Proceedings of the Standing Senate Committee on
Energy, the Environment and Natural Resources
Issue No.10 - Evidence - May 31, 2016
OTTAWA, Tuesday, May 31, 2016
The Standing Senate Committee on Energy, the Environment and Natural Resources met this day at 5:08 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 this committee.
I would like to welcome 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 also find more information on the schedule of witnesses on the website under "Senate Committees.''
I would now ask senators around the table to introduce themselves. I will begin by introducing the deputy chair, Senator Paul Massicotte, from Quebec.
Senator Runciman: Senator Bob Runciman, Ontario, Thousand Islands and Rideau Lakes.
Senator Seidman: Judith Seidman from Montreal, Quebec.
Senator Patterson: Dennis Patterson, Nunavut.
Senator Mockler: Percy Mockler, New Brunswick.
Senator Johnson: Janis Johnson, Manitoba.
The Chair: I would also like to introduce our staff, beginning with the clerk on my left, Marcy Zlotnick, and our two Library of Parliament analysts, Sam Banks and Marc LeBlanc.
Today marks the twelfth meeting for our study on 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.
We continue to hear from transportation sector witnesses and are pleased to welcome, from the Green Aviation Research and Development Network, Sylvain Cofsky, Executive Director; and Fassi Kafyeke, Senior Director, Strategic Technology and Advanced Product Development, Bombardier Aerospace. Our second witness is the National Airlines Council of Canada, represented by Marc-André O'Rourke, Executive Director; and Teresa Ehman, Chair, Environment Subcommittee.
Welcome to all of our witnesses. We thank you for joining us. We ask you to please proceed with your opening statements. After that we'll go to questions and answers. The floor is yours, folks.
[Translation]
Sylvain Cofsky, Executive Director, Green Aviation Research and Development Network: Hello, honourable senators. Thank you for giving me this opportunity to present our work.
[English]
I am Sylvain Cofsky, Executive Director of GARDN, which stands for Green Aviation Research and Development Network. I'm here today with Fassi Kafyeke, former member of the board and executive committee member of GARDN. He is still a very active member of GARDN. Mr. Kafyeke is Senior Director of Strategic Technology and Advanced Product Development at Bombardier Aerospace.
We will give you an overview of what GARDN is and what we are doing, but we will also take this opportunity to give you a snapshot of the importance of the aerospace sector globally and in Canada.
The number of air travel passengers last year was 3.5 billion, a growth of 5 per cent per year for the last 20 years, and a growth of 5 per cent per year for the next 20 years. The number of passengers and the number of aircraft should double around 2030. There is a demand for approximately 30,000 new aircraft: 19,000 from growth and 13,000 to replace older aircraft.
This industry is an important contributor to the Canadian economy, with over 700 companies and 180,000 jobs. It contributes $29 billion to the Canadian GDP and is fast growing and innovative. More than 20 per cent of the industry's activity is dedicated to R&D. It has five times the R&D intensity of the total Canadian manufacturing average.
Canada is a leader in terms of civil aircraft, flight simulation, aircraft production and engine production, but this success has an impact on the environment. The aviation industry consumes around 1.5 billion barrels of jet fuel annually, producing 770 million tonnes of CO2 per year, which represents 2 per cent of global human emissions. But because this industry is fast growing, the aerospace industry needs to do more to improve its environmental performance.
The aviation sector was the first in 2008 to set global goals to proactively manage its climate-change impact. The industry will stabilize its net CO2 emissions from 2020 through a concept called carbon-neutral growth, whereby traffic would continue to rise to meet the demands of society and the economy. The longer-term goal is to actually reduce by 2050 net CO2 emissions from aviation to half of what they were in 2005. To achieve this last long-term goal, technologies need to be developed.
These goals are pretty ambitious, but the aerospace industry has a good track record. Each new generation of aircraft has double-digit fuel efficiency improvements, even up to 25 per cent more fuel efficient than the one it replaces. More importantly, aviation has been successful at decoupling emissions growth and traffic growth. Traffic growth is increasing at an average of 5 per cent per year, while CO2 emissions are growing at around 3 per cent per year.
ICAO defined a basket of measures designed to help achieve these goals. This basket includes technology improvements and alternative fuels, operational changes, infrastructure and market-based measures.
Of the four pillars, technology and biofuel development is by far the best prospect for reducing aviation emissions. The aerospace industry is driven by technological innovation. The conventional tube-and-wing technologies have become highly optimized, and further changes will require the development and introduction of new and unconventional technologies. In order to reduce climate-change impact, designers must seek out technologies that reduce drag, weight, engine emissions and reliance on fossil fuels. GARDN is focusing its work mainly on the first pillar.
GARDN is a non-profit organization created in 2009, funded by the business-led Networks of Centres of Excellence of the Government of Canada and the Canadian aerospace industry. Our mandate is to promote and support the development of green technologies by encouraging creativity, collaboration and investment.
GARDN's 40 members include airline companies such as Air Canada and WestJet; large OEMs such as Bombardier, Pratt, Boeing, Bell Helicopter; many medium-sized companies, such as Esterline and Héroux Devtek; as well as numerous smaller companies and several universities or research entities across the country. Together, they have built a unique nucleus and core strength of R&D capability in the field of green innovation — a true centre of excellence.
Since its creation, GARDN has invested more than $60 million in collaborative R&D that has or will ultimately result in major benefits to the environment on quiet, clean and sustainable air transportation system. It goes from aircraft noise, to alternative fuels, to recycling end of life product.
I will not go into details on the GARDN R&D project portfolio. This graph on slide 12 is only there to demonstrate the research teams covered by the projects and the links between the research teams and the interdependencies. The projects on slide 12 are those that are ongoing right now.
The next few slides, from 13 to 20, give you an overview of the types of projects our members are looking at. Most of them, but not all, are from the GARDN research portfolio.
On avionics, research on flight optimization of cruise and descent phases — for example, by reducing holding time — can significantly reduce fuel burn and CO2 emissions.
The industry continues its research into more electric-powered aircraft systems: generators and electric starters, along with high-powered conditioning, and power distribution and control. Electric aircraft research can improve fuel burn and reduce emissions.
On electric engines — two projects in that case not supported by GARDN — are very interesting. The E-Fan is the prototype two-seater electric aircraft being developed by Airbus Group. The aircraft uses on-board lithium batteries to power the two electric motors. Another aircraft, the Solar Impulse 2, gets all of its energy from the sun, using solar cells or photovoltaic panels.
Once it reaches the end of its useful life, an aircraft can be recycled not only to ensure proper disposal but also to take advantage of the high-quality components materials of which they are made. We are now able to reuse and recover materials making up over 90 per cent of an aircraft's weight. New materials, such as carbon fibre, present new challenges for aircraft engineers to find ways of dealing with the materials once the product leaves service.
Another environmental dimension of GARDN's work is the replacement of materials of concern that contain or use unacceptable substances such as chromium, lead or solvents. The benefits include reducing exposure risk to company personnel, reducing ozone-depleting substances released into the environment, and avoiding handling and breathing exposure to maintenance and repair personnel.
On new types or usage of aircraft, other interesting projects, such as hybrid airships, represent another field of investigation for GARDN. Airships make it possible to affordably deliver heavy cargo and personnel to remote and isolated locations in Canada. Burning less than one-tenth the fuel of a helicopter per tonne, the hybrid airship could redefine sustainability for the future.
UAV is another field of investigation. Commonly known as a drone, it is an aircraft without a human pilot aboard. UAVs are often preferred for missions that are too dangerous or inaccessible for humans. Their use is expanding in commercial, scientific, environmental and agricultural fields.
On new configurations of aircraft, aerodynamicists are exploring radical new aircraft designs for the future. By some measures, the most sufficient aircraft model is a blended wing design where the entire aircraft becomes a lifting device — effectively, a flying wing. Super lightweight materials and new systems will be required to implement the concept. These new concepts could deliver perceived fuel consumption improvements of up to 32 per cent over current aircraft design.
