Introduction…

Introduction
The Canadian Natural Gas Vehicle Alliance (CNGVA) represents Canada's natural gas vehicle industry. Natural gas vehicle technologies provide proven, commercially available transportation solutions that reduce emissions while using abundantly available, affordable, clean, safe and reliable natural gas. The CNGVA’s membership includes leading Canadian companies involved in natural gas distribution, manufacturing, fuel and infrastructure supply, research, vehicle conversion technology and installation, consulting, and international project management. Our mission is to promote the sustainable growth of natural gas vehicles, refueling infrastructure, and renewable gaseous transportation fuels for the benefit of Canada's economy and environment.

CNGVA welcomes this opportunity to provide the Ontario Ministry of Transportation (MTO) with recommendations on its proposed Green Commercial Vehicle Program (GCVP). More broadly, the Government of Ontario’s Climate Change Action Plan has outlined a number of measures that will apply the proceeds of the cap and trade auction toward supporting emissions reductions. Greater use of natural gas in the medium and heavy duty transportation sector was identified as an emissions reductions measure. The Government of Ontario has announced four programs that are of interest to the natural gas vehicle industry. In total up to $400 million in cap and trade funding has been allocated to the four programs. Previously, CNGVA provided recommendations to the Ontario Ministry of Agriculture, Food and Rural Affairs (OMAFRA) on its proposed Renewable Natural Gas (RNG) for Transportation program, one of four cap and trade programs that are of interest to our industry. The GCVP will provide significant impetus for greater use of low emissions commercial transportation technologies including natural gas powered vehicles. The GCVP is one of two central cap and trade policy initiatives that will bring together the natural gas and transportation industry to move ahead with over 3 Megatonnes (MTs) of greenhouse gas emission reductions.

Recommendations:

1.) Expedite the rollout of the proposed natural gas fueling infrastructure cap and trade program, valued at approximately $100 million, to support new adopters. In 2016, the Federal Government introduced a national program that provided support for new public refueling. Without details of an Ontario program, Ontario risks losing matching federal dollars.

2.) The GCVP should offer incentives for all medium and heavy-duty on-road vehicles such as busses and coaches used by commercial transportation fleets.

3.) This program is in line with similar successful programs in New York and California. However, it is important to note that Ontario is currently catching up with peer jurisdictions and should reward early adopters in Ontario. Consideration should be given to increasing the allowable maximum to 50 percent of incremental costs and to enriching the maximum per vehicle amount during the first two years of the GCVP.

The Natural Gas Vehicle Opportunity for Ontario

CNGVA has outlined an opportunity in the province of Ontario to deploy natural gas vehicles as a strategy to reduce emissions, including greenhouse gas (GHG) emissions, while keeping costs down for Ontarians, and encouraging innovation. Transportation in Ontario is a $23 billion industry that employs more than 200,000 Ontarians, and that plays a role in delivering every item that is purchased and disposed in the province. Natural gas vehicles can significantly reduce NOx, SOx and particulate matter as well as reduce GHG emissions by 10 to 25 percent. The natural gas vehicle industry has focused its efforts, and products, on a market segment that generate a lot of emissions, but that includes a relatively small proportion of the vehicles on the road. When it comes to vehicles the target market is 275,000 medium and heavy duty vehicles, plus another 53,000 light duty trucks, and about 60 large great lakes vessels. Relative to 8 million light duty vehicles, this is a small target market – but it is one that consumes 3 billion litres of diesel per year and accounts for more than half of the province’s 58 MTs of transportation GHG emissions. Based on a report by the Canadian Gas Association and ICF International, greater use of natural gas in Ontario could result in almost 3.3 MTs fewer GHG emissions.

The Government of Ontario has pledged significant support to help reduce the risks inherent in switching to a new fuel. These risks include incremental vehicle costs, facility upgrades, staff training needs and costs associated with fueling infrastructure. Anticipated programs to support vehicle deployment through this proposed GCVP and another anticipated program to develop a network of natural gas refueling stations account for almost $300 million in funding that will kick start this transformation. By rewarding early adopters, the Government of Ontario will be sending a strong signal to the industry that natural gas vehicles will be a growing segment in the transportation sector. It will be a necessary and interconnected step toward more significant emissions reductions that will come from the use of other technologies including renewable natural gas (RNG).

