Looking to the Future Bringing Ethanol to the Market

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Clinton Randall
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1 The Conference Board of Canada October 19, 2010 DRIVING CHANGE green solutions for fleet operators Looking to the Future Bringing Ethanol to the Market

2 About Fleet Challenge Began in 2004, active in 5 provinces until 2006 Mission: To reduce carbon and smog-causing emissions from on-road transportation fleets by helping to responsibly accelerate the adaptation of proven green fleet technologies and best management practices.

3 Fleet Challenge Ontario Not for profit supported by Ontario government Works with private and public sector fleets to take action on emissions Hosts regional workshops, events, stakeholder consultations and information sessions Facilitates market adoption of existing and emerging green technologies

4 Fleet Challenge Inc Incorporated in 2007 Delivers for-profit projects Clients include governments, private and public sector fleets

5 Fleet Advantage Inc Performance Management System for fleet operators Proprietary software solution web based Fleet Intelligence Tool (FIT) Drives constant improvement in fleet greening and cost reductions

6 Past Achievements Fleet Review - Ontario Public Service fleet Green Commercial Vehicle Project (MTO) GoGreen Plan - Ontario Public Services (MGS) TDL Group Corp. (Tim Hortons) - Fleet Analysis Direct Energy - Fleet Analysis Ontario BioFleet - biodiesel market development

7 Partnerships include Pollution Probe Cities of Toronto and Hamilton FCM and AMO Toronto Atmospheric Fund University of Windsor / Auto 21 Green Fleets BC & E3 Fleet Rating System US Environmental Defense Fund and the Clinton Global Initiative

8 Current Projects include Ontario Municipal Fleet Review Program Green Fleet Breakfast Forum Series Police & EMS (PEMS) Idling Reduction Project EV300 Project Annual Green Fleet Expo Annual Green Fleet Leadership Awards CBC National Green Fleet Strategy

9 Motivations Past accountabilities allowed alignment of personal values with corporate vision successfully pioneered fleet use of biodiesel in Canada with a 100 vehicle pilot program fleet-wide biodiesel implementation followed by switch to E10

10 My presentation today Not intended to address the environmental and economic benefits of ethanol Will be focused on E85 infrastructure development, since ethanol E5 is already a reality Emphasis on transportation fleets

11 E85 - Looking to the Future Current Considerations

12 The Renewable Fuels Conundrum Supply vs. Demand Producers and Distributors need to know the volume before making a commitment Buyers need to know that a steady supply of quality fuel and reliable distribution methods are available

13 The Ethanol E85 Disconnect Supply vs. Demand Fleets are hungry (thirsty?) for green options Flex-fuel vehicles already in place Production capability exists but there is no distribution network

14 A Success Model for E85 Fleet Challenge BioFleet (biodiesel) program Connected supply with demand Systematically eliminated barriers and impediments to biodiesel adaptation Informed and educated the fleet managers

15 A Success Model for E85 Fleet Challenge BioFleet (biodiesel) program Led to wide-scale biodiesel usage Biodiesel is now injection blended and distributed by at least one major oil company Fleet Challenge Ontario believes a similar approach would boost E85

16 Path to E85 commercialization Plan must include 4 segments: 1. Distributor strategy E85 wholesale distribution network is needed in major market areas 2. Fleet strategy fleets need access to bulk E85 for in-house fuel stations 3. Retail strategy E85 for public consumption must be available in retail stations 4. Communications to inform and address misconceptions

17 Looking to the Future E85 Distributor Strategy

18 Key elements Distributors required in all major markets - fill all the gaps The profit potential and market demand of E85 must be demonstrated; the existing distributor network is then likely to add E85 to their product list If you build it, they will come!