One great example of concrete results coming from research on technologies is the C Series. With optimal aircraft integration and a game-changing engine, the C Series is probably the most environmentally friendly aircraft on the market right now. Not only does the introduction of the C Series give significant environmental gains, but it has also indirectly induced other environmental gains from its competitors by forcing them to re-engineer their existing aircraft.
On alternative fuel, we still have research work to do on finding new sources of biofuel — from woody biomass, for example — and on implementing biofuel into the domestic jet fuel supply system.
We would like to end this presentation by recommending to the government four actions: first, to include the aviation sector as one of the sectors targeted by the government to improve Canada's environmental footprint; second, to use GARDN as one of the mechanisms for supporting green aviation research and development activities in order to keep Canada's competitive advantage; third, to recognize the role of ICAO to implement market-based measures at the international level; and, fourth, to facilitate and de-risk the introduction of biofuels on the market.
The Canadian aviation sector has done a lot since 2009, especially through GARDN, but its actions must be amplified to address its impacts on climate change while responsibly meeting the growing demands for air transport and, in turn, improving the quality of life of all Canadians for the foreseeable future.
Thank you.
Marc-André O'Rourke, Executive Director, National Airlines Council of Canada: Good evening. Thank you for the invitation to appear tonight as part of your examination of Canada's transition to a lower-carbon economy. We do generally appreciate the opportunity to come and discuss how our sector can contribute to meeting the government's greenhouse gas emission targets but still supporting the growth and competitiveness of our economy.
[Translation]
My name is Marc-André O'Rourke. I am the Executive Director of the National Airlines Council of Canada, an association that represents the largest carriers in Canada, that is, Air Canada, Air Transat, Jazz and WestJet.
With me today is Ms. Teresa Ehman, chair of our Environment Subcommittee and Director of Environmental Affairs at Air Canada.
[English]
The air transportation sector in Canada plays a vital role as an enabler of the country's social and economic growth. Aviation in Canada has an economic footprint of over $35 billion per year. All in all, aviation directly employs over 140,000 people and supports more than 400,000 high-value jobs. Collectively, our member airlines carry more than 60 million passengers per year and directly employ 46,000 people.
However, the benefits of aviation go well beyond these numbers. Airlines link communities and families to one another and to the world. They make it easier for businesses to access new markets. These roles are especially important in Canada due to the vastness of our country, our close family and personal ties to other countries around the world, and our reliance on international markets.
As GARDN alluded to, air passenger traffic in Canada has increased 5.4 per cent in 2014, which is the fifth consecutive year of growth since the economic slowdown. Amid this healthy growth, reducing greenhouse gas emissions is a top priority for the aviation sector.
It's useful to put the scale of our emissions in perspective. Air travel accounts for approximately only 2 per cent of all fossil fuel-related emissions worldwide. In Canada, aviation emissions made up only 1 per cent of total Canadian emissions and only 4 per cent of the domestic transportation sector in 2011.
Despite the aviation sector's relatively small impact, we are committed to reducing our environmental footprint. Working with the Air Transport Action Group, the international aviation community has set the following three ambitious targets: one, improving fuel efficiency by an average of 1.5 per cent per year from 2009 to 2020; two, stabilizing emissions from 2020 on with a carbon-neutral growth initiative; and, three, reducing net emissions from aviation by 50 per cent by 2050 compared to the baseline 2005 level.
These targets are underpinned by four pillars of action: technology and innovation, operational improvements, infrastructure efficiencies, and smart economic measures.
We have a lot to be proud of in Canada. In 2005, Canada became the first country to achieve a joint government- industry agreement to address greenhouse gas emissions. Building on the success of this agreement, the aviation sector was proud once again to partner with the government to develop Canada's Action Plan to Reduce Greenhouse Gas Emissions from Aviation in 2012. The action plan brings together government, Transport Canada, airlines, airports, NAV CANADA, aircraft and engine manufacturers, and other partners.
Mirroring the international community's multi-pronged approach, Canada's plan sets out several measures to combat climate change. Aircraft fleet renewal sits prominently under the technology and innovation prong. From 2005 to 2020, NACC airlines will have invested more than $30 billion on new aircraft featuring more fuel efficient engines and better aerodynamics.
We're also seeing important developments in aircraft engine design standards. In February 2016, ICAO approved the first global certification standard for CO2 emissions for new aircraft.
Another example of innovation is the promise and potential of alternative fuels for aviation. Biojet fuel, which can be made from various materials such as oilseed, used cooking oil, or forestry and agriculture residue, is already being used on a small scale around the world and has the potential to cut emissions by up to 80 per cent compared to traditional jet fuel. We will discuss biofuels in a bit more detail later.
[Translation]
With respect to optimizing operations, it should be noted that reducing flight time, even by just one minute, reduces emissions by close to 100 kg of carbon dioxide per flight. We are therefore working with NAV Canada and Transport Canada to optimize the efficiency of the air traffic control system. Performance based navigation, for example, where the descent and landing are shorter and more continuous, can reduce fuel consumption and greenhouse gas emissions.
With respect to infrastructure efficiency, the airlines and airports are working together on reducing emissions by using ground support equipment and improving taxi and hold procedures.
[English]
Canada's action plan is working. Under the plan, between 2005 and 2015 the NACC airlines achieved a cumulative fuel efficiency improvement of 13.2 per cent, which is an average of 1.32 per cent per year, resulting in a reduction of over 11 million tonnes of CO2 equivalent. In addition to these positive results, we recognize that carbon offsets are necessary to help achieve the stated goals. To this end, we are engaged with governments and global stakeholders via the International Civil Aviation Organization, ICAO, to design an effective global market-based measure system. In our view, a well-designed global market-based measure can help achieve the balance between the growth expected in our sector and its commitments to emission reductions.
Utilizing offsets via a market-based measure is a more cost-competitive and efficient approach than a patchwork of different measures. It's also important to note that the investments and efficiencies required for a global market-based measure will continue to benefit domestic operations.
As mentioned earlier, aviation biofuels hold great promise. While airlines have made tremendous progress, the next major opportunity to reduce greenhouse gas emissions is to replace fossil carbon from the fuels combusted in airline operations. NACC members have been very active on this front. For example, in 2015 two of our members, WestJet and Air Canada, teamed up with our friends here at GARDN, the University of British Columbia, Boeing, Bombardier and others on a project to determine technology's readiness to refine forestry residue with a goal being to build a pilot scale production facility by 2025.
Going forward Canada is well positioned for biojet fuel production with its abundant agricultural and forestry biomass resources and globally recognized sustainable production and harvesting practices.
[Translation]
In our opinion, the promise of biofuels, which could reduce emissions by up to 80 per cent over traditional fuels, is fully in line with the Government of Canada's commitment to green energy. We are therefore enthusiastic about working with the government to encourage research and marketing of alternative aviation fuels.
[English]
In closing, let me turn to two questions that go to the crux of your examination. Question one: What is the potential impact on Canadians of transitioning to a lower-carbon economy when it comes to aviation? We would suggest that any climate change approach that imposes additional costs on the aviation sector would unfortunately affect passengers in terms of higher fares and the potential of reduced service. This is because Canada's aviation sector is already saddled by the downloading of taxes and other third-party fees and charges on airfares. These taxes and fees continue to take a bite out of aviation in Canada where, according to the World Economic Forum, taxes and third- party fees are the ninth highest in the world. As such, we are particularly vulnerable to any potential downloading of costs associated with climate change measures. Clearly these third-party charges have a significant impact. We don't need to look much further than the jobs and dollars that are leaked across the border because of the more than 5 million Canadians who choose to fly out of U.S. airports each year.
Question two asks: What is the most viable way for the aviation sector to contribute to a low-carbon economy? We have a proven plan. One, given the significant achievements realized under the action plan, which is an existing and effective joint government-industry initiative, Canada should maintain the course and recognize the actions and commitments contained in the action plan.
