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Proceedings of the Standing Senate Committee on
Energy, the Environment and Natural Resources

Issue 1 - Evidence


Ottawa, Tuesday, March 26, 1996

The Standing Senate Committee on Energy, the Environment and Natural Resources met this day, at 9:00 a.m., to organize the activities of the committee.

Ms Line Gravel, Clerk of the Committee: I see we have a quorum.

Honourable senators, as the clerk of your committee, it is my duty to preside over the election of a Chairman.

Senator Kenny: I would like to nominate Senator Ghitter.

Ms Gravel: It is moved by the Honourable Senator Kenny that the Honourable Senator Ghitter be Chairman of the committee.

Is it your pleasure, honourable senators, to adopt the motion?

Hon. Senators: Agreed.

Ms Gravel: Carried.

Senator Ghitter, I would invite you to take the chair.

Senator Ron Ghitter (Chairman) in the chair.

The Chairman: Thank you, Senator Kenny, for the nomination.

Thank you for your support, senators. I know a number of our members are in Vancouver at the Globe '96 Conference.

At the outset, I would like to pay my respects to the Honourable Senator Carney, our past chairman, who did an outstanding job in many ways, directing us into new areas of concern, particularly relating to the environment. Senator Kenny's bill, passed in the last session, was very significant. I hope we continue to have an active committee, doing new things and moving on issues which are of interest to us. I have a number of ideas to share with the committee in that respect a little later.

The next item on the agenda is the election of the deputy chair.

Senator Rompkey: I move that Senator Kenny be the deputy chairman of the committee.

The Chairman: All in favour of that motion?

Hon. Senators: Agreed.

The Chairman: Carried.

Senator Kenny, it will be a pleasure working with you again.

May I have a motion regarding the Subcommittee on Agenda and Procedure?

Senator Kenny: I need some assistance from my whip as to who will be the third member of the steering committee.

Senator Hébert: I have no idea right now.

Senator Kenny: Then I move:

That the Subcommittee on Agenda and Procedure be composed of the Chair, the Deputy Chair and one other member of the Committee to be designated after the usual consultation;

That the Subcommittee be empowered to make decisions on behalf of the Committee with respect to its agenda and procedure;

That the Subcommittee be empowered to invite witnesses and schedule hearings; and

That the Subcommittee report its decisions to the Committee.

The Chairman: All in favour?

Hon. Senators: Agreed.

The Chairman: Carried.

I need a motion to print committee Proceedings. Do we need 600 copies?

Ms Gravel: We have many requests from witnesses. We have a mailing list, including universities. At its peak, the list has about 490 names. We can easily reduce the number of copies needed to 500.

The Chairman: In the past, how many copies have we printed?

Ms Gravel: We printed 1,200 at one time.

Senator Rompkey: Would it be possible to simply provide proceedings on request? This could be a way to save some money.

Senator Kenny: I move:

That the Committee print 500 copies of its Proceedings and that the Chair be authorized to adjust this number to meet demand.

The Chairman: All in favour?

Hon. Senators: Agreed.

The Chairman: Carried.

Senator Kenny: I move:

That, pursuant to Rule 89, the Chair be authorized to hold meetings, to receive and authorize the printing of the evidence when a quorum is not present.

The Chairman: All in favour?

Hon. Senators: Agreed.

The Chairman: Carried.

Motion 7 on the agenda refers to financial reporting.

Senator Kenny: I do not understand this motion.

The Chairman: As I understand it, we have the costs and the expenses of the past.

Senator Kenny: We must ratify those expenses.

The Chairman: That is my understanding.

Senator Kenny: That is our first report.

The Chairman: We will introduce it in the Senate for approval.

Senator Kenny: I move:

That, pursuant to Rule 104, the Chair be authorized to report to the Senate, as the First Report of the Committee, expenses incurred by the Committee in the last session.

The Chairman: Any discussion? All in favour?

Hon. Senators: Agreed.

The Chairman: Carried.

Item number 8 on the agenda refers to research staff.

Senator Kenny: I move:

That the Subcommittee on Agenda and Procedure be authorized to negotiate the contracts and retain the services of such experts as may be required by the work of the Committee; and

That the Chair, on behalf of the Committee, direct the research staff in the preparation of studies, analyses and summaries.

The Chairman: All in favour?

Hon. Senators: Agreed.

The Chairman: Carried.

Senator Kenny: Mr. Chairman, I would further move:

That we request authority from the chamber for this committee to televise its proceedings.

Then, if there is an event we want televised, we will not need to go back to the chamber, which may not even be sitting. I suggest we pass this motion now to receive the authority to televise our proceedings as the committee chooses.

The Chairman: Senator Kenny, it seems we have been through this before.

Senator Kenny: We need authority from the chamber to televise any of our proceedings. The committee has had this authorization in the past. The clerk can confirm that.

Ms Gravel: We have.

Senator Kenny: I consider this to be part of the boilerplate of getting a committee going. The authority is granted once, and that negates the need to go to the full chamber every time the committee hears something which it feels should be televised. This is not a requirement to televise; it simply gives us the authority to televise if we so choose.

Senator Berntson: Bill C-110, the veto bill, was an example of where this authority would have been useful. We did not pass such a motion to request authority for televising the committee, and the chamber was not in session when the hearings were held. Therefore, we could not televise.

Senator Kenny: Senator Kirby's committee got authority early on and receives terrific coverage on CPAC for much of its work.

The Chairman: That is a good idea.

Senator Rompkey: I agree with the motion to request authority to televise the proceedings.

The Chairman: All in favour?

Hon. Senators: Agreed.

The Chairman: Carried.

Senator Kenny: I would also move:

That the Committee develop a communications plan to be submitted with its budget.

We should endeavour to associate our communications plan with whatever work we choose to do over the course of the next year.

The Chairman: That is very appropriate. Any discussion? All in favour?

Hon. Senators: Agreed.

The Chairman: Carried.

The next item on the agenda is number 9. Do I have a motion?

Senator Kenny: I move:

That, pursuant to section 32 of the Financial Administration Act, authority to commit funds be conferred on the Chair or, in the Chair's absence, the Deputy Chair; and

That, pursuant to section 34 of the Financial Administration Act, and Guideline 3:05 of Appendix II of the Rules of the Senate, authority for certifying accounts payable by the Committee be conferred on the Chair, the Deputy Chair, and/or the Clerk of the Committee.

The Chairman: All in favour?

Hon. Senators: Agreed.

The Chairman: Carried.

Motion 10 involves the travelling and living expenses of witnesses.

Senator Kenny: I move:

That, pursuant to the Senate guidelines for witnesses expenses, the Committee may reimburse reasonable travelling and living expenses for no more than two witnesses from any one organization and payment will take place upon application.

The Chairman: All in favour?

Hon. Senators: Agreed.

The Chairman: Carried.

Motion 11 refers to a time slot for regular meetings. Are these the same as the last committee?

Ms Gravel: Yes.

Senator Rompkey: So moved.

The Chairman: All in favour?

Hon. Senators: Agreed.

The Chairman: Carried.

Senator Kenny: I have two other matters. One is related to the report we worked on in the last session. We never really got any points for that work.

I would like the committee to consider developing a plan - either with you, Mr. Chairman, or with Senator Carney - for a coast-to-coast tour to publicize the report. We spent much time and money developing that report. It is on a fast-track to the Parliamentary Library right now. I would be happy to see some sort of arrangement where Senator Carney was on the road - if she is prepared to do so - for about a week covering all the major regions.

You are the chairman of the committee. You were on the steering committee then. It may be appropriate for you to do this. However, I believe this committee has an obligation to the last committee to see that the report is properly aired.

Senator Berntson: Do I understand there has been no distribution of that report?

Senator Kenny: There was distribution of it, but it was done by Senator Carney after Parliament rose. She and her staff mailed it out to universities and libraries. We all got a letter from her detailing that fact. Frankly, she did what she could with what she had. However, sending out a report to a library does not get you anything. You need badger the Vancouver Sun and the Vancouver Province, and you need to get on television there. Then you should go to Calgary and do the same with the Calgary Herald and the Calgary Sun and then work your way east to St. John's. That process would reflect credit upon the committee and upon the Senate for doing this work. If we do not do that, we may have wasted our time and effort.

The Chairman: I agree, Senator Kenny. Much effort and good material was put into that report. It would be a shame if this transition period after prorogation caused the committee report to receive no attention in the public eye.

If the motion is passed, perhaps I could discuss it with Senator Carney.

Senator Kenny: She was certainly the driving force behind the report.

The Chairman: If she would be willing to do that, I would be happy to consult her.

Senator Kenny: The committee should fund her and provide her with whatever assistance is appropriate to see that it happens correctly.

The Chairman: Is there any further discussion?

All in favour of the motion?

Hon. Senators: Agreed.

The Chairman: Carried.

Senator Kenny: The second item relates to Bill S-7, the alternative fuels bill, which received Royal Assent on June 22 of last year. The first hurdle, which requires the government to purchase 50 per cent of its new vehicles as alternative fuel vehicles, comes up in 12 months at the start of the next fiscal year.

I had hoped this committee would hold some hearings, four hours in total, consisting of four panels for one hour each. We would call back the auto manufacturers, the fuel suppliers, the fuel distributors and the fleet managers and ask them what has happened in the six months that have passed and what is scheduled for the 12 months before the first hurdle arrives. There must be some planning.

I would like to hear the president of the Treasury Board, who is responsible for the bill. He should explain the regulations passed by the government in relation to the bill and the efforts taking place in each department.

After that, I should like to hear about the planning of the fleet managers in the major departments: the RCMP, who have the largest fleet, 6,000 vehicles; the Department of Defence; and the parks department. I should then like to hear from the alternative fuel suppliers on whether they have had problems selling their products to the government and from the car manufacturers on their progress in developing alternative fuels.

We had commitments from about a dozen fuel suppliers to increase the refuelling infrastructure by between $40 million and $50 million if Bill S-7 was passed. The bill has passed, and it is time for them to respond. I would like to hear from a representative sample of them and ask what spending has been done, what refuelling stations have been built and how their plans are coming.

Hearings can be a useful tool to give the government a little poke. We want to let them know we are watching and that we want to know what progress has been made since we passed this bill. We want to let them know that we are still around. The principle of the Senate revisiting issues is useful to reinforce in the government's mind that, if they do not play ball with us, we can always come back to them. A committee hearing on the progress of a certain bill can be an encouragement to bureaucrats and the ministry to ensure that the bill is a success.

The Chairman: I have not heard of that being done in the past, where the Senate would revisit a bill it previously passed to see what is happening. Help on that.

Senator Kenny: Senator Kelly struck a special committee on terrorism about eight years ago. I was a committee member. We had six months of hearings and came up with a set of what I thought were pretty good recommendations. We heard from police and other witnesses who came and nodded their approval. This was after the Turkish embassy incident, the nearby driveway assassination of a diplomat in the late 1980s and the Air India crash. We were becoming increasingly concerned about terrorism in Canada.

We issued a report and nothing happened. About a year later, Senator Kelly had had enough. He rose in the Senate and asked for authority to strike the committee again. We struck the committee and re-called all the turkeys. When they came back, they came back with results. The vast majority of the committee's recommendations were implemented only when they realized that the committee was still watching and not simply content to file its report in the library.

The Chairman: That was a report as distinct from a bill. Is there precedent on a bill where this has been done?

Senator Kenny: I am advised that the Standing Senate Committee on Banking, Trade and Commerce has come back to look at legislation.

This is not in direct answer to your question, Mr. Chairman, but in talking to a couple of ministers involved in the bill, their reaction was initially that such a review would be a pain for them. Then they changed their reaction to say that a review might get things moving better. I have not heard anyone say that the idea is a waste of time.

Senator Rompkey: It seems to me to be a good idea. People will sit on their hands unless they are prodded. I cannot think off the top of my head of instances where committees have re-formed to revisit specific bills. However, a committee would normally build into its agenda unfinished work from previous reports. The idea of review is not unknown to us. It is a good idea.

Senator Berntson: As a procedural question, do we have the authority to do that ourselves, or do we need something from the house?

Senator Kenny: We need a reference. That is why I am bringing it up now. In the letter that I wrote to the new members of the committee, I suggested April 2 and 9, but those dates are too soon, and Easter will likely interfere with the sitting. I suggest April 16 and 23 to give us more time to contact witnesses.

Having said that, I do not know how long the Senate will be sitting. Senator Berntson would know better than most, but my guess is that we would adjourn this week. If that is the case and the committee agreed, it would be helpful this week to request a Senate reference to revisit Bill S-7.

Do you expect us to be sitting next week?

Senator Berntson: My guess is no, but I simply do not know.

Senator Kenny: If we had a reference this week, we could get to work on it. I am asking the committee to give about four hours of sitting time to this. I do not see any legislation coming down the pike right now. I am suggesting that we do this in the first couple of weeks after the Easter break.

Senator Rompkey: The other point to be made is that this bill is unique. There are no shades of uniqueness, I suppose, but I cannot recall another instance where this sort of thing was done. Maybe Senator Kenny can because he has been in the Senate longer.

Senator Kenny: Three bills of a substantive nature have come from the Senate in the past 30 years. One was Senator Nurgitz' bill regarding consanguinity, the marrying of cousins; one was Senator Frith's on renaming an aspect of the CNR; and then there is this bill.

Senator Rompkey: A renaming bill is not as significant as actually getting the government to move to significant savings through alternative fuels. That particular bill was significant. I cannot recall another bill from a senator that achieved that much change. It is a landmark in that respect.

There is a wider issue here, too, which is the Senate itself. It would be a good thing for us to accentuate the positive and eliminate the negative. This is a chance to accentuate what is positive in the Senate.

The Chairman: In a reference, do we need to state dates? We could work that out.

