularly for the highways segment of our industry — or the long haul. There is virtually no infrastructure to support natural gas vehicles in that area.
The third would be the development of maintenance facilities, including the modification of carrier service bays, staff needs and all of those internal processes that would need to be changed for our carrier. In some way, these need to be supported. There are costs associated with making equipment changes in their service bays. This can be $100,000 or $200,000 aside from the actual purchase of the equipment itself.
Last, there needs to be legislation to support the adoption of this technology.
For the first two, incentivizing the trucks and developing infrastructure, the biggest problem is one I heard earlier when someone was talking about a chicken-and-egg scenario. I think that's something that plagues these two, the purchasing of trucks and the development of infrastructure.
Truck operators require fuelling infrastructure, and fuelling infrastructure requires customers. They go hand in hand. In my view, to make any sort of inroads here, both have to move in tandem. You can't just incentivize one without the other; they both very much have to come at the same time.
The fourth point I made regarding legislation speaks to weights and dimensions regimes in the provinces. Natural gas vehicles, in technology, are heavier than diesel. The tanks are the primary culprit here in that they are hundreds of pounds heavier. At the moment, I believe B.C. is the only province to allow some sort of weight allowance to offset this for trucking companies. I think they allow 1,500. I believe in the U.S. it's 900 pounds. I'm not aware of any other province that has similar allowances. Certainly, the bulk of them don't. That would be something that needs to move as well.
With all that, to date the largest penetration we have seen is in smaller trucks, such as those used for garbage collection, return-to-base operations, couriers — that sort of thing. When we talk about the long haul or the highway segment, the penetration to data of natural gas, be it CNG or LNG, is quite minimal.
Having said that, CTA as an organization — it's not all doom and gloom. I myself am a glass-half-full kind of person. Our organization is as well, and our industry has a long history of innovating. They are constantly looking for efficiencies. Natural gas is one of the great untapped opportunities here, but it's not without its challenges.
Perhaps I'll stop there on that, and I'm happy to field any questions you may have.
Senator Massicotte: Thank you, Mr. Blackham, for being with us. Very interesting. I have two comments. You made a comment saying that Canada is more "productive'' — I think that is the word you used — than, say, the Americans — quite a bit. But the explanation was technical. What is it exactly? Is it related to the fact that we in Canada would maybe accept higher loads or bigger trucks than the United States would?
Mr. Blackham: Yes and yes. Without getting too far into the weeds, essentially the U.S. operates two standard truck configurations. We're excluding special permits for overdimensional loads and all that kind of thing. The workhorse of the American fleet is what we call a tandem tandem. On the trailer, you'll have two wheels at the back, essentially. It maxes out at 80,000 pounds, so this is about 36,200 kilograms. That exact same configuration here in Canada, from coast to coast, can operate at 39,500. So right off the bat in terms of payload, we have that advantage.
Senator Massicotte: With same number of wheels.
Mr. Blackham: Same truck.
Senator Massicotte: Tougher on the road?
Mr. Blackham: Yes, but this is the bare minimum that each province has agreed to allow. Generally speaking, here in Canada we have better infrastructure than the U.S. That's a big part of the reason here.
But yes, to be fair, it is tougher on the road. Is it so much tougher on the road? I don't know.
Senator Massicotte: You say you're all in favour of the new regulations based upon the American model, but you say, "Be careful, be careful, be careful'' because our conditions are separate. But you don't give any specific examples to say what it is exactly you want. We hear all the time that everybody is at the table, and everybody agrees until it affects them. Then there are all kinds of problems why you can't execute.
What is it exactly that you're looking for when you say "be careful''? I know we have different conditions.
Mr. Blackham: We know the U.S. rule is the blueprint. We know that's what Environment Canada's working with. We're not going to fundamentally change that, but the key to the U.S. rule is that they are prescribing technology. When they are doing that in the U.S., they are very much thinking of the 80,000-pound tandem tandem. They are usually thinking of it running in the southern United States, to be quite honest. That's where the EPA's mind is when they come up with their lists of technologies.