19 Looking to the Future E85 Fleet Strategy

transportation emissions Fleets are leading the way as early

20 Today s Reality Transportation causes almost 30% of Canada's greenhouse gas emissions Ontario responsible for 32% of national transportation emissions Fleets are leading the way as early adopters of fuels and technologies that will eventually become mainstream

21 Carbon Reduction Plans Most organizations have developed carbon reduction targets; some are aggressive, some not Fleet managers reticent to commit to a firm reduction target because current options are limited

22 Environmental Leadership Companies taking a lead with firm carbon reduction targets

23 Fleet Manager s Low Carbon Toolkit Right-size the fleet Eliminate unnecessary trips & vehicles; implementation takes 6 months to 1 year and is resource intensive Downsize the fleet vehicles Purchase correctly sized vehicles; full implementation takes up to 10 years and can be operationally challenging

24 Fleet Manager s Low Carbon Toolkit Manage driver behaviors Idling & trip reduction programs, route optimization; implementation takes 1-3 years and is resource intensive Install technologies to increase efficiency Cab heaters, idle stop devices, APUs etc.; implementation takes 1 to 5 years; large capital cost and increased maintenance demand; business case for incremental cost is sometimes borderline.

25 Fleet Manager s Low Carbon Toolkit Buy high efficiency vehicles Hybrids, plug-in hybrid; few options available and large incremental capital cost with questionable payback; significant fleet concentration takes up to 10 years Convert to natural gas CNG conversions have limited applicability and large capital cost; business case for incremental cost is sometimes difficult

26 Adding it all up Low Carbon Strategy Carbon Reduction Right size the fleet 2% Downsize the fleet 5% Manage driver behaviors 5% Install fuel efficiency technologies 5% Buy high efficiency vehicles 25% Convert to natural gas 3% Total : 44% Scientists report that 50-80% carbon reduction is now necessary to slow global warming.

27 Ethanol E85 Over 80% per litre carbon reduction with E85!

28 U.S. NAFA 2010 Fleet Manager Survey Over 76% of private and 80% of public sector fleets have sustainability initiatives in place 75% of public service and 59% of private sector fleets used a mix of hybrids and other fuel efficient vehicles, plus alternate fuel vehicles

29 U.S. NAFA 2010 Fleet Manager Survey U.S. Public Service fleets: 16% used propane 34% used CNG 64% used biodiesel 64% used E85

30 U.S. NAFA 2010 Fleet Manager Survey U.S. Private Sector fleets: 9% used propane 10% purchased carbon credits to become carbon neutral 55% adopted smaller motors (4 cylinder) 77% used hybrids 91% used E85

31 Canadians confident in renewable fuels No E85 in Canada therefore no Canadian statistics available, however Federation of Canadian Municipalities 2010 survey reports that almost 60% of municipalities use biodiesel Fleet Challenge Ontario 2010 survey : 80% of fleets use biodiesel Of those: 50% will increase use of biodiesel 50% will increase their blend rate

32 Why fleets choose renewable fuels Corporate Social Responsibility Improved market share Increased share value Financial incentives Mandates (i.e., U.S. government fleets) Based on our in-depth knowledge of the fleet industry and its challenges, it is our firm belief that, if E85 was available, fleets across Canada would quickly embrace it to meet their carbon reduction targets

33 Looking to the Future E85 Retail Strategy

34 The U.S. Retail Distribution System 2000 U.S. retail E85 stations and growing!

35 E85 for Retail Consumption Why is E85 consumption for private vehicles growing in U.S.? Perceived lower pump price than gas Oil independence Support for agricultural industry Owners of gas-guzzlers can atone for their bad habits

36 E85 for Retail Consumption Key elements for successful implementation. Conduct strategic campaign targeted at: 1 service station chains to provide E85 on arterial routes (e.g., Canadian Tire Corp.400 series highway service centers) 2 independent service station operators to offer E85

37 Looking to the Future E85 Communications Strategy

38 Communications Strategy Communication and information is the pathway to positive and effective change Deliver current and pertinent information to distributors, fleet managers and the public Utilize good news information and dispel misconceptions and negative perceptions Build relationships: proactively reach out and be available for timely and personal contact Conduct polls and surveys; use feedback to effectively steer plans and activities

39 Summary: the path to E85 commercialization 1 Successfully launch E85 with 4 stage plan 2 Focus on fleets as the early adopters and champions 3 Tax incentives and mandates to accelerate demand 4 Retail presence needed on arterial routes 5 Accurate information must be disseminated These measures can make a success of E85 in Canada!

40 We continue Evolving to Accelerate Change Overcoming Challenges in Reducing fuel consumption operating costs carbon footprint

Business Plan: Fleet Services

Business Plan: Fleet Services How does this service contribute to the results identified in the City of London Strategic Plan? A Strong Economy A Green and Growing City Fleet Services owns and manages