Senator Kenny: No, we do not need to state dates. The reference would say that the committee wishes to revisit Bill S-7 to review its progress to date. The clerk would give us the exact words.

The Chairman: All in favour of Senator Kenny's motion?

Hon. Senators: Agreed.

The Chairman: Carried.

Senator Berntson: My colleague Senator Graham and I spend a great deal of time trying to manage this place as efficiently as possible. That means, in addition to other things, trying to spread the workload around to the various committees. As you know, some things fit better in some committees than others. Certain issues can easily be moved to fit in a number of committees.

One such issue on the horizon is the Devco issue raised by Senator Murray recently in the Senate. There has been much discussion and interest by senators such as Senator MacEachen. I do not know what else is coming down the pike for this committee early in the game, but this issue could be described as a social question; it could be described as an energy question. Others are trying to describe it as a finance question. However, those other committees have quite a bit of work over the next several weeks.

What is the view of this committee? What type of load do you anticipate? Would you have time for a quick, in-depth study of the Devco issue? A solid review should be completed in two or three weeks.

The Chairman: That is not a bill as much as it is an examination of an issue; is that it?

Senator Berntson: That is my understanding.

Senator Kenny: Does someone have an outline or a proposal for witnesses? Would there be 10 witnesses or 30 witness?

Senator Berntson: That is not in place yet, but I am sure it is being worked on.

Senator Kenny: Who are the brains behind this?

Senator Berntson: The main man is Senator Lowell Murray.

Senator Kenny: Perhaps he can give us an outline of what would be involved.

The Chairman: Does this arise from a motion made by Senator Murray?

Senator Berntson: Yes. Senator Murray put down his inquiry on Wednesday, March 20.

The Chairman: Was the essence of that motion to request a study be undertaken by the Senate?

Senator Berntson: There was some discussion on Senator Murray's inquiry relative to the situation at Devco. Reference has not yet been made to a committee, but there was agreement on the floor between Senator Murray and Senator MacEachen that that would be a good route to take having once identified which committee would have the best fit and the quickest turnaround.

The Chairman: Senator Kenny has suggested the possibility of getting more information. Then our steering could look at it, give you input and see how suitable would be for this committee to undertake such a study. Could we take it on that basis and examine it further?

Senator Berntson: I would see no problem.

The Chairman: From a workload point of view, other than Bill S-7, we may get the bill regarding MMT. There is much controversy around that bill, from what I read, but it may never come back.

Senator Kenny: He has a month to make up his mind. I have asked him, and he said he will take his month.

The Chairman: I will raise other matters for action by this committee. Perhaps we could take it on that basis for now. Senator Kenny, the third subcommittee member and I will discuss those things.

Are we all right on that, Senator Berntson?

Senator Berntson: Yes.

Senator Kenny: I have another motion to place before the committee, Mr. Chairman: I move:

That the Committee write letters to Sheila Copps and to Sergio Marchi reminding them both of the commitment made by Mrs. Copps as Deputy Prime Minister and Minister of the Environment to amend Bill C-83 to include reporting to the Senate.

Minister Copps, sitting right there, made that commitment to us. We were concerned about her switching portfolios. The letter should say that we still hold her personally to her commitment as Deputy Prime Minister. We should also write to Mr. Marchi and say that this commitment was made on behalf of his government and that we expect him to fulfil it on behalf of his government.

We can offer to have the bill to amend C-83 introduced in the House of Commons or in the Senate. One way or another, that commitment to this committee and to the Senate has not been fulfilled. That bill was passed on the condition that we would be part of the reporting procedure in the future.

The Chairman: Is that a motion?

Senator Kenny: That is a motion, giving you authority or asking you to make that communication.

The Chairman: All in favour?

Hon. Senators: Agreed.

The Chairman: Carried.

We will draft the letter first and let you look at it before we send it on, Senator Kenny.

Senator Kenny: I am in favour of a firm letter, Mr. Chairman.

The Chairman: Those are the best.

Senator Rompkey: Will we lose a quorum if I leave? I need to be in the social affairs committee shortly.

The Chairman: There are no further motions. We will have some general discussion.

I would like this committee to get back into the energy sector. I have had a discussion with David Manning, the executive president of CAPP, at a dinner for Paul Martin in Calgary last week. As a result, it may be useful if the committee went to Calgary, met with CAPP and looked at present and future issues. They would be happy to entertain us. Perhaps we can go up to Fort McMurray and take a look. There is much renewed interest by the government in Fort McMurray.

Perhaps we could renew our profile in the energy sector. I do not know that there are specific issues out there, but it seems they want to tell us about what is going on. It seems appropriate, if this committee is of that mind, to we organize a trip out west to meet with officials in the oil and gas sector to see what they are facing and what their prognosis is for the future. If there are issues we should investigate, issues which may in the long term be relevant, then we can spend time looking into them. I wanted to get the view of this committee on whether that makes sense and whether we should explore it. I know we would be welcome.

Senator Kenny: It makes terrific sense. I see it as a fact-finding trip to bring the committee up to speed. I do not think there are any burning issues in the oil patch now in relation to Ottawa, but, having said that, the committee in general is out of touch with the industry. To go back and hear the views of people out west about the interesting changes that have taken place over the last five years, including the trip to Fort McMurray, would be very attractive.

If I were to tag something onto that, it may also be useful to look at California and the market down there. It has been a while since we visited that area. Over the past decade, this committee has made two trips to Sacramento and San Francisco with a view to finding the root of the problems with Canada's major gas market. Those things are coming into place. Having said that, California will continue to be our major purchaser in the foreseeable future.

In the past, the committee has found it to be an enlightening experience to discover the direction of that market and the direction of the environmentalists who are active in Sacramento. What happens there is usually about a decade ahead of what happens here. I do not know whether it could be done as part of the same trip or as a separate trip, but there is a direct flight out of Calgary. That may be the most economical plan.

The Chairman: Let us pursue that. We would be welcome if we were seen out there. The industry seems to like the idea very much. The board of governors of CAPP would meet with us.

Senator Kenny: Would we also call individual companies? Would we hear from some majors, some juniors and some intermediates? Would we look for a balance between gas producers and oil producers, or would we just settle for the board of CAPP?

The Chairman: While we are out there, I think we should meet with the various parties. There are different hierarchies in the oil and gas sector. Certain individuals would be interested in meeting with us, such as Ted Newell.

There is a great internationalization going on in Calgary right now. Companies like Nova are going into Argentina. Interesting issues flow from that.

Senator Kenny: Ian Doig has always been an interesting witness for us. He always has pointed views.

The Chairman: I just heard them two days ago, as we were sitting on bikes beside each other.

We will work that out in our steering committee.

Senator Kenny: What sort of timing do you have in mind, Mr. Chairman?

The Chairman: I do not have any idea at this point in time, but perhaps within the next three months.

Senator Kenny: Are you speaking of May?

The Chairman: Yes.

Senator Kenny: Will you ask for a reference this week?

The Chairman: I had not thought that through, Senator Kenny. While we are asking for the references, perhaps we should just do it.

Senator Kenny: My view is that we should ask for a reference that includes this and other such matters that come to the attention of the committee. I am always in favour of having a broad reference from the chamber.

Senator Ghitter: The clerk and I discussed a mandate to examine issues relating to the oil and gas sector and the environment as we determine them.

Senator Kenny: The fear is, as Senator Berntson said, when the chamber is not sitting and a hot issue comes up, we want to get onto it right away. We need a catch-all to give us authority to act as quickly as we can.

The Chairman: This morning our clerk gave me a mandate so broad you could put a kitchen sink into it. I said to the clerk that it might be too broad.

Senator Kenny: It is difficult to find a mandate which is too broad.

Senator Berntson: If the mandate is broad enough, you could go to Great Britain and look at mad cow disease.

Senator Kenny: We could even study Devco.

The Chairman: Senator Spivak sent a letter to our clerk regarding two items. As a last matter, we should take a look at this letter. When I read it, I thought the first item would be of great interest to us.

Senator Kenny: This could be done over a Wednesday lunch.

The Chairman: I thought it would be interesting to hear from Ms Comeau. The second issue is much broader.

You spent a lot of time looking into that particular issue, Senator Kenny. Perhaps we could talk further about that.

Senator Kenny: It does not attract my personal interest.

The Chairman: Nor mine.

Senator Kenny: Perhaps we could put it to the full committee.

The Chairman: We will ask if other members have a large interest.

On the first point, I suggest we make arrangements to have Ms Comeau come and talk to us in that regard. The second issue will be brought forward at our next meeting.

If there is nothing else, the committee stands adjourned.

The committee adjourned.

Ottawa, Tuesday, April 30, 1996

The Standing Senate Committee on Energy, the Environment and Natural Resources met this day at 9:00 a.m. to consider its order of reference on the monitoring of all matters related to the implementation and application of the the Alternative Fuels Act.

Senator Ron Ghitter (Chairman) in the Chair.

The Chairman: Good morning, honourable senators. As this is the first meeting of the Standing Committee on Energy, the Environment and Natural Resources, I am sorry that, owing to illness, Senator Kenny could not be with us, since he was the prime mover of this legislation and is deeply committed to it. It was at his urging that the committee decided to meet again in order to examine the situation that has evolved since the legislation became law.

I understand that each of the witnesses this morning will make a five-minute presentation. After that, if it is the wish of the committee, we can then ask questions. Assuming that is acceptable, I would ask the witnesses to introduce themselves. I have no preference as to who begins, but possibly we could start on the left with Correctional Services Canada.

Mr. Gerry R. Hooper, Assistant Commissioner, Technical and Information Management Services, Correctional Service Canada: Honourable senators, my name is Gerry Hooper. With me today is Mr. Ernie Hughes, our assets management head.

Mr. Neil MacLeod, Director General, Assets Management and Administrative Services Branch, Corporate Services Sector, Natural Resources Canada: I am from Natural Resources Canada. My name is Neil MacLeod. I am the Director General of Assets Management and Environmental Affairs.

Mr. Bill Jarvis, Director General, Energy Efficiency Branch, Energy Sector, Natural Resources Canada: My name is Bill Jarvis. I am also from Natural Resources Canada. I am Director General of the Energy Efficiency Branch and have responsibility for alternative fuels policy.

Colonel Jim Stewart, Director of Transport and Movements, Department of National Defence: I am Colonel Jim Stewart, Department of National Defence. I am the Director of Transportation and Movement. With me this morning is Mr. Dennis Umrysh, Director of Support Vehicle Program Management.

Mr. Frank A. Richter, Assistant Comissioner, Director of Finance and Supply, RCMP: I am the Director of Finance and Supply for the RCMP. With me are Mr. Alfred Dupuis, Officer in Charge, Materiel and Services, and Mr. Keith Paremain, Officer in Charge, Fleet Program Administration.

The Chairman: Thank you, and welcome. Shall we start at the left, with Correctional Services, and move along that way? Would that be acceptable, gentlemen?

[Translation]

Mr. Hooper: First let me say that we are very pleased to be given the opportunity to discuss our environmental initiatives, and this act in particular, with the committee.

[English]

In opening, I would like to say that Correctional Services Canada is in full support of this legislation, and as part of our service-wide environmental program we have been moving away from conventional fuels since 1993.

Our general program covers reduced energy and water consumption, reduced waste and a move to more use of less traditional fuels. Obviously, we consider vehicles as part of this program, and in 1993 we converted our first vehicles to natural gas.

[Translation]

Perhaps I should give you particular details of our vehicle fleet.

The Correctional Service of Canada operates 1,040 cars and trucks across Canada, and we replace approximately 20 per cent per year on our normal replacement cycle.

[English]

Currently, we have 114 alternative fuel vehicles operating on a range of alternative fuels: propane, natural gas, methanol blend and electricity. For the fiscal year 1996-97 we hope that more than 50 per cent of the vehicles we acquire will be powered by alternative fuels, which will bring our fleet profile to more than 205 alternative-fuel vehicles.

Why do we say "hope to"? Well, for several reasons. For us, of course, the first issue is funding. While there has been great corporate support for our environmental program in the past, starting with the personal support of our then, and still current, Commissioner, John Edwards, we have to recognize that there is a cost premium in acquiring alternative-fuel vehicles, and this is problematic as we are also actively reducing our budgets.

We estimate that we currently pay premiums over conventional-fuel vehicles in the range of $7,000 for a natural gas vehicle, $2,000 to $4,000 for propane-powered and $2,000 for methanol-blend vehicles. We see two reasons for this: there is the increased cost of the vehicle itself, given its power source and the fact that we sometimes have to buy vehicles larger than we need in order to get that capability of alternative fuel.

Next year, our replacement cycle would call for us to acquire approximately 200 vehicles. Fifty per cent of those are to be alternative-fuel vehicles; at least that is our intention. In the worst-case scenario - and I stress that it is the worst case - that could be an additional $700,000, and within the correctional service we face stiff competition in finding the funds to pay that premium. So far we have been successful, but as the budget cuts go deeper, the fight gets a little fiercer.

[Translation]

We also need to acknowledge that for some of our sites, we must convert our current fuel tanks to allow us to provide alternative fuels. This requires time and money, but we believe it will not pose a really significant barrier.

Also, in some regions of the country, we accept that availability of alternative fuels in remote locations can be an issue, though that is rapidly changing, and should not pose any barrier to us meeting the targets set out in this legislation.

[English]

At the moment, however, it does cause us some difficulties. As to our plans for the future beyond this year, of course we will continue with our target of acquiring 50 per cent of our replacement vehicles as alternative-fuel vehicles. We hope to improve our infrastructure to handle alternative fuels, and we will attempt to regularize our funding source, which to this date has been begged, borrowed and bribed, in order to meet increased acquisition costs. We also hope that these cost premiums will drop over time, and that we will succeed with our target, which is to meet or exceed the standards laid out in the legislation.