Quite frankly, in some cases that technology just isn't ready for Canadian operating conditions. So when we talk about things like tire inflation systems, they work great in the summer but don't work at all in the winter. We're bringing in caution; we're emphasizing caution. We're saying to be careful when you prescribe certain technologies. If you're going to prescribe something, we are asking that it be properly tested for Canadian conditions.
Senator Patterson: I have a supplementary on that. I noticed in your white paper that you talked about the impact of regulations that were imposed on the trucking industry respecting tires and winter operation in Western and Northern Canada and how this costs carriers. You also talked about the first phase of heavy-duty vehicle emissions introduced by Canada, I believe, in 2013 as having had a real cost impact on carriers as well. I think you mentioned the 20 per cent in some cases that fleets had to be supplemented.
The committee is studying the costs of transitioning to a low-carbon economy. Could you provide us with information about those cost impacts so that we can have some concrete information about, for example, the danger, as you've described it, of regulating without proper consideration?
Mr. Blackham: There were two different things there.
The 20 per cent comes from the 2003 to 2010 regulations. Basically, these were going after NOx and particulate matter. What essentially happened with these was that the traps that were included in this technology would fail all the time and it would cause the truck to go down. This is where the 20 per cent comes in. Trucks were dropping like flies, to be frank, and that's where the 20 per cent number comes in.
We were able to achieve Phase 1 with a lot of off-the-shelf technology with proven sorts of things: the side fairings and technologies like that. We were able to get there pretty easily.
The tires were the one exception in the sense that certain tires were prescribed that didn't necessarily perform as well in the winter. So you would have a lot of companies that might buy a truck with the prescribed technology on it and then switch the tires out afterwards, for tires better suited for their operation. That's where those costs came in.
The big danger is when trucks go down. Adding 20 per cent to your fleet just to cover your downtime, I can tell you that's not normal; that's quite absurd. That's a high number. That's where the real dangers are.
Senator Patterson: And I take it that you wouldn't actually be able to quantify these costs?
Mr. Blackham: No.
Senator Patterson: Okay. Thank you.
Senator Runciman: When you are talking about traps, was that the limp technology you're talking about? Is that similar?
Mr. Blackham: Yes. That's actually something that we're trying to address under Phase II as well. For me, the impact of that is most profound on the drivers themselves. Limp mode scales back the operations of trucks because there's something —
Senator Runciman: Slows it down?
Mr. Blackham: Yes.
Senator Runciman: So it can cause a multitude of problems.
Mr. Blackham: It can't function as a highway tractor.
Senator Runciman: Yes. Especially in an urban setting with heavy traffic, it could be creating other problems.
Mr. Blackham: That point is very well taken. Even more than that, my concern would be someone in a remote area; it's cold out, it's a driver, and he's not going anywhere quickly. That would be a larger concern for me.
In Phase II we have put that as part of our notes, and we've asked for broader girth when it comes to limp mode, for sure, in terms of the distance you can travel before you have to address it.
Senator Runciman: In responding to Senator Massicotte, you talked about the made-in-Canada approach in terms of the technology. I'm just curious how it works. We have a lot of cross-border traffic in sort of the just-in-time requirements, especially in the auto industry. How does that work given that you're operating under different rules, if you will, with respect to GHG or anything else, but you are going into different jurisdictions where those rules may not apply? Has that created any problems, or are there problems there that could crop up in the future with different rules and regulations applying?
Mr. Blackham: At its essence, that's the great issue, the make or break in cross-border trucking. When you go into the U.S., you play by their rules; and when you come into Canada, you play by our rules. In terms of emissions standards between EPA and Environment Canada, they tend to be harmonized, or very close. On that front, to date it hasn't been so much of an issue, but Phase II is different.
I'll give you another example. Trailers will now be mandated under Phase II. One of the things on the table in the American version is light-weighting the materials. That's great. If it works, it works. There's no inherent issue with industry with that. But the American rules were formulated at, again, the 80,000-pound tandem tandem. If that's carrying much more than that here, the industry wants some assurances that it can handle that and it can survive the life cycle of the technology. That's where we start to differ from where the U.S. is.
Senator Runciman: Another thing you mentioned was the speed limit of trucks. I know in Ontario they are required to have governors. I think it's 60-100 kilometres an hour, I think it is.