Two, Canada should continue to work with ICAO to implement a global market-based measure. We believe a global market-based measure is the best way forward and will clearly have significant positive impacts on domestic operations as well.
Three, Canada should accelerate the implementation of performance-based navigation to reduce fuel consumption and associated greenhouse gas emissions.
Four, Canada should become a world leader in aviation biofuel by fostering research and development and the commercialization of alternative fuels.
Thank you again for the opportunity to appear before you this evening. We are happy to answer any questions you may have.
The Chair: Thank you to both of you. We will begin with the deputy chair.
[Translation]
Senator Massicotte: Thank you for your presence before the committee. This is a very important issue for Canadians, and your contribution is greatly appreciated. I have a technical question for you, I would like some clarification. Mr. O'Rourke, in your presentation, you said the following:
[English]
. . . improving fuel efficiency by an average of 1.5 per cent per year from 2009 to 2020.
That's the objective. Yet I also understand there was a Transport Canada agreement with the Association du transport aérien du Canada whereby the objective was going to be from 2012, a 2 per cent annual improvement in energy efficiency in year 2020. So what gives? Is it 1.5 or is it 2 per cent?
Mr. O'Rourke: My understanding is that 1.5 per cent is the international commitment. I do believe that we had probably set out a more aggressive target here in Canada. I know there has been some discussion on whether that was too aggressive or not. I believe Canada did try to take a much more ambitious and aggressive approach, which I think explains those different numbers.
[Translation]
Senator Massicotte: Transport Canada reached an agreement with the Air Transport Association of Canada — I assume that is the association that represents the industry — under which it was 2 per cent in 2012. In other words, the objective was for both parties to agree; that is not a hypothetical objective. It is an agreement between the two parties, isn't it?
Mr. O'Rourke: Absolutely, that was the agreement that led to the action plan. It is a national agreement.
Senator Massicotte: Exactly. The 1.5 per cent is internationally, but for you, as a Canadian, it is 2 per cent, if I understand correctly.
Mr. O'Rourke: At that time, it was 2 per cent.
Senator Massicotte: Why do you say "at that time''?
[English]
Teresa Ehman, Chair, Environment Subcommittee, National Airlines Council of Canada: Just to clarify the target, ICAO had asked states and countries to commit to a 2 per cent improvement, a collective improvement. The action plan that Canada submitted did submit that 2 per cent.
ICAO is the International Civil Aviation Organization. The International Air Transport Association —290 commercial airlines around the world — has set a fuel efficiency target of 1.5 per cent improvement per year.
You see inside the action plan what was originally set out as 2 per cent that Canada wanted to commit to as an aspirational goal, to contribute to that 2 per cent ICAO goal. From an industry perspective, we think the 1.5 per cent is the more reasonable and achievable goal that we can speak to.
Senator Massicotte: Wasn't there an agreement signed in 2005 by Transport Canada and the Association du transport aérien du Canada, where from 2012 it was down 2 per cent? I'm trying to make sure. It's easy to make targets when you reduce them all the time. What was the deal? Not internationally, we in Canada.
Ms. Ehman: The voluntary agreement that existed from 2005 to 2012 was between Transport Canada and the Air Transport Association of Canada, which was the representative association for carriers in Canada at the time. That was really set without the context of what the industry has done as a global sector approach, which happened in the 2008-09 time frame.
In 2012, the voluntary agreement set up in Canada did a couple things. First, it based its targets more in line with the global sector approach. Secondly, the partners inside that agreement included not just the carriers through ATAC, but by that time we had become ATAC and NACC. It includes the Canadian Airports Council and NAV CANADA.
Senator Massicotte: The 2005 agreement, we don't want to talk about that? We don't want to respect that agreement?
Ms. Ehman: Well, it's done. It was revised and rewritten in 2012. It was set in line with broader industry goals that were set out as a global sector approach. It was also inclusive of all the partners who really need to be a part of reducing greenhouse gas emissions.
When we talk about how to reduce greenhouse gas emissions from aviation, it takes a village. It's more than what any one airline can do. You need air traffic control services; you need airports; you need a collective.
Senator Massicotte: You also mentioned in your presentation that while that may be the goal — I'm not sure if it's 1.5 or 2 per cent anymore — you say, "We will need to use offsets to meet that objective.'' You're basically saying, "We alone, without offsets, will not achieve the 1.5 or the 2 per cent. We need offsets.'' Therefore you encourage having a competitive structure of offsets.
Having said that, you also argue in your presentation that that is the most efficient way. In other words, you're not going to get the CO2 or the greenhouse gas emissions down by that 1.5 per cent; therefore, you are going to pay somebody else, effectively, to have that savings. Does that not depend on the price of the offsets? If I was to tell you it would be $100 a tonne for CO2, you may find a way to do it yourself if it's that expensive, or are you are saying we cannot get there and we are going to pay somebody else to get there?
Mr. O'Rourke: The cost of the offset is obviously relevant, but it does allow the industry to grow and still stabilize its emissions.
Ms. Ehman: When we talk about offsets, it's in the context of, as Marc-André said, the three main goals: the short- term goal, the medium-term goal and the long-term goal.
The short-term goal is around achieving an annual fuel efficiency improvement every year.
The second goal — the one specifically relevant to your question — is around achieving carbon-neutral growth by 2020. In other words, aviation wants to continue to grow and the demand continues, so the concept is: How do we stabilize at 2020 levels?
In order to do that, the industry has a four-pillar approach around technology, operations and infrastructure. It's also recognized that to get that carbon-neutral growth from 2020 onwards, those three things won't be enough. There needs to be a gap-filler in order to get there. That's where the use of a carbon offset is foreseen as the mechanism to achieve carbon-neutral growth.
[Translation]
Mr. Cofsky: The objective of implementing a compensation provision for 2020 and neutralizing carbon emissions was because it was expected that, 2020, that was tomorrow, and that the technology would not be available to give us that result. So this provision caps emission levels. By 2050, technology will be available to help us reduce CO2 emissions by 50 per cent. We will let things evolve over time because the technology cycle is 10 years, which is relatively long.
Senator Massicotte: Yes, indeed. Thank you.
[English]
Senator Seidman: Thank you very much for your presentations.
You both referred to this four-pillar approach: technology and sustainable fuels, infrastructure, operation, market- based measures.
If I heard you correctly, Mr. Cofsky, you said that the primary focus is on technology and sustainable fuels; in other words, innovation. In that context, could you give us an indication of the main thrust? Is there a particular area that the industry is focusing on?
I am thinking of a very recent announcement that was made about European work that is being done on electric planes. I know that obviously the context in Europe is quite different from the context in Canada where we have huge distances to travel.
I'm just wondering what kind of innovation you're talking about when you say you're focused primarily on that pillar.
I would be interested to hear from Mr. O'Rourke, as well.
Mr. Cofsky: As we just said, the short-term goal is probably more effective with an offset mechanism. But on the long-term goal, you're right: The technologies and the biofuel will probably help the industry in general to reach its objectives.
In terms of research, alternative fuels are an important aspect of the research that we do conduct, will conduct and need to continue to conduct. It could be biofuel from camelina, a crop that grows here in Canada on marginal land; it has to be non-food land. There are a couple of principals to respect to use that kind of biofuel. But biofuel is an important aspect to reach the goal.
In terms of technologies, composites will have . . . .
[Translation]
— a lighter aircraft. We could reduce fuel consumption as compared to the past.
[English]
We also have more electric aircraft, not necessarily in terms of engines, but all the mechanisms to replace the hydraulic pumps on an aircraft with electric wires. In doing that, you will also reduce the weight and CO2 emissions of the aircraft.
Fassi Kafyeke, Senior Director, Strategic Technology and Advanced Product Development, Bombardier Aerospace, Green Aviation Research and Development Network: Recently, in terms of innovation, the greatest engine for innovation in aerospace in the world today is environment. A good thing in aviation is that environment is equal to economy, because to reduce carbon emissions into the atmosphere, you have to reduce how much fuel you burn. As you reduce how much fuel you burn, you make it cheaper to operate the airplane, you make it cheaper for people to travel on airplanes and you develop the economy.