Within the correctional service there is no opposition to this at the operational level. We have been lucky to have general support, although there is some uncertainty based on previous experience. However, so long as the operational performance of the vehicles remains acceptable, we view this uncertainty as transitional. But we also acknowledge that, compared to many departments, we are lucky in our operational requirements in that they are quite predictable and quite known.

Driving around and around a perimeter is really rather predictable to foresee and to plan for; and trips from the institution to a local hospital are quite predictable. We know that some of our colleagues do not have that kind of luxury, but for us it means that we can approach the future with some confidence.

In summary, Mr. Chairman, we believe that we are on our way, and, with the funding issue to be resolved, we should meet our targets as set out in the legislation.

The Chairman: We will hear next from Natural Resources Canada. Mr. MacLeod?

Mr. MacLeod: Mr. Chairman, using just a few slides here this morning, we would like to demonstrate that Natural Resources Canada, in terms of the internal management of its fleet, is not only committed to alternative transportation fuels but has taken action in that regard. Indeed, we have demonstrated progress as well. It is perhaps worthwhile, at the outset, to situate Natural Resources Canada in terms of the number of vehicles in the fleet, compared to other government departments.

Looking at the slide, that grey slice that is pulled out, as you can see, represents less than 3 per cent of the number of vehicles in the federal fleet. But even with a smaller number we think we can still demonstrate leadership in our department.

Our approach to transportation fuels is really part of a larger approach to fleet management, and we wanted to put our actions in the area of alternative fuels into that context. We have three major lines of action: we want to reduce the overall size of our fleet; we want to improve the energy efficiency of our fleet; and we want to advance the use of alternative transportation fuels. Clearly, the latter two are linked, but we wanted to pull out alternative transportation fuels because we have specific actions there.

In terms of reducing the size of our fleet, at the end of 1994-95 we had 700 vehicles. Our intention is to reduce that to 420 vehicles by the end of 1997-98. That is a drop of 40 per cent. Mr. Chairman, one thing that helps us manage the fleet in Natural Resources Canada is that we have commitment right at the top. That 40 per cent figure came from Minister McLellan.

We are able to do this in two ways. It is no secret that ours is the department most affected by this legislation. We are having significant program reductions - about 25 per cent; so that does help, naturally. But, in addition, we have increased the use of vehicle pooling so that people now share vehicles much more than they did in the past. As a matter of fact that sharing is not confined to just our department; we have begun some interesting initiatives as between departments. For instance, our colleagues from Agriculture Canada are very interested in making use of our pools because they, as well, want to reduce the size of their fleet.

We have an interesting case in Edmonton where we have had for a number of years a sizeable office. Our people there need the vehicles only from about May until October. We found out that Revenue Canada has a need for similar vehicles from October to May. So we share the same vehicles; it is a good deal for the taxpayer.

As I mentioned, I would like to demonstrate some of the progress we have made. In terms of our fleet reduction, this red line on the chart indicates the operation of the plan from the end of 1994-95 to the end of 1997-98: 700 vehicles down to 420. The green squares represent actual observations of how many vehicles we have had at different times within that three-year period. You can see that our actuals are virtually right on the plan, and we do not foresee any difficulty in achieving our objective of 420 by the end of 1997-98.

Whereas in 1995-96, Mr. Chairman, we were emphasizing fleet reduction and alternative fuels, this year we intend to put far more emphasis on the energy-efficiency aspects, the additional alternative fuels. We will be implementing driver-education programs, with a view to making them compulsory before employees can even use a vehicle, improving our vehicle maintenance practices, and involving group planning, at least on a small scale to start off. There are also small-scale, on-board computer systems that show great promise for increasing fuel efficiency. However, we intend to be careful here, trying it out in one or two cases first, to see if it proves out.

With respect to alternative transportation fuels, we believe that as of 1995-96 we have effectively begun to implement the Alternative Fuels Act, and our goal is to be cost-effective in converting 100 per cent of our fleet through new purchases. We are committed to making sure that 100 per cent run on alternative transportation fuels where it is cost-effective and operationally feasible. We are committed to using all options - methanol, propane, natural gas, and ethanol blends, and we have developed partnerships with the industry. In conclusion, we expect the benefits of the plan to be lower fuel costs and reduced emissions.

An interesting aspect here is that we have been able to use the reduction arm of our program to contribute to the alternative-fuels arm. In other words, we have taken the proceeds from our disposals and used them to fund the costs of conversions. These have worked out to be virtually identical; so this is a non-incremental cost to the taxpayer as we operate it within Natural Resources Canada.

As I have indicated, other departments are watching us carefully. They are glad to see what we are doing; they want to learn from what we have been doing; and we have been able to help the industry as well.

The Chairman: Mr. Jarvis, did you have anything to add to that?

Mr. Jarvis: Not at this time, Mr. Chairman.

Senator Nolin: Would it be possible to have a copy of your high chart?

Mr. MacLeod: Yes. I have handouts for everyone.

The Chairman: You might give the handouts to our clerk and he will pass them around.

Next we will hear from Colonel Stewart of the Department of National Defence.

Col. Stewart: Mr. Chairman, I would begin by briefly outlining the vehicle inventory baseline we will be using to determine the potential for alternative-fuel applications.

Vehicles in the Department of National Defence support two distinct roles. The first is the operational and the operational-support role, and the second is the administrative fleet role. The first role encompasses vehicles that can be deployed in, or in support of, military operations. This includes: tactical vehicles, such as specially designed heavy-armoured vehicles; light, medium and heavy military utility vehicles; and selected mobile support equipment, such as crash and fire rescue vehicles.

These vehicles are not actively being considered for ATF application, for reasons associated with one of the main eligibility criteria identified in the bill, which is operational feasibility.

The second role is the administrative fleet role, which encompasses equipment ranging from standard, commercial, light vehicles to more complicated equipment, such as the equipment required for construction engineering, materiel handling, airfield and aircraft ground support, snow and ice clearing, and heavy transport. Within this administrative fleet the number of vehicles - automobiles, passenger vans and light duty trucks - and therefore the size of the pool from which potential vehicles for ATF conversion will be drawn, and what I will refer to as the target fleet, is approximately 4,200 vehicles.

I would like to note, as I think you all know, that DND has embarked on a major downsizing initiative that will result in the reduction of significant elements of the department's infrastructure. While we cannot specifically pinpoint the impact of that reduction on our future vehicle fleet holdings, we do know that our holdings will be lower, thereby in turn affecting the baseline of the target fleet.

In fact, in some respects that downsizing may have a bit of a negative effect on some new procurements we have, because we may end up with a surplus of vehicles that are too new to be disposed of and are therefore not available to take care of any of the new requirements that come along. At least, that may be the case in the short term.

I should emphasize, however, that it is the department's intention to consider a very broad range of equipment for ATF conversion. We note that the definition of "motor vehicle" in the bill itself and in the draft Treasury Board policy is not restricted to automobiles, passenger vans and light duty trucks. Notwithstanding, I think we will all agree that this particular category, if you will, represents the greatest potential for transition.

The Department of National Defence has developed a three-phased ATF fleet transition program. The first phase encompassed developing an overall strategy; to that end we brought every one of our fleet managers into the national headquarters here in Ottawa to discuss how we were going to implement the program. We have completed that. We are now into the second phase, which is actually the heart of our ATF fleet transition program review. It requires the completion of a detailed fleet-wide assessment to identify those vehicles suitable for transition to ATF application in consideration of the key Bill S-7 aspects of operational feasibility and cost effectiveness, as well as the draft Treasury Board fleet management policy guideline that stipulates that ATF vehicles must use fuels with greater than 50 per cent alternative-fuel content to qualify to meet procurement needs.

There are four steps to our assessment process. After identifying which alternative fuels are available in the local area, bases and wings will determine which fuel is the most suitable for their operation, and that will be based on the following: cost, which will include any potential requirement to construct or in fact reconfigure dispensing facilities; the availability of retail distributors; vehicle range and distance requirements; and any other local considerations.

Once suitable ATFs have been identified, fleet managers will consider each candidate vehicle's operating employment to determine if that employment in fact supports transition to an alternative fuel. Of particular concern to us are vehicles which on the one hand are regularly employed in the local area, but which are also subject to deployments to regions where alternative fuels may not be available. Examples include vehicles used by our mobile repair teams, or flight-line resources deployable to support off-base flying operations, or indeed administrative vehicles that are assigned to support military formations that are exercising in the field. I should emphasize, however, that such applications do not preclude consideration of bi-fuel or flex-fuel vehicles.

Having determined the portion of the fleet best suited for further ATF transition consideration, fleet managers will complete a business case analysis to identify which vehicles may be operated more cost effectively using alternative fuels. This comparison will include not only the fuel cost relationships but also the associated capital costs, disposal revenues, operation and maintenance costs, and related vehicle life-cycle factors.

Business cases will be based on the best estimates available at the time of the calculation. Where ATFs are either more cost effective or on a par with gasoline, that particular vehicle or vehicle type will be targeted for transition. Of course, we will not follow the "on a par with" to the letter. If the cost analysis, for example, is modestly negative - and we would have to determine just what "modest" meant - and all other considerations supported it, we would opt for an ATF vehicle transition.

The final stage of phase 2 integrates the ATF vehicle requirements into appropriate departmental business plans primarily at the Formation/Base/Wing levels, and rolls up a five-year forecast detailing the planned DND, ATF fleet transition program. Fleet managers will identify ATF replacements for fiscal year '97-98 and forecast ATF requirements for the subsequent four years. A last staff check prior to ordering will be required when final individual standing offer vehicle pricing is available to ensure that the business-case estimates were in fact correct.

Our last phase will commence with the procurement and operation of ATF vehicles. It is important, however, to note at this point that the harmonization of our vehicle requirements definition, funding allocation, and equipment acquisition cycle with the conduct of our ATF review will mean that the assessment process could be completed in sufficient time to affect, in fact, a portion of this year's vehicle acquisition program; that is, fiscal year '96-97. We will move towards doing that as much as we can.

Now, overlapping what I have said, we will also be embedding ATF considerations in all DND vehicle fleet management policies, directives and training. As well, to facilitate accurate monitoring and reporting, we are looking at how we can enhance one of the department's main vehicle fleet operations management tools - and that is the Base Automated Transport Operations System - to capture data related to vehicle fleet operations using alternative fuels.

We have made a fair amount of progress, I think, towards "greening the fleet." We have a history of alternative fuels in the department. We were very much and very deeply involved in the earlier propane alternative fuels project. Currently, within the department, we have about 200 vehicles which are currently equipped to operate on propane and methanol, but primarily propane. The majority of these vehicles have reached the end of their useful life and are, in fact, due for replacement. As well, and as an interim measure, many locations have begun using more environmentally friendly fuels to power their conventional vehicles. Indeed, all bulk diesel fuel in DND is of the low sulphur diesel type.

Finally, the department will participate in Natural Resources Canada's ATF demonstration project, and DND will acquire and commit up to 20 light vehicles to the program.

In conclusion, Mr. Chairman, we appreciate the opportunity to brief you on our plan for implementing Bill S-7 and apprising you of the current status of that implementation. The department is committed to supporting the legislation and is taking the actions required to pursue the goals outlined in the bill, taking into consideration, of course, the realities of funding availability and priorities.

The Chairman: We will hear now from the RCMP. Commissioner Richter.

Mr. Richter: On behalf of the RCMP, I would like to present some logistics that we are addressing as we develop policy to meet the requirements of Bill S-7, without compromising our ability to fulfil our policing mandate, without jeopardizing the health and safety of our members and the public or the optimization of our vehicle life-cycle costs.

The RCMP uses approximately 8,000 vehicles to fulfil its mandate in the preservation of peace, the prevention of crime and the investigation of offences against the laws of Canada and the laws in force in any province in which we are employed as the provincial or municipal policing agency. Currently, the 13 operational divisions of the RCMP operate their vehicles from 707 detachments, often for 24 hours per day. These detachments have law enforcement responsibility and are funded by, and are financially accountable to, the federal as well as the provincial and municipal levels of government where we have policing agreements, which is in all provinces and territories with the exception of Ontario and Quebec and approximately 200 municipalities.

With a few exceptions, the RCMP does not provide municipal policing in communities with populations exceeding 50,000 persons; in other words, we are largely in small town Canada. Moreover, we are not concentrated in heavily populated metropolitan areas but are widely dispersed in rural and remote areas. The operating areas are generally much larger than those in which regional or municipal police forces operate. In many of these areas, gasoline is difficult to obtain, especially outside normal business hours, and alternative fuels and their supporting infrastructure are currently either very sparse or actually non-existent.

Most RCMP vehicles are unique compared to those of other government departments; that is because of the increased performance requirements demanded from emergency response vehicles. We develop our own vehicle specifications, and I believe a copy of those has been provided to this committee; those specifications comply with Treasury Board's motor vehicle policy. We develop those specifications in conjunction with the North American police market and the same "specs" are used in North America.

Our specifications contain four vehicle classes representing 24 types of vehicles, as well as options which are unique to our operational requirements. Because of their unique features and relatively low production volumes, police vehicles are usually manufactured in batches and are not continuously available from a production line. In addition, because United States emergency response vehicles are exempt from the U.S. equivalent of Bill S-7, the manufacturers emphasize the performance of these vehicles rather than the fuel consumption and the emission features.

Availability of supply from original equipment manufacturers, therefore, creates some delivery problems. Forty per cent of the approximately 2,400 vehicles that the RCMP purchases each year are highway patrol cars. As of the model year 1997, the only vehicle suited for this purpose will be the Ford Crown Victoria. The "Michigan Police Trials" - a copy of which we provided to you in terms of their study - is the testing standard that is used in North America; those trials have demonstrated that the Crown Victoria converted to natural gas has significantly less satisfactory performance.

