TORONTO — For many Canadian businesses, making money and going green still isn’t a sure thing.
That’s slowly changing, though. Just ask David Demers, CEO and business founder of Vancouver-based Westport Innovations, which in partnership with Cummins, has become the premier designer and supplier of liquefied natural gas (LNG) and hydrogen fuel cell technology for diesel engines around the world.
Today’s Trucking caught up with him recently to talk about the evolution of environmentally friendly vehicle applications, emerging markets, and the outlook for alternative energy in the highway sector.
TT: We hear a lot about biodiesel and ethanol as diesel alternatives, but what role is LNG playing in the marketplace?
DD: First off, we’re not creating a silver-bullet technology. We’re going to be living with internal combustion engines burning conventional fuels for decades, so you have to come up with solutions in vehicles that are interchangeable. We wanted to work with existing products and improve them incrementally.
TT: How does the technology mesh with a conventional diesel engine to produce cleaner emissions output?
DD: I use the term ‘garbage in-garbage out’ a lot, which makes engineers a little grumpy. It’s not about the combustion process. It’s about the fuel. We get a chemical transformation in the combustion chamber, which results in cleaning the stuff that comes out of the exhaust pipe.
The challenge for natural gas is how you get it to ignite, which is tougher than gas or diesel. The ignition and combustion is where all the hard work is. Natural gas burns cooler so you get half the NOx and because there’s so much lower carbon, there’s automatically much less particulates too.
TT: Westport got out of the gate by making a splash in buses, as well as delivery and public utility-refuse applications. But isn’t the highway market too big to ignore for too long?
DD: The challenge is how do you come up with a value proposition when customers are perfectly happy with what they’re doing today?
We’ve dreamed about heavy trucks from the beginning. And we have to have a bit of an eye for the long term. Clearly, there are 50 times as many trucks on the road and they burn twice as much fuel, with much more challenging emissions requirements. So yeah, why wouldn’t you eventually go after heavy trucks?
The truth is, though, for-hire hauling is really a tough business. There’s not a lot of profit margin and it’s very competitive. While many philosophically find green solutions intriguing, many don’t know how to implement it without the confidence that they’re not risking their businesses… But that attitude is starting to change.
TT: Westport’s two highest-growth markets are in California and China. On the face of it, there doesn’t seem to be much commonality between Schwarzeneggerland and the People’s Republic. Are opportunities in China more market driven?
DD: Strategically, the government plans to grow GDP by 10 percent a year over the next 25 years. But the economy is highly dependant on energy supply continuing to keep pace with infrastructure. China is a leading natural gas producer … so it’s a great opportunity for us because large amounts of natural gas in LNG form is arriving in these large urban centers and creating a great potential source for trucks and buses.
TT: So Asia fits very well with the company’s strategy of seeking attractive natural gas to diesel price differentials?
DD: It varies, but on average, it’s 40 to 50 percent cheaper than diesel. It’s the emerging growth economies that have the best characteristics — China, South America, Russia, and India. They’re also the markets that are growing fastest in terms of new vehicles. Their infrastructure is still relatively immature, so it’s a great opportunity to establish a new fuel because they haven’t got the complete build-out of the fuel system [dependant on oil].
TT: You sell thousands of LNG engines south of the border and in Asia. Why so little interest in the country where the technology was developed?
DD: We’ve sold 14,000 engines to date. Do you know how many have gone into Canada? Seventy-five. It’s been a real struggle, actually. [Canada] lectures the world on environmental issues, and yet, we’ve got some of the most polluted cities and we’re also very conservative in trying new things. If you talk to anyone in the energy technology [field], I’m sure they’ll echo this — that once our products are proven for awhile somewhere else, only then will Canadians trust them and buy them.
Canada needs to be more aggressive in adopting these things early and creating conditions so that customers can buy these things without risk.
TT: What’s the biggest pitfall for new energy tech companies looking for a piece of the vehicle industry?
DD: Coming to terms with the fact the world is so big and it’s easy to get caught up pursuing so many different areas, that you’ll never get anything done.
— The entire interview can be read in the April print issue of Today’s Trucking magazine.
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