Coming back to your technology questions, with an airplane, we are looking at three things. We are looking at the structure of the airplane. We want to reduce the weight of the structure and make it more efficient, because a heavier airplane requires burning more fuel.
The second thing is aerodynamics of the airplane — the configuration. We are looking for new configurations that will be 10 or 15 per cent more efficient than the current ones.
Then there are the systems. As Sylvain says, there are very sophisticated systems on these airplanes, and the safety of the airplane requires that they are duplicated or triplicated. So we are looking for simple systems, and, when possible, to replace hydraulic and pneumatic systems with electric systems that may be more efficient.
Those are the major thrusts of the research.
Then you have the operation where you are looking to manage the air space in the world so that we can reduce all the delays. That requires additional technology for avionics on board the airplanes.
Those are the things we are doing.
Senator Seidman: There are no standards developed to date for aircraft as far as GHG emissions are concerned; there are no federal regulations like there are on cars that drive innovation and work on these particular areas you're talking about. Why do you think there are no federal regulations, other than voluntary ones? Do you think it would be helpful to have regulations that might be an impetus for this kind of innovation?
[Translation]
Mr. Cofsky: At the most recent meetings of the ICAO, a CO2 emissions standard system was implemented for new aircraft coming into service as of 2020. There will be a CO2 emissions cap per type and size of aircraft. The standard you are talking about is being developed now. It can't be implemented right away. International regulations have to be established with different countries, but the standard has been validated by the ICAO.
I can't speak for the federal government, but for international flights, we will have to comply with ICAO regulations; as to domestic flights, there could be federal regulations to support international regulations.
[English]
Senator Seidman: Mr. O'Rourke, in your presentation to us, you said Canada should become a world leader in aviation biofuel, foster research and development, and the commercialization of alternate fuels. Since you both emphasize this pillar, what would be your dream? How would Canada become that world leader? What kind of support systems does Canada require?
Mr. O'Rourke: There are great examples around the world. There are two very concrete things I can start with. One is that we need to de-risk research on this. We need to maybe guarantee loans — or, again, just the concept of de- risking initial research and development. The government could step in and guarantee some loans, so that area.
The second area we could look at is some sort of a credit-based system for renewable energy where a company that is producing this biofuel — just incentives, in general. The U.S., in particular, has a credit system for each litre of biofuel produced.
In general, create an incentive for research and development, but also de-risk that and make the entrance more comfortable in doing the research so that they know they are backed financially, and off they go.
Senator Seidman: You represent Canada's four largest passenger air carriers, if I understand correctly. How much emphasis do these companies place on research and development?
Mr. O'Rourke: It's very important to note that there is an incredible inherent financial incentive. Not only is it a good idea for the environment, it's a good idea for the bottom line.
Fuel, along with labour, can be the single biggest component cost of an airline. I'll let Air Canada speak to how strongly they feel about R&D and projects working with GARDN, but there is no question about it, given that we are seeing airlines around the world buying their own refineries and investing in those types of things. With that, I'll let Teresa speak from an Air Canada perspective about how strongly they feel about R&D.
Ms. Ehman: At Air Canada in 2010, we set up an internal working group within the company to understand how we could support and advocate the development of aviation biofuel in Canada, with our preference for a made-in-Canada solution. We recognize that we operate in an international forum, so there is a bigger biofuel industry at work globally within the industry.
We flew our two first biofuel flights in 2012. I want to make note of the first flight in particular because it shows the potential of biofuel. We took aircraft we flew from Toronto to Mexico City, and we used the approved 50/50 blend of convention fuel with a biofuel. The biofuel was based on a used cooking oil that was re-refined to come up to a jet fuel spec. Then we did what we could operationally on the aircraft to fly it as efficiently as possible: We reduced weight from the aircraft, and we had air-traffic control assistance to get plane to fly as the crow flies, as efficiently as possible. This is in 2012, remember. We reduced the net footprint of that flight by 42 per cent. That tells you this is all possible. We know how to do this. The question is: How do we make those things happen today so we have not less and dampened travel but rather sustainable air travel.
In 2013 we conducted a feedstock assessment across Canada to understand what is really available for aviation biofuels. It was done province by province to understand what was available and where it existed. As it turns out, Canada is probably one of the best biomass countries in the world, so we see potential in that area.
We also have a lot of smart research and development in the scientific community with expertise in some of these feedstocks. So in the agriculture sector, in the forestry sector, there are some incredible brains at work across the country on that part.
In 2014-15 we were part of a clean transportation initiative studying what a biofuel supply chain would look like in Canada. Air Canada participated in that work as well.
More recently, with GARDN and a number of other partners, such as BioFuelNet Canada, Boeing, Transport — and there are a number of other partners — we are setting up a Canadian biofuel supply chain initiative. It will be at the Montreal airport. What this will do is say, if you put biofuel into an existing fuel system, how could it work? How can you measure your net carbon reduction by using those fuels? How can you account for it?
How do you account for sustainability criteria? This is the other important part of biofuel. We want to have harmonized sustainability criteria. We don't want to exchange one environmental problem for another. As was mentioned before, we don't want to stop growing food and be growing fuel in the field.
What is the airline's stake in this? To answer your question, for six years now we have been actively participating in this. We participate in our international group as well in terms of understanding what those goals and objectives can be. How can we harmonize criteria so that if Lufthansa flies over to Canada and wants to fuel their plane with biojet fuel, how can Canada supply that?
We have also run numbers to look at what would it take for Canadian carriers to achieve carbon neutral growth 2020. You can buy offsets, but also if you have an economically viable and sustainable biofuel available, you can achieve carbon-neutral growth using that as well. That's part of the potential we see.
Senator Johnson: Thank you very much. This is very interesting. I'm really fascinated with the biofuels being used. It will be so interesting going forward in terms of our airlines.
Mr. O'Rourke, in the EU, consumers are given the option of purchasing carbon offsets when they purchase flight tickets. What is your organization's view of this option? Would you be introducing it in the near future?
Mr. O'Rourke: That's an individual airline decision. We wouldn't address that as an association.
Does Air Canada want to address the question?
Ms. Ehman: At Air Canada we have had that voluntary carbon offset program available to our customers since 2007. When you book a flight on the Air Canada website, once you purchase the ticket, it gives you that option, if you choose to offset your flight. If you are flying from Ottawa to Calgary, it calculates what the carbon footprint is for you and gives you a choice of projects to offset for the flight. Our view is that it's an offering we make available to customers who are interested in participating in it. I don't want to speak for the other carriers.
I believe WestJet also has a similar program. I'm not sure where theirs exists in their booking order, but we have had the program for a number of years already.
Senator Johnson: Can you also talk about the increasing CO2 levels in the atmosphere in terms of flight turbulence, an increase in that by the middle of the 21st century? The turbulence could lead to the usual passenger problems, injuries, decreased fuel efficiency, delays and damage to planes. Do you agree that climate change could cause this increase in inflight turbulence or not? As someone who flies constantly, I'm very interested in this. There has been some indication already. If so, how could it be addressed?
Ms. Ehman: I'll take a shot at that.
Yes, I think we have seen that. When you hear about these turbulent incidents happening on the aircraft, it's difficult to associate that causally to climate change. There has always been turbulence in flight. You would have to calculate the fact that there is way more air travel now. There are way more routes. For particular routes, such as if you're coming from Australia or travelling over the Pacific, it's always been turbulent.
So is it a case of there being more reports of it now because we have more air traffic? That's possible. I don't think we can necessarily link it directly to it being specific to climate change.
Fassi, do you want to speak on that as well?
Mr. Kafyeke: We cannot link it specifically. The evidence is still not there.
Senator Johnson: Research is still not in on that.
In terms of jet fuel, what are the prospects for developing it out of municipal waste in Canada? There has been some research and articles about that. You addressed some of it in your last response to Senator Seidman. In terms of municipalities, coming from a smaller community, I know how much biofuel waste could be available.