The remaining 60 per cent of the RCMP fleet consists of a variety of vehicles used for applications such as VIP transportation and protection, surveillance, undercover work, prisoner transportation, bomb disposal units, canine units and administration.

While many of these specialized vehicles may be located in a metropolitan centre, they frequently have a larger operating radius. For example, vehicles doing surveillance work and generating low kilometerage are frequently rotated to highway patrol to compensate or to maximize their usefulness.

The automobile manufacturers have been downsizing cars as they work to meet fuel consumption and emission standards. Even full-size cars in which police officers may spend up to 12 hours per day have been reduced in size. This downsizing is creating some difficulties for all police forces as we try to pack ever more equipment into the vehicles in order to combat crime.

More equipment than ever before has been installed in the trunk. Many alternative fuel tanks intrude into this trunk space. Alternative fuels have less energy per litre or kilogram than does gasoline, and combined with the space requirements of pressurized tanks, fuel storage takes more space for an equivalent distance. This is creating concerns, not only because of the limited space, but also because of the possibility that volatile fuel might leak and then be ignited by electronic equipment and thus detonate ammunition, since all of these things have had to be located in the trunk space.

I would like to emphasize, though, that the RCMP wholeheartedly endorses the environmental philosophy of Bill S-7. However, in the short term, based upon the information I have just given you and upon additional factors, the RCMP anticipates that it will be unable to fully comply with the initial schedule of Bill S-7.

Unless there are dramatic and extremely rapid technological developments by the automobile industry and a dramatic expansion of the distribution networks and infrastructure of the alternative-fuels industry, we believe that the cost effectiveness and/or operational feasibility will make these fuels less viable for the majority of the RCMP vehicles.

Today, the RCMP is having to provide its services in an environment of escalating costs - a situation not a great deal different from that of my colleagues. We have reduced budgets, reorganization and restructuring, and fewer personnel. To meet some of these challenges in the short term - that is, in this coming year, the RCMP is taking several initiatives which should provide us with both operational and user feedback as well as an opportunity to determine the cost effectiveness of these initiatives.

Natural gas and propane vehicles with suitable operating profiles are being introduced in whaat we call "viable operating areas" in a pilot program. Smaller "police spec" vehicles are being introduced, and devices which are expected to reduce fuel consumption and emissions are being installed. The information received from these programs will be analyzed, and satisfactory solutions to any problems will be identified and sought with our partners, the manufacturers and suppliers of alternative fuels. The number of vehicles involved will be expanded as time goes on, and in addition, new developments and technology will be studied for opportunities to expand our program.

In the medium term, between 1997 and the year 2000, we expect to expand our short term initiatives based on new and improved vehicle technology combined with expansions of the alternative-fuel industry's capabilities. In addition, we will actively seek niches where certain applications will permit the use of alternative-fuel vehicles, such as large municipal detachments, which will be more operationally feasible and cost effective. We will also explore any new opportunities that become available.

The long-term plans have not been formulated beyond that, but will be developed on an ongoing basis. I look forward to working with and in cooperation and consultation with the vehicle manufacturers and the alternative-fuel industry. The RCMP, as you can see, with 8,000 vehicles, has the largest single departmental use of vehicles in the federal government. Therefore, we have the largest potential for gain, and I would endorse and support this initiative.

I guess my only comment at this point is that we are being cautious, to some extent, to ensure that we can demonstrate the cost effectiveness and the operational suitability of these alternatives for our personnel.

I will be pleased to answer any questions.

[Translation]

Senator Nolin: First of all, let me congratulate the representatives of these various organisations for their efforts to understand at the very least the aims of this legislation which initially seemed somewhat disconcerting. I would like to thank you for participating along with Senator Kenny in the drafting of this bill. Thank you for your efforts.

I have a number of questions for anyone who would like to take a stab at answering them. Treasury Board must put in place the regulatory framework and the policy plans for implementing this legislation. Have you, the RCMP, been invited by Treasury Board to take part in the process? Are you satisfied with the way in which this policy is being formulated? Among other things, you mentioned motor vehicle manufacturers. Have these parties been adequately involved and interested in the policy formulation process? Would you care to make any recommendations, quite freely, of course?

Mr. Alfred A. Dupuis, A. OIC Material and Services Management Branch, RCMP: We have had discussions with Treasury Board. At the last meeting, it recommended that we set up a sub-committee to stop the departments from going off in all directions. I asked that Natural Resources Canada be the principal program operator. We participated in this committee.

We would like to see the gas suppliers and manufacturers come before this committee to explain the advantages of these vehicles and the advances that have been made in this field. When the bill was first tabled, people were knocking on our doors across Canada. They were wondering if they should convert because it all sounded very nice. This matter should be handled by the sub-committee on which we sit.

As Commissioner Richter stated, we have no objections to the bill. We do not want to see a repeat of the situation 15 years ago when propane fuel was introduced. A number of problems occurred. Automobiles refused to start in the winter. Our operations were affected. Along with Treasury Board, we try to monitor the situation very closely.

We have launched a pilot project involving the use of propane and natural gas. We want to see other devices installed on motor vehicles. These devices are fitted on vehicles that use regular fuel to assess the impact on the environment.

Senator Nolin: Regarding the budgetary concerns that Mr. Hooper raised earlier, if it is going to cost twice as much to convert the vehicles, I am not saying that we should not implement this legislation, but at the very least, we should devise appropriate ways of ensuring enhanced coordination between the motor vehicle manufacturers and the buyers.

Is the operations committee planning to purchase these vehicles? The manufacturers have come before this committee and testified that the purchase price could be significantly reduced if more than two or three million vehicles were purchased annually. Your concern is quite valid. Is your committee giving any thought to group purchases?

Mr. Dupuis: We work with our colleagues from the government purchasing service. However, we approached the manufacturers last year at the time the bill was introduced. The manufacturers informed us as to which motor vehicles would be available. We ordered Ford Crown Victorias. Delivery of the vehicles ordered for the pilot project has been delayed.

Senator Nolin: We would have liked to have the bill ready earlier.

Mr. Dupuis: The manufacturers must meet our long-term demands. We want them to work together with the companies installing these fuel systems. Last year in Texas, we watched a demonstration of vehicles that operate on natural gas. An explosion in the air filter occurred. The GM manufacturers witnessed the demonstration. We want assurances that the necessary modifications will be made. There could be a danger for our employees.

Another time, people were standing around the vehicle and the hood popped open. We were told that this defect would be corrected. The manufacturers claim that they are not responsible. We want to know that the manufacturers are satisfied and that the vehicle warranties will be honoured.

Senator Nolin: The legislation is scheduled to come into force on April 1, 2004. Treasury Board and the various agencies have been given all the time they need to coordinate in the best possible way the efforts of the manufacturers and those who maintain the vehicles, and to address warranty and cost concerns.

[Translation]

The legislation will have a spin-off effect on the general public. When the federal government adopts an important policy such as this one, the hope is that it will have a beneficial effect. The time factor is important to us. It is pointless for us to impose legislation that cannot be implemented in a short period of time.

[English]

The transition phase is critical to ensuring that the message is getting across. I think that it is. Everything is in place to facilitate an efficient, cost-efficient transition. Would anyone else care to comment on this matter?

Mr. Dupuis: Indeed, as my colleague has mentioned, Natural Resources Canada is working closely with Treasury Board and Environment Canada to provide the various tools and policies that will help implement Bill S-7, and indeed the program with respect to the fleet, which includes all the aspects that my colleague mentioned in his presentation.

We are currently negotiating with the automobile industry in two fora. First, we are negotiating under the National Air Issues Coordinating Council. Secondly, as a result of a study by the Canadian Council of Ministers of the Environment, we are proceeding with a consultation with industry, both the manufacturers of automobiles and the fuel-producing industries, to see if we can develop agreements between the automobile manufacturers and the fuel-producing industries, and their clients, if that is possible, to break through the difficulties that my colleague has pointed out.

There is no doubt that the success of the implementation of Bill S-7 will require some further developments from the side of the automobile manufacturers. The number and range and variety of alternative-fuel vehicles that are produced as original vehicles from the manufacturers is still quite restricted. I think the comments from all those who are participating in the program around the table has demonstrated that.

As I said, we have one consultation now under way with the vehicle manufacturers and the fuel producers and we are set for a workshop early in the summer to discuss the possibility of making arrangements between the fuel producers and the automobile manufacturers effectively to deliver vehicles where they are needed, when they are needed, for purchase orders.

The other framework that we have with the automobile producers is a memorandum of understanding between the North American motor vehicle manufacturers, represented by the Motor Vehicle Manufacturers Association, and the major offshore manufacturers to discuss the process and mechanisms by which we can implement a whole range of policies including energy efficiency, the incorporation of technology, help in training drivers, and the applications of alternative-fuel vehicles.

This process is not going to be easy. The manufacturers are pushed back and forth by the processes in the United States, and the ebb and flux of the laws and the markets in the United States, as well as the markets in Canada. But they have come together with us in all seriousness to try to find mechanisms whereby we can find ways to deliver the right vehicle at the right time to the markets that we hope will be developed under Bill S-7.

Col. John Stewart: I think it is important to underscore the kind of cooperation and coordination that takes place among all of the players in this game. We are, as fleet owners and managers, all in the same boat, so to speak. We all have a commitment to do whatever it is that we can do to achieve the goals of the bill.

While we may all have different operating circumstances and may also have different factors bearing upon the way we conduct our various cost and business analyses, the kind of cooperation and coordination that we do have allows us almost to feed off each other. We learn from each other's situation. We have an opportunity to deal with Natural Resources Canada and the Treasury Board regarding the particular factors that bear on what our business is and how we have to go about conducting that business.

So the environment and the framework for the right kind of consultation, the right kind of coordination and the right kind of cooperation is there, and we are all very full participants in that. Certainly from DND's point of view, we have had every opportunity we needed to speak with Treasury Board regarding the life-cycle cost factors affecting how we manage our fleets. We have also had the opportunity to deal with Natural Resources Canada on the cost-analysis program they are coming out with, and we have offered to test their software for that program; in fact, I think we are getting a copy of it next week.

I simply wanted to underscore the importance that, collectively, we see in that kind of coordination and cooperation. I think that that, in itself, is a significant enabler to our coming together to achieve here what it is that we want to achieve.

The Chairman: Unless anyone else wishes to comment on Senator Nolin's remarks and questions, Senator Spivak has a question.

Senator Spivak: This is very useful and interesting information to those of us who went through the initial stages of the legislation.

I have two basic questions here. It seems to me that in the Department of Natural Resources you give priority to the things that can be done right away: reduction of fleet size and energy efficiency. Am I right in saying that you are placing priorities? I wonder whether the other departments are also prioritizing in that way, that is, looking at reducing fleet size and opting for energy efficiency, because of the natural obstacles that we all know about in terms of infrastructure and manufacturing of alternative-fuel vehicles.

In particular, I would like to ask the gentlemen from the RCMP this question: I note that with a fleet of 8,000 vehicles you are purchasing 2,400 each year. Is that going up or down, or is that normal? What is the rationale? Are these requirements ongoing and necessary? Also, how do you see going about reducing the number? I would like comments from the other departments as well.

Mr. Richter: I can give you a global response. Originally, in terms of costs of operation, natural events have reduced our gas consumption relatively significantly; because of lack of increases, particularly in contract policing jurisdiction, relatively stable workload but an increase in activity, we have had less and less time to patrol, and so we are doing more, relatively speaking, in response to that. Also, the vehicles have become more efficient, so the costs of both maintenance and gas consumption have gone down a fair bit.

I think our vehicle population at 8,000, plus or minus, is relatively stable. Many of our cuts have been made in our national headquarters and in division administration, as well as in a flattening of the numbers of levels of supervision. Up to now we have met a good number of our reductions in that way, so our operational fleet has not been as significantly affected as some of the most affected departments. Perhaps Mr. Dupuis could talk about the number of vehicles being ordered.

Mr. Dupuis: On the number of vehicles being ordered, there has been a reduction; we are going to be reducing. As the Assistant Commissioner is saying, we are stable at the moment, but because of the number of police officers we have out there serving, it means that we have a ratio, in some areas, of six to one vehicle. The rest of the people might think that we have a vehicle for every police officer. We do not.

Some of our vehicles are older ones that we have had maybe five or six years. Because of low mileage in certain areas, we try to rotate them. We have also put in a vehicle committee, internally to the RCMP, where we are looking at the downsizing of our vehicles and the types of vehicles we will be using in the future, because, as we know, we are faced with Crown Vics at the moment because GM is getting out of the Caprice. So we have to look at what types of other models we could use for police work, with probably smaller engines, as long as they can perform.

The weight factor is the other item we are looking at in our vehicles. As you know, with the natural gas vehicles we have tried to look at the equipment we are putting in, plus the cylinders already in there, to see whether these cars will hold the road properly. Because we put a lot of equipment in our vehicles, we are looking at the types of equipment we can put in these vehicles, to see if we can downsize that also - for instance, whether we need smaller laptops versus the big terminals we used to have in our vehicles.

This has a total impact on what a vehicle costs us with the equipment and the vehicle itself. So from the point of view of our budget, we are looking very seriously at reducing the number of our applications.

Senator Spivak: But your target is not the 40 per cent that Natural Resources is looking at?

Mr. Dupuis: No.

Senator Spivak: Do you have some idea of what your target might be?

Mr. Dupuis: With the subcommittee that is created, right now we are progressing in a pilot stage on both types of gas vehicles. We are trying it in Ottawa here and we are trying some in British Columbia. Also, we are looking at our counterparts in the committee to see what we can do collectively, because, again, we want to be cautious, rather than going into this full-fledged, not knowing what the effects are totally. I think the committee is the way to go for us to do it collectively.