Net zero Emission Transportation potential of RNG

Renewable natural gas can be produced from a variety of existing sources of organic waste from farms, forests, landfills, and water treatment plants. Using these materials as a source of energy – in this case to power transportation – allows for the displacement of these emissions. The gas is captured, cleaned, and injected in pipelines to be used in the same way as natural gas by homes, businesses, institutions, industry, and transportation fleets. Canada has an RNG resource base of approximately 1,210 billion cubic feet (Bcf) per year, which is nearly 50 per cent of Canada’s 2014 natural gas consumption. As a starting point, gas utilities are looking at measures to support a target of up to 10 per cent RNG into natural gas pipeline distribution systems by 2030. Nationally, this amount of RNG would be equal to approximately 267 billion cubic feet of natural gas per year. This volume of RNG could fuel 3.1 million homes with renewable fuel annually and would result in 14 MT per year of GHG emission reductions per year, equivalent to removing 3 million passenger cars from the road. In Ontario, current emissions attributed to potential sources of RNG (municipal and agricultural waste emissions) account for about 12 MTs and are roughly equivalent to on road diesel emissions – which points to an opportunity for Ontario to have net zero emissions in the commercial fleet sector when these vehicles operate on natural gas.

Program Elements

In order to better calibrate the Ministry of Transportation’s efforts, CNGVA has reviewed the proposed program elements, and believes certain changes would significantly contribute toward better program success. The following program elements, as outlined in the proposed approach should be revisited and improved based on the recommendations bellow:

1.) While the GCVP is a one program, the MTO and Government of Ontario should take steps to advance other planned programs to ensure better alignment. Program support for natural gas refueling infrastructure should be advanced as soon as possible to align with the GCVP. Consideration should be given to immediately match any federal funding for projects in Ontario under Natural Resources Canada’s alternative fueling infrastructure program. The first $60 million of NRCan programing must be spent by 2018 – Ontario is risking losing out on these funds. The shortest route to advancing these, is to simply match the federal support amounts. The second $120 million of NRCan program funding will flow between 2018 and 2021 – the federal government is currently reviewing criteria for this next tranche. Ontario must sequence cap and trade funding for natural gas fueling infrastructure to take full advantage of federal funding. While vehicle and fleet owners will benefit from the opportunity to purchase natural gas vehicles with provincial support, they will have some difficulty in securing adequate refueling. Many fleets will operate on a return to base model, or will operate from key logistics clusters. This will require investment in natural gas refueling to give fleet owners sufficient confidence. Building new refueling facilities will also help move some fleet owners forward in their decision making.

2.) The omission of passenger transportation in the GCVP leaves a significant market out of this opportunity. There are 30,000 busses registered in Ontario, of these about 7,000 to 8,000 are municipal or regional transit vehicles, the remainder are private sector vehicles that are currently not eligible for this program. This is a significant lost opportunity for additional emissions reductions. Ontario’s Northern Transportation Agency (ONTA) is currently evaluating the opportunity for natural gas busses on its own fleet, and has demonstrated a test natural gas motor coach this past August. While the ONTA example would not be a commercial fleet, it does illustrate the level of interest among provincial agencies. While conversion of transit busses is worthy of support, the Government of Ontario should open funds like the proposed GFVP to commercial bus fleets. Other policy instruments should be used to encourage municipal fleet conversions to natural gas. It is worth noting that Hamilton Street Railway (HSR) has one of the longest running natural gas transit fleets in North America – with over 100 natural gas busses spanning two generations of bus purchases. Transit leaders like HSR should be encouraged and enhancing federal-provincial transit funding is a great way to do accomplish this.

3.) While the proposed GCVP includes funding to cover incremental costs associated with natural gas vehicles, the proportion and total amounts are not sufficient relative to a number of up-front costs and challenges faced by fleet adopters. In a report prepared for the Ontario Trucking Association by the Rustbelt Group: Natural Gas as an Alternative Fuel for Canadian Truck Fleets: A Roadmap Toward Implementation, these various costs are outlined. While up-front incremental costs for natural gas vehicles can range from $30,000 to $80,000, additional costs for developing return to base refueling, maintenance facility upgrades, staff training and business process innovation can be significant. Some of the issues associated with refueling could be lessened if CNGVA’s first recommendation is accommodated. Facility upgrade, training and other vehicle conversion project costs can significantly increase the overall incremental cost per vehicle. Maintenance facility upgrades can range from a few thousand dollars for a small facility to much higher costs for larger facilities. Providing training for one maintenance technologist could cost between $5,000 and $10,000 depending on their existing knowledge and training. While these costs are not contemplated by the proposed GCVP, it is worth noting that British Columbia’s natural gas vehicle deployment incentive programs do provide firms with funding up to 100 percent of these costs. In the absence of any plans for this type of funding, it is essential that the proposed incentives be enriched from 30 percent of incremental costs with a cap of $30,000 to 50 percent of incremental costs, with a cap closer to $60,000 per vehicle. This would not only better encourage early adopters, it would keep Ontario in line with other jurisdictions, such as the State of New York which offers 80 percent incremental funding in its similarly designed green fleet program.

[Original Comment ID: 211156]