Ms. Ehman: I think you are referring to municipal solid waste as a feedstock for producing jet fuel.
Senator Johnson: Yes.
Ms. Ehman: Is the potential there? Yes. There are three projects in the world right now. British Airways is involved with a municipal solid waste project. Unfortunately, it only makes sense when oil is $70 a barrel, and they have had some issues with their technology platform partner.
In the United States, there is United Airlines, as well as Cathay Pacific. So interestingly, a Hong Kong-based airline looked to its first biofuel supply project in the United States. Again, as was pointed out earlier, some of the policy mechanisms in the United States are much better at facilitating biojet development. Those two projects are also based on a municipal solid waste feedstock. You have to take municipal solid waste and do some filtering, because what you are really after is the organics. You're after the carbon and the hydrogen.
So it is feasibility. The technology at a commercial scale is still untested. A company called Fulcrum in the States is doing both of those projects and has actually built a demonstration plant, so they have proven that it works. Part of the economic piece is that it's actually a great feedstock in the sense that you're taking one environmental problem and solving another one with it. But the economics are also a part of it, so tipping fees, what you would be paying.
That's why in London, for example, that project had some good economic drivers. Tipping fees in London for disposing of municipal solid waste are very high. So you get into these unique economic situations that have to be evaluated.
Senator Johnson: I was reading about the work that Fulcrum is doing. It's incredible.
Ms. Ehman: It is.
Senator Johnson: United Airlines on Tuesday invested $30 million in a startup, Fulcrum BioEnergy to make jet fuel from garbage. This is so amazing.
Ms. Ehman: Yes.
Senator Johnson: When will this come to Canada?
Ms. Ehman: When we have the right government policy mechanisms for it to make sense in Canada.
Senator Johnson: So what do we have to do for that?
Ms. Ehman: Roll up our sleeves.
Senator Johnson: Thank you, chair. I leave it up to you.
Senator Runciman: Following up on the right policy mechanisms, does that mean government support? Is that what you're referencing?
Ms. Ehman: I think what we have to look at, and give it a real honest look, is what are the right mechanisms in Canada? I would say that up until now the biofuel mandate in the Canadian policy environment has been relatively weak. I think that's changed with our new government. There is an openness to look at those policies. Marc-André mentioned some of them. They can be incentivizing, so making funding available for project-specific purposes. They can be related to, for example, the RINs credit in the United States. For every gallon of a renewable fuel you produce, you get a $2 subsidy back from the government. Fulcrum is getting loan guarantees. They are getting good loans from the government that is de-risking their venture in this way.
Our view as an airline is that we're an end user. Air Canada is not in the business of making biofuel; we're in the business of flying passengers around. We want this industry to grow up around us. They need secure financial measures to be able to do that.
There are a number of mechanisms that in all likelihood need to be looked at with respect to other biofuel development in Canada, because other sectors are looking to produce biofuels in different means for other forms of transportation.
Senator Runciman: You mentioned using biofuels. In terms of cost comparisons with purchasing jet fuel — and you mentioned the trip to Mexico City — how does the cost comparison work?
Ms. Ehman: It's expensive. Having said that, though, it's phenomenal to see the progress that has been made in this space over the last seven years. We've seen what used to be a seven times multiplier cost to now sort of being two times. As people continue to drive the technology and the research and development around this, we're seeing that cost gap close itself closer to conventional fuel.
It's still a ways off, though. There are still many challenges. There are going to be some failures. There's still risk involved here, but remarkable progress has been made.
The other piece that really fits into Canada's plan is looking for absolute reductions. From an aviation perspective, if you want to look at how you can provide sustainable, accessible and affordable travel to people, how are you actually going to get absolute emission reductions? You're going to have to fly less, offset it by incurring a market- based measure or use biofuel where you can to actually get a net absolute reduction.
Senator Runciman: Or you can reduce third-party fees and taxes, put in larger seats and fly fewer passengers.
Ms. Ehman: Yes, there are a multitude of solutions to that, I suppose.
Senator Runciman: It's another answer that is not being pursued, I guess.
You mentioned the project — and I'm not a regular member of this committee, so my questions might reflect that. Was it the flight from Montreal to Mexico?
Ms. Ehman: Toronto to Mexico City.
Senator Runciman: You said that you were able to retain something like a 40-per-cent reduction, but you also referenced fewer passengers. You flew as the crow flies. You had all these perfect conditions. I wonder if that's a fair way to assess the success of that alternative.
Ms. Ehman: We looked at it as an opportunity. In fact, we called it a perfect flight from an environmental perspective.
Senator Runciman: Not too many of those.
Ms. Ehman: Not too many of those. But it was a full commercial passenger flight — a regular, scheduled flight — from Toronto to Mexico City.
With regard to operational measures, at Air Canada right now, we have 70 projects that are looking at how we can improve our fuel efficiency and reduce our fuel use. These are being implemented, studied or have already been implemented to try and reduce our fuel use, which is a win-win on the environment side.
To your point as to how we could replicate it, that particular flight had a full 50/50 blend of biofuel onboard. Realistically, we're far away from thinking we're going to full airplanes fully with biofuel. I don't think it's reasonable. We're looking at that marginal ability for it to bring our emissions down.
The other aspects — improving air traffic control and operational efficiencies — many of those things we have already been doing, as well as the other carriers within NACC.
Mr. O'Rourke: The question highlights that there's only so much that airlines control. Granted, it's a big piece of it, but we do need to work with the airports to reduce things like taxiing times and de-icing procedures, so we're using less fuel on the ground. Air traffic control is a huge one. We work closely with NAV CANADA.
I want to quickly touch on two items. PBN, or performance-based navigation, is the new, modern way to approach and land at the airport. It's shorter and it's more continuous. So we're saving fuel there, but we need to work with NAV CANADA to get these new procedures in.
NAV CANADA is a world leader with satellite-based navigation, so that overseas, especially, or across the Atlantic we'll be able to safely put more planes into the more efficient, optimal corridors to take advantage of the Gulf Stream. There are savings there.
Of course, airlines have a big piece, but it's working with government and the other stakeholders like air traffic control and airports.
Senator Runciman: You seem to be focusing on biofuels, and I think from your organization there is more emphasis on electric engines. I know you want to look at all of these alternatives, but if you're looking at the two of them side by side, where do you stand in terms of being ready to move? I know there's a small plane here — I think it was the National Research Council — operating with an electric engine. Looking ahead with your crystal ball, when can you see us moving into larger aircraft?
Mr. Kafyeke: We are looking at all of these. We are making sure that all the airplanes we are producing and certifying can indeed fly with biofuels and 50/50 blends. It's understood that, beyond technology and navigation, you also need biofuels in order to get to the industry objective of reducing carbon emissions by 50 per cent.
Don't forget that today you can reduce how much carbon you put into the atmosphere by 20 per cent by simply taking a more efficient airplane and replacing one that is less efficient. That exists. Air Canada and other airlines are doing that. When you trade off old planes for newer planes, you can fly the same number of passengers — same distance, same speed — and burn 20 per cent less fuel. That is what technology can do today.
Coming back to your questions, the problem with electric power is the weight of batteries and also the duration these batteries can provide. Today you can only have it on very small airplanes; it's not yet there for big ones. So you may see hybrids before you see full electric airplanes.
Today, we are focusing more on turning systems into electric systems rather than turning propulsion into electric propulsion.
Senator Runciman: I guess from the Air Canada perspective or the commercial aviation industry, generally, how are you approaching this from a public perspective? Do you see any pushback moving in this direction? I know people generally want to see carbon reductions, but they're also concerned about airline safety. Whenever you're looking at innovative fuel options, I think there are always going some concerns. How are you approaching that?
Mr. O'Rourke: I will make it clear that the number one priority in everything our members do is safety. That's not just saying it. The true commitment in everything they do is making sure the passenger gets from point A to point B safely.