If we put a percentage on at this time and we cannot meet it because of our operational needs, this is where we have to answer to the public out there that we are serving. We are in contract with these provinces and municipalities; we are providing them with that service; so it is very important that we do not commit ourselves too far ahead without knowing what is out in the future in terms of manufacturers and availability.

Mr. Richter: On the number of vehicles, I think 2,400 is probably going to be relatively stable. While there are going to be reductions in many of the provincial budgets across the country, we are also policing some areas that are expanding, like the lower mainland of British Columbia; the number of police officers there is increasing rather than being stable or reducing. My general sense is that the numbers of vehicles that we will continue to order will be in the same general range.

Col. Stewart: The downsizing aspect, I think for us, is a pervasive one that will be going on and will be continuing for some time. However, we will still be essentially covering much of the same scope of work that our ATF-potential vehicles would be used for. The fact that we are reducing the infrastructure does not necessarily directly affect the scope of work that we still have to do. We will still have to do the same scope of work; but within a reduced overall infrastructure.

One of the aspects is that there will be a move toward reduced fleet sizes. We are moving toward a program of devolving the responsibility for both identifying the funding and identifying the requirement for vehicle support in the department to those formations that will actually be responsible for using them. We will still manage our vehicle systems from a departmental point of view, but in the interests of better management we are devolving responsibility to determine what is required and the funding for that to the other level formations that are lower than the National Defence headquarters.

In terms of a percentage, there is no specific level of funding that is projected out for three, four or five years for vehicle acquisition. It is reviewed annually along with all of the rest of the department's funding requirements and, of course, those requirements, like any good business, are prioritized based on what is the priority focus of the department. The priority focus of our department, of course, is the support of military operations in the field. Our forces deployed in support of United Nations' activities in which we are currently involved obviously take a large chunk of our operating capacity and our funding, and certainly the budget cuts that the department has been subjected to since 1989 have forcefully brought it to our attention that we really have to do a good job of doing that prioritization.

The target fleet we have focused on is that which represents the best potential for transition to alternative fuels. However, if we decided in any given year to acquire, say, 500 vehicles, it might well be that the available funding allocation would in fact only support the acquisition of 200 vehicles. Of course, what we would then have to do, based on our business case analysis and the operational feasibility, would be to deal with the issue of reaching that required percentile that is in the bill. I think that is a challenge for all of us.

We have just now embarked on our entire process of operational feasibility assessments and developing our business cases. We expect to have that completed by September, which will allow us to effect any procurements for this fiscal year as well as the start of '97-98.

Senator Cochrane: I, too, have learned quite a bit from our witnesses this morning and I want to thank them for appearing.

Having just come back from Vancouver, I can say that I have seen the results there of converting to alternative fuels, especially in the improvement of the air, because all of the taxis in Vancouver have been converted to this new technology. I understand that propane emission is very minor and that emission of natural gas is zero. All the taxi drivers tell me that the reason they have converted to natural gas is that they spend exactly half as much money on natural gas as they used to on gasoline; so their costs have gone down by half.

I was also speaking with the bus drivers. They tell me the exact same thing, and they are very happy. They must have some manufacturers sold on this idea in order to accommodate the large fleet of taxis and the large fleet of buses that serve the Vancouver region.

Does the RCMP have a pilot project in place to use natural gas? Is there anything going on now? If so, what success have you had and how long has the project been in place? I understand from the Natural Resources group, I think, that you are using propane right now, but could you let me know what the status is of RCMP vehicles in regard to natural gas at the moment.

Mr. Keith Paremain, OIC, Fleet Program Administration, RCMP: I will try to answer that one. At this point in time we have two natural gas Ford Crown Victorias on order. They have been on order since the beginning of the year. We do not expect to get them until the middle of June. We also have six vehicles that were converted to natural gas in the lower mainland B.C. area, which we have identified as a viable operating area for the RCMP, in that there is a large enough geographical area for our people policing there to be able to get fuel within their operating area. At the moment we are just getting into this field. We do not have any data that we can analyze and say, "This is the direction to go in." As you may realize, much of this industry is in its infancy.

One thing we had hoped to do was to get six new Ford Crown Vics for this model year. However, because of our operations requirements, we were able to find good homes for only two. It is very important that whoever has these vehicles makes sure that they are given a fair chance to prove their value. We have discovered that, in respect of the two that we ordered, their performance is not what we desired, but it was a case where operating these vehicles would give us a lot of experience in many areas.

In the next model year, the Crown Victoria is going to have a considerably enhanced performance and we expect to purchase more of them than we did in this model year. That is definite.

Mr. Richter: Just to add to that, I have a great deal of interest in this area, so every time I get into a taxi cab I wonder to myself what fuel the vehicle runs on. Two weeks ago I took a taxi in Ottawa that had a dual system, using both gas and natural gas. The driver said he uses natural gas quite a bit, but he needs the gas as back-up because he cannot always count on having a full tank, or cannot always count on supply. And that is right here in Ottawa.

In Regina about three months ago, in the middle of winter, a taxi driver told me he owned two cabs and drove them constantly. One had 400,000 kilometres on it and the other one had 600,000 kilometres. They were both propane. He was going to replace the 600,000 kilometre vehicle and I asked him what he was going to replace it with. He said he was going to replace it with gas.

We try to get 150,000 to 200,000 kilometres out of our vehicles, but because of the operational stress that is on them and the constant use, we cannot go to that; we are not able to go, economically, to those high levels. So the taxi companies will be able to amortize their savings over quite a bit longer time; and often they purchase ex-police cars at a pretty reasonable price and convert them. That is just my unscientific survey.

Senator Cochrane: My next question is probably for all departments. Do you feel that the problems involved in the accessibility of alternative fuels and the manufacturing of the vehicles to use them could be resolved by the year 2004, if you had complete cooperation and coordination on all the other problems you are encountering now because this is a new concept?

Mr. Richter: Technologically, I suspect that they could be, because we would want to work together. What hindered us in the 1980s with the use of propane was that there was not a market; the public was not buying and so the manufacturers stopped making the car because there was not enough money in it, or it was not a good investment.

Senator Cochrane: But I believe the thinking has changed now.

Mr. Richter: Yes. So it may depend on demand.

Mr. MacLeod: I would agree. I think there is a real synergy that goes on here. The more it happens, the more the markets will respond. My people tell me that today in Canada there are actually more depots for propane than there are for diesel fuel, which is a real change, real progress. I think that is a good sign.

Senator Cochrane: I have one more question. This one is for Correctional Service Canada. Are you emphasizing fleet reduction within your department?

Mr. Hooper: Yes, without wishing to sound like a bureaucrat, we are, as much as we can. Unlike many of our colleagues, we, unfortunately, are not faced with a declining market. We have an expanding market. However, we are trying to reduce the ratio of vehicles. By way of illustration, in the last two years we have acquired or constructed six new facilities. We have expanded our parole operations. We have increased the size of some of our existing institutions by 30 to 50 per cent, and in some cases virtually by 100 per cent, and yet we have added only 40 vehicles to our fleet, whereas, in the past, we would have probably added closer to a 100. In other words, we are reducing the numbers that we use and we are reducing the size of the vehicles that we are prepared to use so that they are somewhat more efficient.

Senator Cochrane: So your bottom line is a saving?

Mr. Hooper: Relative to what it would have been if we had not introduced these more stringent measures, yes.

Senator Cochrane: How are you going to accommodate these new natural gas vehicles?

Mr. Hooper: We are currently purchasing 50 per cent of our annual acquisition as alternative-fuel vehicles. So, as I said earlier, unlike some of our colleagues' vehicles, which roam far and wide, ours tend to be in relatively limited areas, quite predictable in use, with the exception of parole officers' vehicles, since they go where their customers are. We do not, therefore, anticipate any particular difficulty from an operational point of view in meeting these targets.

Senator Marchand: I want to join the others in congratulating all of you on implementing the use of alternative fuels. It is a practice I have supported for a long time, going back to when I was Minister of the Environment and used to try to do it all the time. But it is going to happen and is happening. I am really delighted.

I just wanted to ask Commissioner Frank Richter of the RCMP to clarify one point. He said something about one vehicle in Saskatchewan having 600,000 kilometres on it. Was it in Saskatchewan you ran across that?

Mr. Richter: That was my taxi example, senator. It was a taxi. Actually the man had two taxis.

Senator Marchand: How many engine changes did he have, or was that 600,000 kilometres on the one engine?

Mr. Richter: I asked him that and it was, I believe, the same engine in both cases. He was close to good mechanical support, he went to the same garage all the time, although repairs were starting to mount up at that point, at least, for this 600,000 kilometre vehicle.

Senator Marchand: Was it a V-8?

Mr. Richter: It was a station wagon. I suspect it may have been, senator. But I was interested in the extent of kilometres that they could get out of that type of vehicle.

Senator Marchand: I expect that out of the alternative-fuel vehicles versus the regular use of gas, you need a fast car and you just do not get the quick performance, I guess. Is that part of the problem with using propane and natural gas, which I guess are the two fuels of choice?

Mr. Richter: Yes. I think that currently in the tests done in the Michigan State Trials both the acceleration and the stopping abilities have been found to be less efficient than for gasoline vehicles at this point. But I would not be surprised to hear that technology could easily overcome that. It is not just performance, but weight. There is a differential there, as I understand it. But with respect to performance, I would not be surprised that technology could overcome that as long as there was a market demand and interest from all the parties concerned.

Senator Marchand: I guess they still beat horses, though.

Mr. Richter: Absolutely, senator, absolutely. In terms of equipment, we use our vehicles as our offices away from home, and they are equipped with radios, computers, video cameras, and all kinds of other equipment. So the cost of the vehicle is now less than the equipment that goes in it.

Senator Adams: Talking about propane and natural gas, I recall that when the committee of a couple years ago was talking about a changeover to natural gas and propane, we had some of the manufacturers appear as witnesses. I believe we heard from Ford, GM and Chrysler.

According to the manufacturers at that time, just one or two years ago, the cost of changing over to alternative fuels was going to be an extra few thousand dollars per vehicle. I am not sure exactly how much they said, but I think they were saying the change from gasoline to natural gas would increase the vehicle's cost by maybe $2,000 or $3,000, if my memory is right, and changing to propane would cost $5,000 or $6,000 more. Apparently it would cost more to convert to propane, because the nature and location of the fuel tank presented special problems. They even had slides and movies to show what would happen in the event that a propane tank was involved in a direct collision. It would explode, as I recall.

Do you know whether there has been any progress by the manufacturers in that regard?

Mr. Jarvis: I can try to answer your question, senator. There has been an enormous amount of effort, particularly from the major auto producers, to expand their capacity to produce original equipment that can use alternative transportation fuels, particularly natural gas.

It has proved to be a difficult challenge for the auto producers for some of the reasons you were talking about, but also because there has been a desire on their part, and significant success, to improve the environmental performance, as Senator Cochrane was saying. There are vehicles being produced now that use natural gas that have very excellent environmental performance. The difficulty is that all that technology comes at a cost, and the resolution between the additional cost of the technology and the availability of vehicles that are economically attractive for the buyers is still a puzzle that has to be worked out.

To answer a previous question, this is a problem that we can expect to be worked out over the next five to ten years, but it is going to take some time to get there.

Senator Adams: I have one more question. I am mostly using methanol in my car now, and I find it a little bit more costly than regular gasoline; it costs a little more per litre. The thing that saves it is that it is better environmentally.

I heard the RCMP have Crown Victorias. I have a Crown Victoria. It cost me $40 to fill up my tank yesterday with methanol, and maybe if I used regular gas it would cost me between $32 and $33.

Mr. Jarvis: Without presuming to understand the pricing policies of the fuel producers, the price for methanol typically is equal or at a slight premium to the equivalent prices for premium high octane gasoline with which it competes directly. It is difficult to know what the price of methanol would settle out at if you developed a large transmission transportation delivery system.

At the moment, methanol has to bear significant extra charges because it is mostly shipped by truck to local service stations, and not in high volumes. The cost of doing that is relatively high.

The Chairman: We are right on 10:15, so if I may, on behalf of the committee, I would thank the witnesses for appearing this morning. I think they may have sensed a certain desire on the part of the committee to move along faster than is sometimes possible in a difficult transition period.

Gentlemen, we appreciate your efforts and we thank you all very much for coming and enlightening us this morning.

Honourable senators, we will now hear from the next group of witnesses representing the natural gas indutry.

Mr. McNeil, I understand that you are going to lead off and introduce the panelists. I welcome you and I turn the microphone over to you, if I may.

Mr. Michael McNeil, President and CEO, Canadian Natural Gas Vehicles Alliance: On behalf of my colleagues and the natural gas industry, I would like to thank this committee and all honourable senators for the opportunity of appearing before you today. As you will hear as we move into our presentations, the natural gas industry has embraced enthusiastically the principles of Bill S-7 and its supporting legislation, the Alternative Fuels Act.

Over this past year, the gas industry as a whole has come together to respond to what we believe is a significant initiative among many which must be taken to address our environmental problems. In fact, the Canadian Natural Gas Vehicles Alliance itself, or CNGVA as it is referred to, is testimony to our concerted effort because it brings together a very diverse industry and focuses our collective action on the problems.

Today, we have with us a number of key players in the natural gas industry, and in particular in the natural gas vehicle industry. In alphabetical order, and coincidentally from west to east, we have Mr. Al Basham from British Columbia, from BC Gas; Mr. Tom Bell from Centra Gas Manitoba Inc., a wholly owned subsidiary of Westcoast Energy and recently reorganized to provide for an NGV specific activity; and Mr. Perry Stover of Consumers Gas.

Also in attendance, but not at the witness table, are Mr. Jamie Robinson and Laura Stennett from Consumers Gas, and I understand that Dave MacEacheron may be arriving in a few moments.