You talk about playing by the rules. I'm not sure how that applies in terms of Ontario and the speed limits of trucks, but I'm curious about the industry's view of the speed limit of trucks. Ontario and Quebec, I think you mentioned, have this kind of regulation in place.
Has the industry supported this across the country? It strikes me that it's surprising that other jurisdictions haven't moved in this direction; and if not, why not? I know the industry in Ontario was very supportive of putting these limiters on their trucks. It kind of baffled me at the time, but they were very supportive. I'm wondering what's happening, especially if we're talking about GHG reductions, plus the safety element. What's happening in other jurisdictions across this country?
Mr. Blackham: I can say you are absolutely right. In addition to working for the Canadian Trucking Alliance, I also work for the Ontario Trucking Association. We were the lead push behind bringing that in.
Senator Runciman: I remember it well, a fellow by the name of Bradley.
Mr. Blackham: Yes. That was our CEO's seminal project. You're absolutely right; the association is behind it and the industry is behind it. It's been endorsed by our board of directors. It has safety benefits. It has GHG benefits. Reducing speeds is much better for fuel economy. That's right in the sweet spot, around 105, 110.
I can't tell you, though, how much traction it's gained in other parts of the country. Certainly I think you would find support from the provincial trucking associations in those jurisdictions. How far along it is or not, I can't say.
Senator Runciman: You talked as well about credits for GHG in this industry if we're going to this carbon tax, whatever shape it takes. Can you now, today, measure the impact in, say, Ontario, on a provincial basis? Can you measure the impact in terms of reductions in GHG to make this argument to qualify for a credit in recognition of that?
Mr. Blackham: Off the top of my head right now, no. I think whatever form carbon pricing comes in, the trucking industry is going to pay it. If it's a tax, they're going to pay it directly through the fuel, likely. If it's a cap-and-trade system, it's going to be passed down, and again they're going to pay it. They're going to be paying it either way.
If that's the case, then I think there is some acceptance. No one welcomes taxes; let's be honest. But if that's going to be the reality, then —
Senator Runciman: Just governments.
Mr. Blackham: Yes. If we're going to be paying it and that's the reality, I think it's a fair ask to have that money plowed back into the industry to invest in greener technology.
Senator Runciman: You have to quantify it, though. That's the challenge.
Senator Lang: First of all, I would just clarify that the trucking industry is going to pay it. When we get right down to the bottom of the food chain, it's the consumer that's going to pay, isn't it?
Mr. Blackham: That's a fair statement.
Senator Lang: So at the end of the day, it's a tax generally on the population. Especially for us in the North; everything comes in via truck, and so we're going to be paying that much more.
Mr. Blackham: That's fair.
Senator Lang: I guess my next question would be, if you had the choice to make, carbon tax or no carbon tax, what would your position be?
Senator Massicotte: Let me guess.
Senator Lang: Well, it's interesting the narrative that's going around now. It's not a question of whether the carbon tax will be good or bad for the economy. We're discussing how you would implement a carbon tax as opposed to saying would it be a good thing for the economy.
Mr. Blackham: There was a fundamental question in there, sort of a yes or no. I would say no, but even with that there still is some acceptance that it's coming.
Senator Lang: I'm not arguing that, because the narrative continues, and then it becomes a fact.
I want to go over to one other area that you emphasized, and maybe you answered the question. I kind of got a bit confused. That's the question of when they brought in the regulations, and because of the way the standards were brought in, there was less fuel efficiency, I believe. There was a question of overall energy performance and reliability, and you had to increase your fleet by 20 per cent in order to offset the number of vehicles that were off the road being repaired.
Have you overcome that, or are you still experiencing that because of the regulations? Has technology caught up to us so you can carry on your business and you don't lose that 20 per cent efficiency?
Mr. Blackham: The technology you're referring to was brought in to deal with NOx and particulate matter, so slightly different than the GHG but related. As a result, one of the things that did suffer from this technology was fuel efficiency and reliability.
Trucks that were brought in in the early stages of that are still operating, and they still suffer from those problems. I think as the march of progress and technology moves on, we're much better. The 2016s and 2017s are much better than the 2003s.