To answer your question, our feeling — and this probably varies from airline to airline — is that the consumer is very welcoming of initiatives to reduce our footprint. Frankly, we have a great story to tell. We've been doing great things, but I don't think we've done a very good job of telling that story. We don't toot our own horn enough, but we've done some great things, and we're very proud of our record.
Ms. Ehman: To add to that, we did two biofuel flights in 2012, and we asked ourselves that question: What if someone says, "I'm not sure I want to get on that plane with some used cooking-oil-based biofuel onboard''? Other carriers had that come up before, because other airlines had done demonstration flights, and everyone said, "No, in fact people were excited to get on board.'' We had prepared that other option, though, if someone said, "Wait a second, I don't want to fly to Mexico City because I'm worried about it.'' But it was quite the contrary. People were interested and excited. I think people see it as the future.
The second flight we did was we flew a large number of our Olympic team to London for the summer games, and they were extremely excited to be a part of that mission. It was a question we were prepared for.
The bottom line answer is this: We call it alternative fuel, but the truth is that it's fuel. It has to meet the right energy and engineering specifications. Nothing gets on that aircraft unless it meets all the ASTM approvals required, so it is actually jet fuel. It's just that the carbon and hydrogen molecules are coming from the surface of the earth rather than digging in a well to get it.
Senator Patterson: This is all very interesting. I come from a region or a community that still uses the Boeing 737- 200 series because they have the cargo/passenger combination. They're highly inefficient and very old planes.
I have, I'm sure, a very ignorant question. I'm told there are no dumb questions, so I'm going to try this one first. How do you measure a tonne of CO2? Isn't it a gas? You talk about metric tonnes. Could you, for my benefit and hopefully for some of the people watching this proceeding, tell us how you measure the weight of the gas?
Mr. Kafyeke: Combustion is a chemical reaction. In a lab you can easily find out how many kilos of carbon you produce, if you have one kilo fuel and burn it with the air required to burn that. Typically, the ratio is about 3.16 kilos of carbon to 1 kilo of fuel. All you have to do is measure how many kilos of fuel you burn and translate that into kilos or tonnes of carbon, because it's a well-known chemical reaction.
Ms. Ehman: That's a great question because part of the challenge with greenhouse gases is you cannot see them. You can't feel or observe them, and it's very difficult to know what a tonne of CO2 means. It's a difficult concept to explain or experience, whereas a polluted stream, people see it, smell it, feel it, can touch it. It has a very different communication around explaining it to people.
Senator Patterson: So you don't actually have to weigh it. It's the result of the formula, depending on the fuel.
Mr. Kafyeke: Yes.
Senator Patterson: Thank you.
We heard from the transportation ministry about the consultation process they're launching with Canadians this spring and summer to develop a long-term agenda for transportation in Canada, and it's looking forward to the next 20 or 30 years. Firstly, are you participating in this process?
Secondly, what will the aviation industry look like or aspire to be in the next 20 or 30 years? Maybe you've given us a glimpse today.
Mr. O'Rourke: Yes, we absolutely will participate in that process. We're very happy to do so. We're actually finalizing our submissions for the online portal. The government has set up four different working groups, as you may know, and we will be joining those as well. It's a major initiative and we're taking it seriously.
Some of our submissions, no surprise, will be some of the things we have talked about this evening, pointing to the progress that we've made. We believe that's the way to go: Let our industry invest in new aircraft, look at technology and look at innovation.
Very briefly, in the next 20 or 30 years we see the industry reducing its environmental footprint by even more, and investments in biofuel will continue. This is not going away. Again, there's an inherent financial incentive to reduce fuel, and we take this commitment very seriously.
Mr. Cofsky: GARDN has been invited to participate in this process. We will submit a proposal. There is a strategy called the Sustainable Development Strategy, and it's still in the writing process right now. We received a draft version of this strategy. The manufacturing sector in general is not included in the strategy right now, so we propose to add the manufacturing sector, and in our case the aviation sector should be included in that strategy. We will propose a position paper before the end of next week.
Senator Patterson: Finally, you mentioned the Bombardier C Series as being environmentally efficient. Of the conventional aircraft — I know there's the Dreamliner, and Airbus has a competitor — what are some of the leading manufacturers in efficient jet aircraft today?
Mr. Cofsky: I know that Airbus and Boeing have re-engineered the aircraft. The A320 will have new engines, and it will be the same thing for the Boeing 737. These airplanes are pretty old. In fact, these are 20-year-old aircraft, so they're trying to reduce the CO2 emissions with new engines, which is good because the engine is great, especially if you take the Pratt & Whitney engine, the geared turbofan. You will probably obtain a 10 per cent CO2 reduction by just putting a new engine in an old aircraft. So these aircraft will become more efficient than ever.
Right now, yes, the Dreamliner is a very efficient aircraft. The A380 Airbus is very efficient as well. It consumes less than 3 litres per 100 kilometres per passenger.
I will let my colleague speak about the other category, but fuel consumption for the C Series is 2.1 litres per 100 kilometres per passenger, so it's best in class in terms of aircraft.
Mr. Kafyeke: The absolute lowest in commercial aviation today is 2.1 litres per 100 kilometres per passenger. You need to go to the A380 with so many passengers to find something below 3 litres. As efficient airplanes, the latest 787, the A350 and the C Series are the latest standards. If you look at the C Series, they are about 20 per cent more efficient than the initial 737 and A320, and they made the engine 10 per cent more efficient. They have narrowed the gap.
If you look at the C Series and if, let's say, in one year you produce 80 CS300s, replacing the A319, and 40 CS100s, and look at the emissions, if you just do that replacement, it's the equivalent of 340,000 tonnes of CO2 reduced per year. That's like taking 92,000 cars off the road in a year.
Canada, through the C Series, has an even bigger impact on our environment than our industry portion, because the C Series forced other companies — Boeing, Embraer, Airbus — to accelerate by five to 10 years the re-engineering of their airplanes. Because they are producing more airplanes, the effect on the environment is even bigger. We are talking about $2.5 million tonnes of CO2 reduced per year in five years, all because of engine innovation and the new C Series. That is the impact that these innovations have on the environment. We do have an impact that is bigger than just that of our own airplanes.
Senator Mockler: You have mentioned alternative fuels and the need to work with airports. When you look at the 89 airports in Canada, only five are accredited when it comes to CO2 emissions.
Last week in Moncton, I met with the board. I know all of the CEOs are in Ottawa right now to talk about the way forward. I was told that in 2015, with its accreditation, the Moncton airport had reduced the equivalent of 2,625 tonnes of CO2.
If that's the case, how come you and those 89 airports — you led me to believe that we need to work with the airport authorities — don't work together to have more airports accredited so that we can better control emissions coming from the management side of those airports?
Mr. O'Rourke: We would definitely love to have more airports accredited. Ultimately it's their decision. We do work well with airports on many fronts. What I was referring to is the taxiing, the auxiliary units, that type of infrastructure.
To be honest, I wasn't aware of those numbers. Actually, we have a great relationship with the Airports Council, and I'd be pleased to chat with them and see if there's anything we can do to help on that front.
Senator Mockler: There are only 5 airports that are accredited in Canada and only 13 in North America. With that said, we can see there's a long way to go.
When they made their presentation last Tuesday, it was quite revealing. They also shared with me that there will be meetings in Montreal in September precisely on the next step forward in aviation for these companies. Can you comment on that, or is it that you just don't have the information?
Mr. O'Rourke: No, I don't have the information.
Ms. Ehman: Are you referring to the ICAO assembly in Montreal in September?
Senator Mockler: Yes.
Ms. Ehman: Every three years, the ICAO assembly meets in Montreal, where it's based. Really that assembly is set out to address not just the environment but a number of civil aviation situations.
Certainly this is a big environmental assembly; it's of environmental significance. It is where two key things on the environment side happen. One is agreement on a global market-based measure for international aviation. This work has been under way for the last three years. It's remarkable. There are hundreds of people around the world involved in moving that conversation forward, so we're looking for agreement at this assembly.