These gentlemen and lady and their respective companies are no strangers to this committee. On the other hand, this is the first occasion that the alliance and I have had to appear before you representing the NGV industry at this type of hearing. With your indulgence, I would provide you with a very brief description of what the alliance is, and identify for you our objectives, particularly as they relate to the implementation of the Alternative Fuels Act.

Just over a year ago, the Canadian Gas Association operated a unit known as the NGV development office. It was that office which gave its support and assistance to Senator Kenny in the process of bringing Bill S-7 to fruition. The development office was primarily funded by the gas utility companies across the nation to represent their collective interests in developing the NGV market in Canada.

As Bill S-7 moved through the Senate and on to the floor of the House of Commons, it was recognized by the utilities and the CGA that with such initiatives underway in government, and similar directions being taken by private business, there was a need for a more comprehensive approach to NGV development in Canada.

In addition, a large number of businesses in Canada which had played a key role over the past decade in NGV research and development were anxious to play an equally key role in bringing their proven technology to market. Consequently, the Canadian NGV Alliance was created.

Today, the alliance represents the best interests of the NGV industry at large. Our membership includes gas utility companies, manufacturers of NGV parts and components, gas containment businesses, compression and dispenser companies, installation and service enterprises and other NGV-related organizations, associations and individuals.

Last September, the alliance recruited me, formerly the national president and CEO of the Canadian Automobile Association. Within just a few weeks of my appointment, the alliance revisited its objectives and goals and adopted an even more proactive position in terms of marketing the NGV product. Much of this enthusiasm and vigour was based on the success of Bill S-7 making its way through to proclamation last June. To say that we were excited about the prospect of assisting the federal government to meet its objective to converting its fleet to a more responsible motive fuel would be an understatement.

Under the banners of the Ministers of Environment, Natural Resources Canada and Treasury Board, the alliance fully participated at last fall's "fleet-wise" program and exhibition in Ottawa-Hull. We orchestrated a demonstration ride and drive opportunity, provided speakers for the government workshops and exhibited our NGV technology at the trade show. Following the conference, we contacted every federal fleet manager in attendance with an invitation to contact the alliance as their first point of reference in reviewing their requirements to adopt cleaner-fuel vehicles.

Over the past year, we have also devoted considerable resources toward working with government in preparing its federal fleet policy and guidelines. Our industry has banded together and is prepared to offer a one-stop shopping experience for fleet managers. As you will soon hear from Mr. Bell, this even includes reorganizing whole business units to accommodate the needs of public servants and the private sector. We have firms such as Fuelmaker, who are now offering leasing arrangements that are one-stop shopping. There are any number of opportunities within our industry to provide for the needs and requirements of the bureaucracy.

In terms of financing, the industry has been very creative and offers performance contracting or, as they have mentioned, inclusive lease arrangements. New partnerships within our alliance have been formed to cater to the federal government's requirements. To say that our industry has done its part to respond positively to the challenges presented by the implementation of the Alternative Fuels Act, again would be an understatement.

And finally, in terms of our industry's competency to deliver NGVs to the federal fleet, we have never been in a better position to do so. Having spent the past decade in demo after demo after demo, we now have NGVs that have proved to be economically viable and environmentally friendly, are a practical, clean choice, and are safe, and are a very responsible decision.

Ready, willing and able: the NGV industry is all of these. It is sad to say, and perhaps we will hear more about the experiences from my colleagues, that we have yet to encounter this motto within the federal government's efforts to implement the principles of Bill S-7.

At this time, honourable senators, I am pleased to call upon my colleagues to present their respective experiences in working with the federal government and their clean-fuel-vehicle policy. Thank you very much.

Mr. Al Basham, Manager, Natural Gas for Vehicles, BC Gas Utility Limited: First of all, I would like to commend the Senate and this committee, and Senator Kenny in particular, for their far-sighted vision in implementing a new policy in Canada that I think will have a very strong impact on our international industrial competitiveness and our ability to continue to expand the export of high technology products from Canada, because that is exactly what is going on now with the natural gas vehicle industry. Of course, the major manufacturers, Ford and Chrysler, manufacture their products in Canada.

We have a large number of after-market firms that produce equipment used to convert vehicles to natural gas, and that equipment is now being exported. We have manufacturers of compressor equipment that export their equipment as well. So I look forward to a very exciting future for this industry.

We were asked to address ourselves to two questions: How successful are we in selling our products to the government? What are our plans concerning infrastructure development? I would like to address those questions.

Since last July we have converted four vehicles, we have four vehicles in the process of being converted, and as mentioned by the RCMP, there are two factory-built vehicles on order. So that is our record to date. We have met with some 11 federal departments and crown corporations on a number of occasions. We are pursuing this matter as actively as we can.

So far we have found a number of cost effective and operationally feasible applications. I would like to just describe two of them in detail to you. The first one is a Canada Post courier van. This particular van is a Chrysler van manufactured in Windsor, Ontario, and it runs only on natural gas and has a V8 engine. This van beats California's ultra-low-emission-vehicle standard. In other words, this is a very clean vehicle. It is almost as clean as an electric vehicle when you consider that electricity has to be generated in some manner.

With respect to tailpipe emissions, I have a slide that indicates the difference between gas and NGV. You can see that here by the little puffs of smoke. These are the emissions that are of most importance to urban communities, and you can see that there is a 66 per cent reduction of those emissions and there is approximately a 20 per cent reduction of carbon dioxide or greenhouse gas emissions from this van.

In actual Canada Post applications, and we were given the mileages and the fuel consumptions and everything, this van saves about $2,677 per year in fuel costs. That gives a 1.4 year payback on the additional cost of the van. These vehicles are typically kept from five to seven years by Canada Post. So I believe that this is definitely cost effective.

According to the fleet comptroller we deal with in our area, he would like to buy more of these vans, but he has budgetary limitations which prevent him from doing so. They also prevent him from being able to convert more vehicles to natural gas. This is a factory-built van. I would like to give you one other example, if I may.

The Chairman: What does a van like that cost originally?

Mr. Basham: I believe it is around $18,000, plus the premium cost of roughly $5,000.

Senator Taylor: How can you say budget reduces that position when you are showing savings. I don't understand.

Mr. Basham: I am showing the annual savings that you obtain on the fuel.

Senator Taylor: He is complaining about a capital budget.

Mr. Basham: Yes, that is correct. Yes.

Senator Taylor: It does not sound sensible.

Mr. Basham: I would like to show you a second cost-effective and operationally feasible application. This is one of the converted RCMP police vehicles mentioned earlier this morning. The ones that are on order from the factory look exactly the same as this. As a matter of fact BC Gas has just received one of these vehicles, and we have provided it to the City of Vancouver for their evaluation purposes on a six-month trial basis; that vehicle is now in regular patrol service in Vancouver.

Again we are talking about an ultra-low-emission vehicle from the factory. Again we are looking at very substantial reductions in urban pollution; in this case, I believe it is 89 per cent reduction in emissions, and again about a 20 per cent benefit in terms of greenhouse gas emissions.

Using the RCMP data for mileage and fuel consumption, we find an annual savings of almost $3,500, which gives a 1.7 year payback. These vehicles are maintained and serviced for a three-year period. According to the Division E fleet manager for the RCMP - that is B.C. and the Yukon, which I believe is the largest division of the RCMP - these vehicles are expected to meet the operational requirements of the RCMP. Of course, they do not have them in service yet and it would be premature to make a judgment.

I believe the top speed of this vehicle is only 108 miles an hour, versus 120 miles an hour for gasoline. However, I do not believe that there are that many high-speed chases taking place any more in these fleets. I perhaps failed to mention that the Crown Victoria is manufactured in St. Thomas.

As far as the question concerning what are BC Gas's plans to develop the infrastructure for natural gas, in British Columbia we are very fortunate in having an infrastructure for natural gas refuelling already in place. Much of this infrastructure was developed during the 1980s and it continues to be developed today. The infrastructure in the lower mainland of British Columbia primarily is owned by the oil companies or other third-party investors, not by the gas company. The interior, for historical reasons, happens to be owned by the gas company.

I would like to draw your attention to the fact that this infrastructure is underutilized at the present time. We have about 6,000 vehicles operating in the province. I believe that we could readily double the number of vehicles with the existing stations without causing any difficulty at the stations. If we were to do that, I think it would be very encouraging to the companies that are, frankly, facing disappointing financial results with the stations as they now exist. In fact, it might be rather important to demonstrate the implementation of this bill and the leadership that it is showing in order to encourage these companies to stay involved in maintaining this infrastructure. It is not cheap to do so.

Senator Taylor: What is the total number of vehicles? Six thousand on natural gas?

Mr. Basham: Yes, 6,000 on natural gas.

Senator Taylor: What is the total number of vehicles?

Mr. Basham: Approximately two million. Over two million.

The Chairman: Do these stations only have natural gas, or do they have different fuels?

Mr. Basham: These are normal, if I could say, regular gasoline refuelling stations - Imperial, Mohawk - with a natural gas pump as well.

The Chairman: And these stations are not doing well financially?

Mr. Basham: The natural gas side of it is not doing well; I have to admit that. Incidentally, the economics that I showed you are based on prices at the pumps at these stations, never mind special contracts or anything else, which are also available. BC Gas proposes to this committee that in the terms of Bill S-7 and Treasury Board guidelines which are being developed, we would like to request that along the lines of what the RCMP gentlemen told us, the lower mainland area of British Columbia should be designated as an area within which it is operationally feasible to utilize natural gas. Furthermore, the other major centres in British Columbia, Prince George, Kamloops and Kelowna, each of which has two stations, should be designated as operationally feasible for bi-fuel vehicles. We believe that that would remove some of the uncertainty in the minds of fleet managers when they are trying to determine whether or not Bill S-7 applies to them.

The Chairman: Could you explain that last comment in more detail for our understanding, to declare the lower mainland?

Mr. Basham: Yes. A mono-fuel vehicle from the factory typically has a range of over 150 kilometres. The Chrysler vans have a range of about 150 kilometres; the Ford Crown Victoria, about 300 kilometres. Within this area, we believe that there is enough density of stations that you can use the public network with a mono-fuel vehicle. Actually, I should correct myself. We do not believe that. That is what our customers believe. That is what our fleet managers tell us, and we believe that that should be accepted as a fact.

When you get outside the lower mainland, then you are dealing with longer distances and certainly it would be very inconvenient and not a good business strategy to have a vehicle that only uses natural gas in a place where, if you arrive at Williams Lake and for some reason the station is down for maintenance for an hour or two, or whatever it is, you are not going to be able to proceed from there until you can get fuel. In that case I think you would be well advised to have a bi-fuel vehicle that can also use gasoline as well as natural gas, and then you can continue, carry out your duties and not be inconvenienced by the sparsity of stations.

Senator Cochrane: Have you shown this overhead, or a fax of this overhead regarding the areas, to the RCMP? Have you had consultation with the RCMP to sort of elaborate on this concept that you are talking about, that they can operate within this boundary?

Mr. Basham: Yes, I believe that they have reached that conclusion, if I heard them correctly this morning, that within the lower mainland there is enough natural gas that they can utilize it. We have had those discussions and our fleet managers are very well aware of where our stations are and what the opportunities are.

The Chairman: Mr. Bell, are you going to show us slides too?

Mr. Tom Bell, Vice-Presient Marketing and Sales, Centra Gas Manitoba Inc.: I have quite a number of slides, but I think several of them I will just skip through fairly quickly; they are for information purposes. Whatever you like.

Like my colleagues, I would like to express my appreciation for the opportunity to speak to you, honourable senators, and our guests in the room. I will not take too much of your time. I am representing the interests of Westcoast Energy, and its subsidiary companies across the country, in relation to its NGV activities.

Let me give you just a little bit of background. Westcoast Energy is a major international energy company based in Vancouver. We serve over 1.3 million customers mainly across the country through the local distribution subsidiary companies. The asset base to serve these customers is in excess of $8 billion, closer to $9 billion. We have annual sales of about $4 billion and we have in excess of 6,300 employees across the country. The natural gas subsidiary companies operate in British Columbia, Alberta, Manitoba and Ontario.

Senator Taylor: What's wrong with Saskatchewan?

Mr. Bell: That is a crown corporation. Concerning the company's NGV activities, we provide related services through all regulated subsidiary natural gas distribution companies in BC, Alberta and Ontario. You will notice that Manitoba is missing from that first line. We have opted, as a result of internal decisions as well as a result of our local regulatory agency board order last year, to set up an unregulated company to provide natural gas products and services on a national basis based in Winnipeg. One of the building blocks of this new company that has just been formed, which started operations January 1, 1996, is to provide NGV products and services across the country; once again on an unregulated basis.

You can see from this list of endeavours the abilities of the company are broad and the company does have the capability of supplying whatever the government fleet requirements are in terms of assessment and analysis, development-of-use options, design and installation of on-site refuelling facilities, retrofit of existing vehicles, including sales, installation and service of NGV equipment, capital financing and operating programs, fleet- management-systems integration, service training and support, and single-source supply and integration management across the country.

As a general update on the natural gas vehicle industry, one of the major considerations is product availability. Product availability is beyond the experimental stage, beyond the introduction stage, beyond the emerging stage. It is now commercially viable to operate a fleet extensively on natural gas. There are factory-produced vehicles, as some people mentioned earlier this morning. There are three transit bus companies in Canada operating and producing natural gas transit buses, as well as LNG transit buses.

I will comment on New Flyer Bus Industries in Manitoba. Thirty to 40 per cent of its total production is either LNG or natural gas, pretty well all of which is exported, for medium, light and heavy-duty vehicles - Ford, Chrysler and Honda. We dealt extensively with Ford's dedicated natural gas vehicle this morning.