Senator Lang: Just to get this clear, then, if I get into 2016-17, I really won't be experiencing what those past vehicles had?
Mr. Blackham: In terms of the NOx and the particulate, no, but we have a whole new set of technologies coming in, so that's what we're focusing on.
Senator Seidman: I'd like to ask you a bit more about the natural gas. You're right, we did have a presentation that talked about people, talked about a certain degree of resistance in the trucking industry, but it was pragmatic and realistic in the sense that he said that there really was fear about its reliability and also that there really was no payback to the industry.
Keeping that in mind, do you know how many heavy-duty vehicles currently use natural gas in Canada?
Mr. Blackham: No, but I could take a guess. It's not very many. On the long-haul segment, you could probably count it on two hands.
Senator Seidman: That's really not very many.
Mr. Blackham: There have been some pilot projects out there that some carriers have got involved in, but it's not widespread.
Senator Seidman: I'm going to ask you, given the fact that you represent the people who have obviously discussed this and tried to see how pragmatic or realistic it is, what are the barriers?
Mr. Blackham: There's a whole host of them. You start with the truck. The truck is more expensive. It's a more expensive truck up front.
Most carriers who purchase new equipment, there's an economy that goes around trucks. You'll have a carrier that will buy a new truck. They'll run it for maybe five years. They'll put 200,000 kilometres on it a year, and then they'll sell it. That truck will go to a regional operation, likely, so smaller distances, and it will run for a couple more years. At the end, it may go to a farmer or someone like that who just needs it to go 20 kilometres to the food terminal or what have you.
When you talk about natural gas trucks, somebody making this huge upfront cost in the truck, when you go to sell it right now, there's no one to buy it. There's no secondary market for these, so that's a huge barrier in the conversation as well.
We talk about weights and dimensions. Provincially, we haven't seen the increases in payloads for these to accommodate the fact that they're heavier.
Weight is trucking's business. They max out. They're allowed to carry a certain amount of weight, and lots of them go right up to that limit. If we're talking about decreasing payload, then that's an issue for them as well. So there's lots of things at play, all sorts of levels.
Senator Seidman: It's interesting, because in my home province of Quebec, Gaz Métro has spearheaded what they call the Blue Road initiative, and their objective is to install LNG refuelling stations and to obviously encourage the infrastructure and the use of natural gas for, in this case, medium-distance transport because it would be provincial.
Mr. Blackham: I'm familiar with Gaz Métro. I can also say that under the new Ontario cap-and-trade system, a significant amount of funds will be directed at natural gas. I think that you will see the Toronto-Montreal corridor open up in terms of its natural gas potential. I do think that will happen.
It's too early to make any sort of projections on what that might look like, but I think that will be likely the first corridor where we actually see this.
Senator Seidman: So it's not that unrealistic. It's not like it's a foregone conclusion, and it can't happen given all the barriers you presented in terms of investments?
Mr. Blackham: No. I don't think so. Again, I've been optimistic on this one. CTA, as an organization, has been optimistic on this. Every pre-budget submission I've ever seen from CTA has always included asks surrounding investments in natural gas.
We're supporters of it, but at the same time, there are real barriers that need to be overcome. Ontario would need to make allowances again for the weights on these sorts of things. They would need to help support the development of fuelling stations at strategic locations along the corridor. It starts small, but it can spiral, yes.
The Chair: I just have a couple of questions, and then I think we're finished.
Can you tell me — if you don't have it now, that's fine, you can get it to the clerk — what percentage the cost would increase for moving products with the $30 per tonne carbon tax?
We're going to get a carbon tax, and it starts at $10, goes to $20 and goes to $30. We'd like to know what the costs will be because, as Senator Lang pointed out and as our committee has said from the start, the person who will pay the bill is Fred and Martha, at the end of the day, because those costs will be transferred down.
If you could get us that cost, I'd appreciate that.
Mr. Blackham: Not a problem.