The other one is the CO2 standard that Sylvain mentioned earlier, which is basically a fuel performance standard for aircraft that has already been agreed upon. In February, 190 states agreed to it, and this would be the formal adoption of it. That's expected at this meeting. Those two things will significantly, from our perspective, be discussed.
There will probably be some airport discussion at the ICAO as well, but just to mention it, you were talking specifically in Canada. The Airports Council of Canada is also a partner on Canada's action plan for reduction. That is also a mechanism where we can help support and endorse for them to be certified, this new accreditation system that has been developed around the world for airports. A number of them have been looking to do this, and it's a good vehicle to help work our plan, which is how to bring reductions across the whole aviation spectrum.
Senator Mockler: I know you've been consulted and you're going forward, but what role should the government play in order to help you people bring it to the level that governments would like? What is the role of government?
Mr. Cofsky: For us it's pretty simple. When you compare the green aviation program in Canada to other regions around the world, the biggest one would probably be in Europe with the Clean Sky program, which has a budget of around 3 billion euros. Our budget is just insignificant compared to that amount of money.
When we see the research portfolio of GARDN and we try to find a sweet balance between the development of biofuels and the development of technologies, the question is just the availability of funds to conduct research. The aerospace industry here in Canada is a pretty important one. It's not because we are in a smaller country that we don't need the kind of funds that the Europeans or Americans have. We would like the government to help us get some research funds.
There was the Emerson report a couple of years ago; I think it was in 2012. They conducted a study and evaluated that the amount of research funds in Canada were around $200 million, but the need for research funds in aerospace will be more around $2 billion, which is probably comparable to the Clean Sky project in Europe. We will need funds to conduct our research.
Mr. O'Rourke: I would take it one step higher. One of the positions we have been taking that is for the past 20 years, government has seen the aviation sector as a source of revenue, and we need to change that view of the sector and recognize it as an engine that enables all the other sectors. I don't like this expression because it's overused, but there needs to be a paradigm shift from treating it as a source of revenue with all these taxes and fees that we download on the industry and recognizing that aviation enables trade, travel, tourism and investment.
Once we make that shift, I think things like research follow and the sector becomes more competitive; it becomes healthier on many levels. That's what we've been asking for: Let's make the shift from treating this sector as a source of revenue to what the Senate committee called the spark plug that ignites Canada's economy.
Senator Mockler: We were apprised in another committee that the government is possibly looking to privatize the biggest airports in Canada. They named six. Would it help with CO2 emissions if we were to privatize airports in Canada?
Mr. O'Rourke: What you may be referring to is a report that came out, the CTA review panel recommendations. There were several recommendations. In fact, Mr. Emerson did that same report.
From our perspective on the specific issue of airport privatization, I think we need to proceed with caution. We need to do more research. We've kind of taken the position of treading carefully here. It's not necessarily the solution we may think it is. We need to look at what impact it will have on ultimately passengers and airlines. That's what we have to say about airport privatization.
Senator Mockler: But the question was: Could that be an element to control CO2 emissions? The concerns I had in meeting CEOs of two different airports were vis-à-vis the fact that we could have a two-tiered security system which would impact on how you manage airports and how companies would be looking at the most profitable route.
Mr. O'Rourke: I'm not sure what effect that would have, to be honest.
Senator Seidman: I have one question related to Mr. Cofsky's discussion about what is needed in terms of what can government do.
You're an R&D network. You're funded equally by the business-led Networks of Centres for Excellence program at the Government of Canada, and the Canadian aerospace industry. We have heard a lot of talk about research, but we also know from studies done in this country that the biggest problem is knowledge translation to commercialization. We do a lot of research, but a lot of good ideas never get translated through to commercialization. It's a huge problem. What could you tell us about this particular problem? We are legislators. How can government policies help encourage that problem?
Mr. Cofsky: It may be a little different in the aerospace industry. In other industries, scientists or even small companies will develop a technology. They will go out on the market to see if there is a receptor somewhere. In the aerospace industry, the technology will be developed by scientists in universities, or small companies or big companies. At the beginning, it will be an expression of need from the OEM. The big companies will be there from the beginning of the project, even if it's done within the walls of a university. They will not look at the end of the project to see if there is a receptor outside. They will be the receptor.
It's a long 10- to 15-year research cycle in the aerospace industry, but in our case, the maturity of the technology we developed is a TRL of 3 to 6. That means the research is conducted within the walls of the industry. Universities participate, but it's not led by universities. It's really led by the companies. After the end of the project, the companies will not go out and see if there is a receptor or a client or a market. They will include the results in their own products or processes. It's quite different.
Senator Seidman: It's the reverse. Basically you're saying it's driven by industry.
Mr. Cofsky: It's driven by industry and the receptors are here in Canada. We don't have to look outside to see where they are.
Senator Seidman: Right. So the needs are way upstream in the development and research phase.
Mr. Cofsky: Yes.
The Chair: Sylvain, in your presentation, you suggested that any climate change approach that imposes additional costs on the aviation sector will unfortunately affect passengers in terms of higher air fares and the potential of reduced service.
Our goal as a committee is to find out how much more it's going to cost Fred and Martha to meet these targets the government has set. You proved it here. It's the end user who pays. It's the person on the street who pays the bill. What kind of numbers did you come up with? How do you justify that paragraph? Did you do some research?
Mr. Cofsky: It was Marc-André.
Mr. O'Rourke: That is a very good question.
The Chair: Was it just if it costs us more, it will cost you more?
Mr. O'Rourke: No. The second part of our submission puts it in context. In Canada we are particularly vulnerable to any extra costs. We have the ninth highest types of third party fees. Everybody is piggybacking on the airfare; the security fee, the airport improvement fee. All these taxes and charges make us almost dead last. We're very vulnerable and very afraid of any type of additional costs.
Now we can do a quick paper napkin calculation. It's hard to answer. I can't come up with an answer that will be X dollars per ticket. That has too many variables. A $20 or $30 carbon tax translates to 7 to 10 cents a litre. Depending how many litres we use as an industry, we're talking hundreds of millions of dollars dumped on an industry that is already overtaxed and overused for sources of revenue like this. That's why we make that statement.
There are no margins for airlines to absorb many of these costs. That's the sad reality. Something will likely give, depending on the approach taken.
The Chair: I appreciate that. I've been in government long enough to know that every industry comes to the table and says, "If you cut my taxes to zero, with my brains and government's money we can make beautiful music.'' You hear that all the time.
In realistic terms, give me a number for what a carbon tax would add to a flight ticket, because we want to find out what the end user will pay. That's important for you to be able to lobby governments to reduce their taxes on you. I need to know what that paragraph means. I need to know in real terms. I know there are lots of variables. In both these presentations there are variables from over on that wall to that wall. Come up with something for our clerk.
Mr. O'Rourke: We will. We don't want to talk about a carbon tax. That's not what we're looking for. We think that's not the way to do it. Let's assume there is a carbon tax of $30. That translates to roughly 8 cents per litre. Then if you count how many litres of fuel we use, there is —
The Chair: Actually, you don't have to do the math here. Go away and figure out something and put it in writing.
Mr. O'Rourke: I just want to caution you that it's unlikely we will be able to say it will be $25 more per ticket, because each airline will have to decide what they do with the additional cost.
The Chair: I appreciate all that. Don't be difficult with trying to give me those numbers. That's what I'm trying to get at. I want to know what it will cost Fred and Martha. It won't be exact because a lot of these things are hypothetical. Some things may happen and some things may not happen. Our report should reflect what will happen to airfares.
On top of that you mention a potential for reduced service. That's interesting to the public, too. Other presentations have said that air traffic will increase in the coming years, and then we see that it's going to decrease. So I need to know a little bit about that.
Mr. O'Rourke: Sure.