There are three certified after-market conversion kit manufacturers to convert existing vehicles over to natural gas; two are based in Ontario and one is based in BC. As well, there are several engine manufacturers capable of manufacturing NGV engines. Compressor manufacturers are located across the country. Sultzer is operating here in Ontario, IMW in British Columbia, Kraus out of Winnipeg, and Fuelmaker out of Ontario.

Fuelmaker mainly manufactures slow-fill compressors for overnight refuelling, whereas the other three have capabilities of manufacturing the fast-fill units. Kraus Industries is a totally Canadian operation based in Winnipeg that is now exporting its natural gas compressors around the world.

With respect to current NGV use, by the end of the year there will be some 100,000 vehicles in North America running on natural gas, of which 30,000 will be in Canada. There has been in excess of $50 million invested in the natural gas vehicle infrastructure across the country, and the current NGV market share in Canada is less than one per cent.

This next slide represents just some of the fleet use of natural gas in Canada; it does not represent every single fleet that is using natural gas. You can see that the fleets run pretty much across the country. Alberta is not mentioned here, but there are fleets in Alberta, British Columbia, Saskatchewan, Manitoba and Ontario. I might add that concerning the Manitoba fleet, all these fleets have been converted or are in the process of being converted since January 1 of this year. That goes to show that fleets can convert on a fast basis.

Senator Spivak: Not the buses, though, I note.

Mr. Bell: Not the buses, that is right. When you see SD here, that means school division. There are several school divisions in Manitoba that are converting over to natural gas right now.

Looking at current Canadian government NGV fleet use - once again, only in Westcoast Energy operating areas - it shows Canada Post has converted 50 of its vans in the Windsor, London area. Corrections Canada, in Stony Mountain, in Manitoba is in the process of converting eight vehicles. Williams Head, Corrections Canada, outside of Victoria, has 14 vehicles. Environment Canada in Hamilton, has 7 vehicles. That is a total of 79. This is a result, as well, of several years of work as opposed to a fairly recent endeavour.

I would just like to say a very brief word about federal government NGV support. There has been significant support from the federal government, and our company recognizes that support, during the development of this technology and the emerging market. Technology has been developed through assistance and technical support to develop, for instance, vehicle conversion kits, and there has been indoor-refuelling research and market development work of various types, as well as consumer-awareness programs.

Collectively, it is our belief that the federal government and the industry as a whole have really positioned NGV in Canada among the leaders of the world. The recent introduction and passage of Bill S-7 has lead and accelerated the use of alternative fuels for motor vehicles and, furthermore, lends the support of the federal government in developing this industry.

The next slide looks at Bill S-7 and where we are now from a Westcoast Energy perspective. The bill passed during 1995. In January 1996 we received the draft motor vehicle policy for comment. The Westcoast Energy group of companies provided feedback on that draft. Every single point was responded to by the president and CEO of each subsidiary company on January 19, 1996, supporting the endeavour, supporting the move forward with the use of alternative fuels and offering to provide support where necessary.

The Westcoast group of companies were also present at a meeting in Ottawa sponsored by the Treasury Board on March 18 to discuss the content of Bill S-7. Our comments are on record with the folks who were at that meeting. We had some discussion about the rate of introduction of NGV to the federal fleet as well as the various emissions standards that were set out in the bill, and, of course, we are here today.

Looking at the results of efforts to date, once again from our own Westcoast Energy perspective, we see them as marginal to date: 79 vehicles out of a total of roughly 39,000 in the federal fleet. This is a result, again, of several years of effort. When I compare that with a few months of effort to convert 212 fleet vehicles in the province of Manitoba, I see there is room for improvement.

Results of efforts with several government departments have been minimal. Various federal departments do not appear, in our dealings with them, to have policies and programs in place for effective implementation of Bill S-7, and it does appear that federal departments are waiting for guidance, direction and policy leadership from Ottawa. Once again, that is a Westcoast Energy perspective as opposed to an industry-wide perspective.

With respect to Westcoast Energy infrastructure investment capabilities for government NGV fleet conversion, the options considered for practical execution will vary by fleet, by the location and by specific vehicle. I think that point was touched on somewhat earlier this morning by representatives of government bodies. A staged approach, from our viewpoint, is recommended. Once again, several of the folks here suggested a similar approach. But we are suggesting that the tools are in place, the capabilities are in place, to make all these things happen very quickly.

I remember one gentleman this morning mentioned that they were developing a computer program to help assess fleet conversions and the economic feasibility. That is already in place through Centra Energy Services, and we are able, with correct input variables, to determine in minutes whether or not a fleet is capable of converting economically to natural gas.

Investment of resources and capital are, once again, dependent on the federal government's specific needs on a fleet-by-fleet basis to meet the prescribed objectives of Bill S-7, and also the ability of a supplier to provide a full slate of products and services for the government to ease the conversion. Once again, Centra Energy Services is a company that has been set up and is running and is functioning to do just that, using the methods that I outlined earlier.

From our perspective, again - and it sounds as though some groups are indeed working on this - we see a need to formalize general policy and guidelines at a national level. Please bear in mind that we are looking at this from a supplier viewpoint trying to deal with various bodies across the country, as opposed to the Centra group, trying to set up criteria, evaluation methods, expectations and tight boundaries with regard to rejection and opting out.

We see a need to communicate general policy and guidelines and expectations to each department head accountable for fleet operations. Then it goes over to the department to manage that process effectively and efficiently, providing feedback on a timely periodic basis to the Treasury Board.

In conclusion, it is our view that the technology has been proven safe, economical and reliable. There are significant emissions reductions and they have been proven. Equipment is available across the country, and in fact the technology is being exported, and the infrastructure is being installed on a planned basis. I would like to emphasize the need to work with the fleet operators to install the infrastructure in a manner that meets the needs. Industry is prepared to work with the federal government to achieve the goals of Bill S-7, and certainly Westcoast aims to play a significant role in that development.

Mr. Perry Stover, Director and NGV Business Development, Consumers Gas: I am pleased to be back in Ottawa again and back in this particular room. As a few of you may recall, I was here a year ago on March 28. I was here with the president of Consumers Gas Company, Ron Munkley and the president of Union Gas and Centra Gas Ontario, John Bergsma. We appeared before the Senate standing committee to give our support to Bill S-7. At that time, we firmly believed that Bill S-7 demonstrated the forward-thinking required by all governments to resolve pressing economic and environmental issues facing the country. We put forward our view that clean-burning, economical natural gas should play an important part in any federal fleet government policy.

I should mention that the impact of Bill S-7 is starting to flow out to some of the municipalities, in Ontario anyway. As an example, the Metropolitan Toronto area has now started on an alternative-fuel campaign and recently purchased 14 natural gas pickup trucks for the city of Toronto. They are delighted with the results; the emissions are clean and the operating costs are a little cheaper than with gasoline when all the costs are factored in, because they paid a premium for their products. Of course, the city of Toronto has been using natural gas buses for a few years, but again the final driver of that, if I can put it that way, really came from Bill S-7; so it is starting to flow out into the community.

Last year we indicated that over the previous 12 years the federal government had invested approximately $32 million in support of the natural gas vehicle market. This model of government-industry cooperation has resulted in world-class products such as a refuelling system, transit buses, storage cylinders and dedicated natural gas vehicles. You heard my colleagues explain that earlier. However, despite the federal government's long-standing support and commitment to alternative-fuel vehicles, less than one quarter of one per cent of the federal government's fleet of 39,000 vehicles operate on natural gas. Clearly, as we pointed out last year, there is an opportunity here for the government to lead more by example.

We were very optimistic that Bill S-7 was a mechanism many of us had been looking for and that it was a vehicle to stimulate investment from others to build additional infrastructure that could be utilized not only by the government fleets but by the general public. This would result in increased economic development, job creation and an improved environment. We felt it would also result in an upward spiral of hope, because as this infrastructure is enhanced, the public feels increased confidence about converting their vehicles, and the vehicle manufacturers are more confident about building additional dedicated natural gas vehicles. Clearly, this is in the public interest.

Last year we knew progress would be slow, but in reviewing the results since the passage of the Alternative Fuels Act on June 22, 1995, we are, quite frankly, disappointed. Not only have the opportunities for vehicle conversions not materialized, owing to the age of the fleet, but fleet managers have been less than enthusiastic about converting their vehicles. The stark reality is that, as of today, Consumers Gas has converted only 12 vehicles in the federal fleet to natural gas.

The principal activities that have been pursued by the federal government in the past year may be characterized as information gathering. In our view, this has not been critical and has only served to delay the process. We just have to get on with it in order that the benefits of the legislation can be realized. I appreciate that the Treasury Board has been working on updating the federal fleet policy and guidelines which will encompass the use of alternative fuels in keeping with the spirit and the requirements of the Alternative Fuels Act, and we have been pleased to have been consulted as part of the process; but the delays in implementing the policy are troubling. We recognize a need to get it right, obviously, but the fact that it was not in place prior to the beginning of the current fiscal year will lead to many lost opportunities.

In the draft policy, the federal government has recognized the importance of life-cycle costing, and the need for fuel management through credit cards, as key fleet management tools required to successfully implement and monitor the switch to alternative-fuel vehicles. However, the life-cycle analysis should realistically match fleet experience, and, given the existing federal fleet, a six-year life-cycle or greater is necessary - not the three-year cycle being considered.

It is our understanding that the concept behind Bill S-7 is based on switching the government fleet to alternative transportation fuels through the acquisition of new vehicles from the automobile manufacturers. As we heard again from my colleagues this morning, there are several models of these vehicles currently available. I was surprised to hear that the RCMP has to wait for so long to get a Crown Victoria. Our company ordered a natural gas Crown Victoria three weeks ago and we have the delivery, and it has a police package.

We agree with the support, and certainly the concept of using the OEM vehicles to maximize performance, because it reduces tailpipe emissions, and certainly these vehicles carry the new vehicle service and emission warranties. As an added benefit, and again we talked about this last year, acquisition of the OEMs encourages automakers to build and market these alternative-fuel vehicles in Canada. Again, this is in everyone's best interest.

The conversion of existing vehicles should only be considered as an economical bridging strategy between gasoline and the OEM alternative-fuel vehicles. Since existing vehicles have questionable maintenance history and are in possession of used catalytic converters, because they are used vehicles, it is unreasonable to expect these older vehicles to perform as well as an OEM or to have tailpipes similar to an OEM simply because they have been converted to an alternative, clean fuel.

In concluding my remarks, I think there are two things the government can do to move ahead and ensure that the objectives of the Alternative Fuels Act are met. First, the policies and guidelines coming from Treasury Board have to be implemented; second, the issue requires leadership from the top.

Consumers Gas has sent letters to every minister and deputy minister offering to convert their vehicles at a substantially reduced rate. While we have received many replies, no one - and I emphasize that - no one has taken us up on this offer.

Senator Buchanan: In all the presentations this morning, I did not hear Atlantic Canada mentioned once. Not one of our provinces was mentioned at any time in any presentation. The reason, of course, is quite obvious. We do not have natural gas. In Nova Scotia we like oil, but we love natural gas. We have all kinds of natural gas, but nobody has brought it ashore yet. In 1977, I visited the first drilling rig on Sable Island. It was right on Sable Island; Mobile Oil had it.

For 13 years as Premier of Nova Scotia I was the chief salesman for natural gas production in the Sable Island area, offshore Nova Scotia. It should have been in production by 1988-89, but market conditions and price conditions dictated that it was not going to happen then. So the project was put off temporarily. But at every opportunity we still push the project of Sable Island natural gas production.

Just as early as last fall I spoke to the New England Governors in Boston, giving them an update on where we are at the present time, and Tom Bell and his colleagues should listen to this, because now is the time to do something about this situation. The group of you representing the natural gas industry could be the vehicle, if you will pardon the pun, to accelerate the project off Sable Island and start the production of our own Nova Scotia natural gas.

We have a minimum of four trillion cubic feet of natural gas proven, and a possible maximum of 20 trillion cubic feet of natural gas. Our pipelines will be built from the gathering system around Sable Island, 110 miles to the Strait of Canso, then overland or underground from the Strait of Canso to New Brunswick, through New Brunswick to the State of Maine, hooking up with the natural gas system which will be built from the Boston area right to the Calais border at St. Stephen, New Brunswick. That is how we will supply natural gas to that market.

So we look forward to seeing in the very near future hundreds of natural gas stations loading cars up with natural gas in our four provinces, to seeing home-heating natural gas distribution centres throughout Atlantic Canada, all using Nova Scotia natural gas.

The reason I mentioned Tom is that Westcoast will be one of the major companies involved in this massive $4.5 billion to $5 billion project, which we believe will start very soon. The ball is in your court. Let us get it going. The next time we meet here, we will not be talking about British Columbia to Quebec; we will be talking about Atlantic Canada, with Nova Scotia as the focal point, providing the natural gas to all of the Atlantic provinces for cars, for heating, and for export to the big markets of the northeastern United States.

The Chairman: Did you have a question, senator?

Senator Buchanan: When are Westcoast and its partners going to get going and do it?

Mr. Stover: Perhaps I could partially respond, Senator Buchanan. You mentioned the same thing last year when we were here, and I think I have heard you before talking about the same area. Clearly, that is a missing link in the natural gas distribution system in North America. As well, as you have indicated, clearly there is a lot of interest in seeing what can be done to develop natural gas in that area.

Clearly, companies like Westcoast Energy, which Tom represents, are interested; companies like Consumers Gas are working with other people who are also interested. So we are very aware of what is there, and when the gas is produced we will have natural gas for the vehicles.

Mr. Bell: I have to say something on behalf of Westcoast. We are indeed working very hard.

Senator Buchanan: I mentioned you very prominently in New England just last October, and your partner Algonquin was there.

Mr. Bell: We would like nothing better than to see natural gas spread throughout all regions of Canada, especially in those areas where gas service is not yet available. The key component is that it has to be economically feasible, and we are working very hard on the Sable Island project right now to try to make that feasible and make natural gas supply a reality in the maritimes.