The Chair: Second, further to Senator Seidman's questions, it's been a number of years since we had Robert Trucking here, who was making a huge investment in natural gas-powered trucks to run the Montreal-Toronto run. You're saying only a handful. Mr. Robert told me, and maybe what we'll do in transportation is get him back here, or there's other large companies in British Columbia that are using natural gas on some fairly long hauls. It has to be at least three or four years ago that he was here, and he was making that investment at that time, yet you said there's only a handful. So I'm a little confused.
Mr. Blackham: The big one would be that company.
Senator Massicotte: The handful.
Mr. Blackham: Yes. There are some, but again we might be talking about different operations. I'm talking about truly, truly long-haul trucking. Especially when you go into smaller classes of trucks, there are fleets of natural gas straight trucks and that sort of thing, couriers.
The Chair: There is in cities, and they are back to base. I understand that. That's in Vancouver, that's in, I think, quite a few big cities. It's in Ottawa. I saw a garbage truck here the other day that's powered with natural gas, so I understand those.
As I understand Robert Trucking, you're not talking about garbage trucks or anything like that. You're talking about some long hauls. Montreal to Toronto, maybe you classify it as short haul.
I understand going across the country. That's a totally different thing. I appreciate that. There won't be any because there's no place to fuel along the road. We know that. I've been around it long enough to know that. But there are places where there is fuelling, like what Senator Seidman talked about.
Mr. Blackham: In many ways, they are the leader or one of the leaders in our industry. The point I was trying to make was more to the truly long-haul segment of our industry.
The point I was trying to make is that the penetration is still very low, even if you take all those. Robert is one company. There are thousands and thousands of trucking companies in Canada, so the penetration is still quite low.
The Chair: You listened to the person who was here talking about electric vehicles. There are not plug-ins all over, but there are plug-ins in different cities where vehicles can plug in.
I was involved in the trucking industry when I was a much younger person, but single tires, the wide single tires, are they more efficient? Are they less costly to run?
Mr. Blackham: I'm very, very happy you raised that issue. That might be issue number one for us, when we talk about those regulatory barriers that are preventing the industry from investing in proven technology. They work. The tires can produce upwards of a 10 per cent saving, 5 to 10 per cent. We have carriers that want to invest in them. Right now only Ontario, Quebec and Manitoba allow for them to be used at weight parities. The rest don't.
To be honest, it's two things that are coming together. These things are fuel-efficient. Carriers want to use them. The benefits are well demonstrated.
That comes up against the realities of the engineers who are protecting their infrastructure. I don't want to mislead in any way. These things are more damaging to infrastructure than a conventional set of duals, but as an association working with tire manufacturers, we have had a heck of a time dispelling a lot of the myths that are out there with these. They aren't as bad as many people would like to think they are and like to say they are.
On one side of the argument, you have people whose sole focus is their infrastructure, and on the other side of the argument you have groups where their focus is the environment. Somewhere in-between there has to be some give. As I said, 10 per cent is significant for a carrier. It's significant for the environment. We had provinces that have moved. Alberta, I believe, is in the process of getting going a limited pilot on them, which is fantastic news.
The Chair: They are.
Mr. Blackham: But the rest, they are still not allowed at parity, so until that happens, no one's going to adopt.
The Chair: One last thing. Could you think of half a dozen, or maybe it's fewer, things that we could recommend in our report that would help the transportation industry in reducing GHGs and actually increasing the revenue to the companies, the good things that you can do or think you can do? Can you do something like that for us, so we can just have a little bit of that to play around with?
Mr. Blackham: I would be happy to. Would you like CTA to prepare something for this group?
The Chair: Yes, if you can get it to the clerk. We don't want pages and pages of stuff. I don't want you to have to go to a lot of work. You work in the industry all the time. You will know what those things are that you can highlight that we can actually put in there.
Mr. Blackham: I'm tempted to do it off the top of my head now, but I don't want to.
Senator Massicotte: Think about it.
The Chair: If you would do that. One of them could be to qualify what it will cost with a $30 per tonne tax, that increase in costs that you're going to pass on to the consumer, so we have something that deals with costs.
With that, I don't think anybody else has any other questions. Thank you very much, Jonathan, we appreciate that. The meeting is adjourned.
(The committee adjourned.)