Mr. Cofsky: The other important consideration would be where the money will be reinvested. I don't know if it's good to have a green tax. Many jurisdictions have put that kind of tax in place, but the money has never been reinvested in green aviation operation or in aviation operation at all. So it could be a good thing to put a tax in place, if it's to reinvest that amount of money in a green aviation program.
The Chair: In my experience, when government gives a lot of money, it doesn't always arrive to the right place, to be perfectly frank. There are good intentions, but it doesn't happen.
I was part of a government that put in a revenue neutral tax which placed a tax on fuel in British Columbia and returned that in tax cuts to the general public. When you give governments a great big gob of money, it's always interesting to see where that money goes.
You talk about going from hydraulics to electric. Is it cheaper to actually generate the electricity than it is to run the hydraulics? You already have the engines running, so there are hydraulics. I'm not sure how you come up with that. Is that a big difference or is that one of the things that is referred to as a "patchwork''?
Mr. Kafyeke: It depends on the application. To transmit electricity is usually very efficient. You have very little loss. To transmit other forms of energy, you have a lot of loss.
For instance, if you go from hydraulic brakes to electric brakes, all you have to run to the wheels is an electric cable, and then you have the actuator in the wheels to brake. But if you have hydraulic brakes, you have to run hydraulic pipes. They are subject to bursting. If you have a burst and you lose the hydraulic pipes, you lose all the brakes. With electricity, you can use one actuator and still brake.
The Chair: Break the line and you have no brakes.
Mr. Kafyeke: In terms of reliability, it's more reliable.
In terms of how much you save, it depends on the application. It's usually a matter of being more efficient. In the end you have the same function for less weight.
The Chair: So it's more that than it is saving any energy or doing anything with energy.
Mr. Kafyeke: Yes.
The Chair: I appreciate that.
When Air Canada is through with their A320s — I fly them steady across this whole country — where do they go? Air Canada wants to buy new airplanes and be more efficient. I appreciate that. I think everybody does. But what happens to the old ones? I think they go to other countries that can't afford to buy the new ones.
To me, the atmosphere is the atmosphere. If that A320 is going to some place in South America, it's still putting out whatever it puts out in the atmosphere, and Air Canada can feel good because they have a C Series. Am I correct in thinking that?
Ms. Ehman: In the case of Air Canada, the final disposal location of an airplane depends on the ownership structure. In some cases we're leasing the aircraft, and in some cases we own the aircraft. Leased aircraft go back to the leaseholder, where they can be deployed by another carrier, or the known destination is the desert. There is a very big parking lot in Arizona, a boneyard of thousands of aircraft that are out of service.
The industry has come to recognize what we do with the final disposal of an aircraft. There is AFRA, which is a group looking at how to recycle the high-value components from the aircraft to be used again where it's feasible to do so. There is a lot of work going on in that area.
You raise a good question. A plane leaves our fleet, and it goes off to another part of the world and flies somewhere else. In the end, what is the net emission that could be created? We can't answer what happens to it when it goes somewhere else, but certainly if it's being utilized at the rate we're using it, you're still going to produce that carbon footprint.
What it really does is underpin the importance of this agreement at ICAO, which is a global sector approach on aviation, the four pillars, and using a global market-based measure for international aviation. It allows for a way to stabilize the emissions — the second goal that we have — and ultimately take us to the third goal, which is really so important when we talk about Canada's 30 per cent reduction by 2030. We are talking about a 50 per cent absolute reduction in emissions by 2050.
With regard to that goal and that technology timeline, we're going to see all these new aircraft come on board and the old ones getting phased out. What we will see is a decline in the use of them, because the truth is they are very expensive to run. They become less fuel efficient, and whoever is operating them ends up paying far more for their fuel costs, and soon it's going to cost more in carbon costs as well. I think it works as a double mechanism to show that they are not desirable aircraft to be flying anymore.
The Chair: I don't disagree with all those things you've said.
Can you tell me how many Air Canada planes are in the desert junkyard?
Ms. Ehman: Not many.
The Chair: Have they been sold and moved to other places?
Ms. Ehman: Yes. A number of our aircraft are leased. They are held by other entities. The aircraft we are bringing on board that we own, they are not headed for the desert anytime soon. They are some of the best technology available right now.
In terms of the life-cycle plan for aircraft, there a number of industry initiatives working on how to do that properly and what happens to all these aircraft as these new ones come into service. It's recognized in the industry as something to be dealt with, yes.
The Chair: We can feel good in Canada that we have reduced our greenhouse gases, but we'd have a hard time telling people what we did was transfer it from our borders to somewhere else.
Ms. Ehman: I like to think it's about how we lead it, really. By bringing the new aircraft in, we start to see the phase- out of the older aircraft. I prefer to look at it as a way to lead that path forward and buy the best technology available.
We talk about long life spans. When you buy an aircraft, you expect that aircraft to last 25 to 30 years. Over that lifetime, when you're deploying it, you have to think about these long-term costs to run the business and what happens to the technology as this happens. Well, Bombardier is in there cooking up brand new technology. We see this evolution of replacement that happens.
The Chair: I appreciate that and I think everybody does. If they really knew the whole life cycle, I think they would say it would be very nice if Air Canada flew them to the desert, turned the key off and left them there so that they don't continue to pollute, because they will. There are all kinds of aircraft out there, including small ones that were built in the 1930s and 1940s. They are still out there flying.
On page 4 of the presentation, you say that the new C Series matches the efficiency of most modern compact cars and uses less than three litres of fuel per 100 passengers per 100 kilometres. How many litres of fuel would that be to fly across Canada as compared to Air Canada's A320? I'm not picking on the A320, but just to give me some kind of idea. Does it save 2,000 litres? How much does it consume and how much does it save? It's fine to put that in there, but I want to see what it saves.
Mr. Kafyeke: Just multiply it by the number of passengers in a CS300. Let's say it's 130. You compute the distance and do the computations.
If you are currently flying an A319, which is the same number of passengers, the C Series will typically burn 20 per cent less fuel.
The Chair: Twenty per cent less fuel.
Mr. Kafyeke: Yes, with the same flight and the same number of passengers.
The Chair: Your taxes get reduced, Air Canada, when you start flying the C Series. Would that be passed on to the consumer? You use a fuel surtax, but when you start getting better mileage, does it just get eaten up in the whole system of Air Canada or do people actually get a reduction?
Ms. Ehman: For the last six years, our fares have stayed stagnant. It's not the fares that are going up. It's the taxes and charges that have increased the cost for the passenger, the end user.
Is that passed on? No, not directly. Situations where, for example, the price of fuel goes up and a fuel surcharge could be added to a ticket have to be applied for through the CTA, I believe. I'm not a taxes and charges person, so I'm not sure.
But to directly answer your question, other than the fact that you would have a reduced carbon footprint from flying, I don't think you would see that specifically passed on, other than the cost of flying the aircraft has become cheaper. But we had to buy that aircraft, because they are not giving us those C Series aircraft. So we are paying the capital expenditure to buy the new aircraft, which is money we risk; the company takes that risk to buy the new aircraft in the order of billions of dollars. Our purchase is $3.8 billion for the C Series aircraft. So, no, I don't think Martha and Bob will see —
The Chair: Fred and Martha.
Ms. Ehman: Sure, Fred and Martha — while we're paying the bill to Bombardier.
The Chair: That's unfortunate. Actually, I've been flying Air Canada for 30-some years. Prices aren't stagnant.
Mr. O'Rourke: Base fares.
Ms. Ehman: Taxes and charges.
The Chair: Air Canada prices have gone up. I'm not saying they are the only one, but those prices have increased. In fact, I saw another increase just a little while ago.
Mr. O'Rourke: Compared to other goods, base fares are not increasing as much; they have increased less than the rate of inflation in the last five or six years.
The Chair: They have gone up.
Anyhow, I guess Fred and Martha won't get a break when you get the C Series — we'll probably see an increase — but it will interesting to see what you send to me.
I appreciate that. Thank you very much. They were good presentations. There is a lot to talk about and mull around.
(The committee adjourned.)