Senator Taylor: I was enjoying listening here. I hesitate to tell Senator Buchanan that the Newfoundlanders may be catching up and getting ahead of you. They have made a couple of discoveries on the west side.

Senator Buchanan: They have no natural gas.

Senator Taylor: Averybody knows that Newfoundland gas will go a lot farther than Nova Scotia gas!

One thing I noticed today, though, and the Mounties particularly referred to it, is the difference in performance. I drive both a propane and a natural gas vehicle and I am of the age where the performance does not bother me, but I can see how a young RCMP officer might go a little red in the face if a car went whipping by because it was fuelled by gasoline. When you step on it using either propane or natural gas, you do not get the type of pick up you need for a chase and they do not give the top speed. They mentioned 120 miles an hour versus 100. That also means between stop signs there is a few seconds less time.

Has there been any work on that aspect at all? I have often wondered about being able to insert a quick pick up, some sort of a chemical that you could put in there that would blow the doors off a guy at least for a few minutes.

Mr. Stover: I am not aware of any rocket-booster approach to the vehicles, but I certainly am aware of the point you are making, because our company is participating in the research of natural gas engines. What we are talking about now is really a modified gasoline block. A natural gas engine, if it is designed and built specifically for natural gas, is a very powerful and efficient engine. The octane rating of natural gas is 130. For the gasoline that you buy at the pump, the octane rating is about 90 and the super octane rating, again with gasoline, is about 95 or 96.

However, what we are not doing now through technology is utilizing the full octane rating in these engines. But as one of the witnesses ahead of us said, technology is changing, and this is one of the areas that it is changing in. There is another factor I should mention; with the dedicated natural gas engine, not only would we make use of the octane rating for power, but the octane rating allows the compression of the engine to operate at a much higher level than for standard gasoline, so it improves the efficiency. So a side benefit of natural gas in vehicles is an energy gain of about 20 per cent.

Senator Taylor: That is good information. I think maybe it should be passed on to the fleets, because I think the average mounted policeman thinks he has been given a pretty slow horse if he is given one of these vehicles.

My second question is this: Are there any regulations?

Mr. Basham: May I add something to that? I think it is very technologically dependent. For example, the Honda Civic has more horsepower in its natural gas version than in its gasoline version. That vehicle is coming out on the market now, although not in Canada as yet. We expect it in Canada probably next year.

Senator Taylor: That is why I wanted to bring it up, because I think that does bother a lot of army and police forces. They have the old fashioned idea.

On my question concerning regulations, in Alberta, for instance, I think school buses are not allowed to have propane tanks because one exploded and some children got burned. Are there any other provincial regulations across the country that somehow or other stop you from converting? I notice you had a number of school districts converted to NG. But LNG -

Mr. Bell: LNG refers to liquefied natural gas as opposed to propane.

Senator Taylor: I am sorry. Yes.

Mr. Bell: There are really no major uses of LNG yet in Canada. There is a demonstration project going on in Toronto right now with a transit bus, but for the most part all applications of natural gas as an alternative fuel are through compressed natural gas.

Senator Taylor: So you are not in the market of pushing propane as an environmentally clean alternative as well as NGs?

Mr. Bell: We think natural gas is by far the superior alternative now.

Senator Taylor: The other question was what progress has been made? I noticed you mentioned one manufacturer of those little home compressors where you can drive your car home at night and plug it in. The last time I looked, they were very expensive. But on top of that, the ones they were selling did not stand up at all after ninety days to six months.

Can the manufacturer not make one which they could guarantee to the homeowner would last for four years, so therefore they could convert their vehicle to gas as they were snoozing away at night and the machine would be recharging their tank?

Mr. McNeil: Senator, with respect, the VRA, the vehicle refuelling appliance that you are speaking of, is very well tested, very dependable, very reliable and is in use right across Canada, from Quebec west, of course. It is available, has its warranty packages, is serviced on a regular basis, and is available through any of the utility companies across Canada. It is particularly efficient and effective when it is a small vehicle fleet that is using it, where the vehicle fleet is resting in the evening, or the use is home use.

One of the things about infrastructure that has not yet been mentioned at this table is that, in fact, infrastructure for natural gas is as close as your own driveway for 80 per cent of all Canadians who are serviced by natural gas. So I think that area has a tremendous amount of room for growth; there is an opportunity, which Fuelmaker is now taking advantage of and is working very hard to do so, and the reliability aspect and all of the problems of the past have been resolved, and they are certainly far ahead of where they were.

Senator Taylor: I wish you would tell that to all those Alberta farmers who are my neighbours, because they say it is the worst bunch of junk they can buy. I hope you can get some publicity out that you now have something that works and will stand up for four years, because I do not think it is believed.

Mr. Bell: There was a technical problem that you referred to. They located the problem and it was determined it was a failure of an O-ring. They have been able to overcome the problem by some development work on the design of the O-ring as well as the institution of a normal maintenance program for the units themselves.

Senator Spivak: I have just two questions. First, Mr. Bell, you mentioned leadership, so I want to know where you think that leadership needs to come from within the federal government. Do you think it is the Minister of Natural Resources? Is it Treasury Board? can you say just from your experience? We also have our experience, but I want to know yours.

The second thing I wanted to ask is this: What is the window of opportunity? Obviously, 1996-97 looks like it is lost because there have not been enough plans in place to move quickly on this. How long do you think we have to build up a critical mass, in other words, so that you get the infrastructure in place and get this thing going? What is the window of opportunity?

Mr. Bell: You have asked me two tough questions. I really cannot speak on behalf of the federal government in terms of leadership, but just common sense tells me that if this is a Treasury Board initiative, then maybe Treasury Board should be providing the leadership with all the necessary input and support from the various government departments. In terms of fleet conversions, I mentioned a possible approach during my presentation. But it does need leadership.

I think the key question in dealing with the issue of alternative fuels and major changes to fleet operations is really change itself. We have experienced in our activities that when you have something that is running pretty smoothly and then you try to change it, it takes a fair bit of work and perseverance and consistency of action and just plain hard work to have people develop confidence in the new technology.

In our work with various fleets across the country, that is what it has taken, an awful lot of hard work with the fleet management people and the operators of the fleet vehicles themselves during the initial stages. I think some of that has to take place as well.

The Chairman: I think that is really where it comes from. I felt, listening to the departments speak this morning, that they were really looking for reasons not to do it. I was a little disappointed in their comments. They were talking about the cost of $7,000 per vehicle. They were talking about the Michigan test. It seemed to me that underlying what we were hearing as a committee from the departments were really reasons for not doing it.

Although they, of course, have to say that they accept the principles implied in the bill, I really had the feeling that what it was going to take more than anything was a lot of salesmanship from your industry's point of view to make it happen, because I do not know that even Treasury Board can give the impetus. I think the impetus has to come from fleet managers in making decisions, the people whom you have to sell and persuade to make it happen. Is that a fair comment?

Mr. Bell: I do not disagree with you, but I do think that some leadership can come from within government itself. We can provide whatever services or whatever support is needed to try to work with these individual fleet managers and the operators, but the leadership has to come from within. We are not the ones who are going to do it; we are sort of viewed as the supplier.

Senator Taylor: Why don't you give us a free sample of one of those hot caps?

The Chairman: But you do have an Act of Parliament. What could be better leadership? You have an act of parliament that says there are certain targets that are out there to achieve within certain time frames. That is not bad from a leadership point of view, I would think.

Mr. Bell: What I heard this morning, in terms of the earlier presentations, was not surprising. It is the natural barriers that appear, the barriers to change, and what has to be done is each one of the barriers that were raised this morning has to be addressed.

Senator Spivak: Could I just make a comment, Mr. Chairman? It is interesting that whereas command-and-control kinds of measures are in disrepute at the moment in terms of regulation, it does take a certain amount of enforcement to get this going. Maybe the problem is that we do not have sufficient teeth in these regulations to say, "You shall." I think that is what is required. It is easy for the bureaucracy to say, "We are committed, but we cannot do this and that." If the government says, "You must," then they have to do it.

Mr. McNeil: Senator, may I just speak for one second on the issue of leadership and then also on putting teeth into the regulations? In addition to finding leadership within government, there is leadership in industry. The alliance's creation itself is a show of leadership. We have taken the bull by the horns; we are marching down and we are trying to do the best we can with what we have in terms of providing the wherewithal, the tools, all of the information that is necessary, the research. All of the research and technology for the last 15 or 20 years has been dedicated to the advancement and to the implementation of natural gas vehicles in Canada. A tremendous amount of investment has been taking place, and all that has been through leadership within the industry, with the cooperation and the help of Natural Resources Canada, Canmet and a few other agencies within government. I think what we are looking for now is the same type of leadership that Senator Kenny and this committee have given over the past two years in bringing S-7 to fruition.

I think that kind of leadership is transferable now into the bureaucracy, and be it at a minister's level or be it at a senior bureaucrat's level, we have to find those leaders and we have to have the commitment, the dedication and the willingness of all government departments to cooperate in transfering that kind of technology into their fleets, and to adopting clean fuel, be it natural gas or propane or methanol or any of the other alternatives. We need that kind of leadership now.

The Chairman: I suppose it would help if we had the regulations so we could know what "cost effective" really was by way of criteria, but the regulations are still forthcoming. I suspect that this committee might be interested to see the regulations when they do come forward, or to press for them to be promulgated.

Mr. Stover: I was going to give you an example of leadership in our company. Consumers Gas, although it is a fuel supplier, also operates a very large fleet. When natural gas as a vehicle fuel was first introduced, there was considerable resistance from our men in the field, in particular because it was something new and they were concerned about the performance, and so on. There was a great deal, as the federal government is experiencing, of this resistance that sort of stopped things.

So our president of the day did not issue a directive; he simply had his own car converted to natural gas. He then asked other senior management people in the companies if they would mind having their cars converted. All of them did, and that was all it took, because suddenly the rest of our company, all of the people working in the field, the service men in your houses, and so on, decided that natural gas in the vehicles was okay because the president was using it. So that is another example of how leadership can be applied.

Mr. Basham: I have just a rather irreverent view from the wacko west, if I may be permitted to give one. If the fleet managers concerned were able to participate in some kind of incentive program where the savings accruing to their fleet would really mean something to them personally, I think we might see quite a rapid rate of introduction of alternative fuels.

Senator Adams: Just referring again to the Atlantic region, speaking only for myself, if I had a natural gas car I would not drive to Nova Scotia for my holidays, because there are no gas stations down there.

I think we should remember that we are talking about something that concerns private business, government and the public. I think we are talking about, in the future, anybody turning to natural gas or propane. We have no problem with methanol because almost every gas station has it now.

What is the future of a new gas company to be? Say I want to have natural gas put into the tank of my car, well, I cannot drive to Winnipeg or Toronto because none of the highways now, the way things stand, have pumps for natural gas or propane.

Mr. McNeil: The infrastructure within every place west of Quebec City is building as we speak. You can, in fact, take a vehicle from here to Toronto with ease. You will be able to refill in Kingston if you need to, and you can continue on. Most of the vehicles that are doing that type of travel are bi-fuel vehicles that operate both on natural gas and on gasoline. So when your natural gas tank empties, it automatically, or at the flip of a switch on your decision, will switch over to gasoline.

In fact, what you are doing is extending the range of your vehicle so that you can travel from to very remote places that you would not be able to go to if you only had gasoline. So putting that into perspective, and I know it is no consolation to the senator from the East, Senator Buchanan, you are able to travel from here through to Quebec City on natural gas, and beyond Quebec City, at which point you would then flip over to your gasoline for the rest of the maritimes.

Senator Taylor: You cannot take any luggage when you have your trunk full of fuel tanks.

Mr. McNeil: It is amazing how compact those things are now. I have only been with the alliance for the last six months after leaving the CAA, and I have been amazed at the technology and the convenience that NGV affords, or propane or a number of the other alternatives. It does not take up as much room as you think; there is lots of trunk space in the vehicles that are being converted. In fact, in the OEM models, the original equipment models, all of the tanks and cylinders are built right within the body of the vehicle and so you really do not lose any trunk space whatsoever, except for perhaps a little bit at the back of the boot. But it is fabulous equipment.

Senator Adams: I just want to apologize to the gas company. This morning I asked a question of the department about the possibility of danger in using these fuel tanks. I do not have any problem with propane and natural gas, and I understand now that other vehicles do not have any danger involved in putting the tank in the trunk of the car.

Mr. McNeil: In terms of safety, for natural gas, and I believe in the case of propane and the other alternative fuels, there is a tremendous amount of safety being built in. They have gone through the most strict safety standards. In respect of natural gas, there has never been an incident, so far as I am aware, where there has been any kind of fatality or any severe injury as a result of any kind of explosion. Natural gas has a higher ignition temperature and a very small window of ignition; it is lighter than air and would quickly dissipate in the unusual event that there was a leak. All of those factors are considered, and the natural gas vehicle is actually safer than a gasoline-powered vehicle, because gasoline pools, its vapours explode, and there is a lower ignition temperature. All of those things have to be considered. So natural gas has an impeccable safety record.

Senator Cochrane: I was wondering if the alliance would have any comment or input for this committee to give to those who are drafting the regulations, to make sure that this act is well implemented. That might be an idea, Mr. Chairman.

Mr. McNeil: We would welcome that opportunity, senator, and would avail ourselves of whatever convenient schedule you could arrange.

Senator Cochrane: This is a suggestion to the Chair.

Mr. McNeil: Well, we would welcome it, too.

The Chairman: We will have the minister before us next week. We can find out where the regulations are at that point in time and just see what input may be helpful to put a little teeth into those regulations.

Gentlemen, thank you very much for coming and meeting with us; it was very useful. We thank you for your guidance.

The committee adjourned.