Good afternoon, I appreciate the opportunity to address the committee today.
I'll start by providing some background on important energy and technology issues facing the automotive industry, then provide you with GM's energy and technology strategy and close with some recommended policy initiatives.
Today petroleum accounts for just over a third of the world's energy needs, yet transportation is 96% dependent on petroleum. GM believes that continuing to rely exclusively on petroleum to power personal transportation is not a sustainable strategy. Next, greenhouse gas emissions have become a regulatory focus of many developed nations. The U.S. and Canada have recently implemented landmark regulations focused on dramatically reducing vehicle greenhouse gas emissions, regulations that will require the most significant introduction of new vehicle technology in more than a generation.
For the first time, these new regulations will establish specific greenhouse gas emission standards for each size of new vehicle, and the greenhouse gas emissions allowed will be reduced every year by 3.5% to 5% up to the year 2025. Cumulatively these reductions will result in vehicle fuel consumption improvements of up to 60% by 2025.
Given these factors, GM's energy strategy, simply put, is to displace petroleum use through accelerating the rate of efficiency improvements for gasoline vehicles, as well as introducing vehicle technologies powered by a diverse range of more sustainable and renewable energy sources.
We strongly feel that there is no single silver bullet that will address the transportation energy challenge and, therefore, it is imperative to have a portfolio of alternative propulsion technologies that use a variety of energy sources that are more sustainable and, where possible, renewable.
As mentioned, the fuel efficiency of gasoline vehicles will continue to improve through a variety of technologies like lightweighting, cylinder deactivation, and direct injection systems. But again, only focusing on improving gasoline and diesel engines will not be enough.
Renewable biofuels like ethanol and biodiesel offer the best near-term solution to reduce transportation's dependency on petroleum and vehicle greenhouse gas emissions. This option has minimal incremental vehicle and refueling costs. GM is a leader in providing these types of vehicles that thanol and biodiesel.
Compressed natural gas and liquid petroleum gas also have benefits, and GM offers vehicles that use these fuels. Compressed natural gas can cut CO2 emissions by more than 15% and there is an abundant supply. Liquefied petroleum gas is currently the third most commonly transportation fuel and it's cheaper than gasoline.
Vehicle electrification has been a large focus recently and GM believes that this path offers the best long-term solution for sustainable personal transportation. We have an expanding number of hybrid electric vehicle models that effectively improve the efficiency of gasoline vehicles, but we've also introduced plug-in electrical vehicles like the award-winning Chevrolet Volt and have announced additional new plug-in electric vehicles like the Cadillac ELR and the Chevrolet Spark. We continue our development of fuel cell electric vehicles as well.
Electricity holds many benefits as a transportation fuel. It's produced domestically, is inexpensive relative to gasoline, and there's significant off-peak capacity to fuel vehicles. Electric powertrains are much more energy efficient than gasoline or diesel powertrains and have dramatically lower fueling costs for consumers, of approximately one fifth the fueling cost compared to a gasoline vehicle.
Canada is a global leader in producing clean low greenhouse gas electricity. When used in plug-in electric vehicles, vehicle greenhouse gas emissions can be virtually eliminated in many provinces like B.C., Manitoba, Ontario, and Quebec.
GM also continues to advance the development of hydrogen fuel cell electric vehicles, which offer the promise of potentially eliminating vehicles' dependence on fossil fuels and provide customers driving ranges and fueling times that are very comparable to those of gasoline vehicles.
As you can see, a diversity of future vehicle technologies and associated energy in fuels will be critically important going forward. As a global vehicle manufacturer, GM is prepared to meet this drive towards a diversified and sustainable personal transportation.
So what does this mean for Canada?
The current reality, unfortunately, is that Canada lags behind most developed countries in policies that support the development of alternative refueling infrastructure. That has resulted in the extremely limited availability, or even non-existence, of these new green fuels. Policies to support establishing alternative fuel pumps and stations have been implemented in other countries and need to be considered by Canada.
A good example is the United States' alternative fuel vehicle refueling property credit program. It provides a 30% tax credit or up to $30,000 to offset costs of establishing a fueling pump for E85 ethanol, B20 biodiesel, CNG, LPG, electric recharging and/or hydrogen.
The U.S. Department of Energy has also been providing funding to support private and public sector initiatives to expand alternative fueling infrastructure.
Retail fuel price support measures are also an important factor. Many other jurisdictions also provide these types of fuel tax reliefs or eliminate fuel taxes for lower carbon alternative fuels to increase consumer demand as well as increase the commercial viability of bringing these new more environmental fuels to market. Canadian fuel excise tax and many provincial fuel road taxes continue to be applied to some green alternative fuels in Canada. This effectively undermines the initial commercial viability of some of these advanced green alternative fuels.
In order to increase the adoption of these new vehicle technologies and fuels, Canada should increase consumer demand for these green fuels by exempting them from federal excise fuel tax as well as provincial road taxes in the early stages of these fuel developments.
With that I'll close my comments.
Once again, thank you for the opportunity to address the committee today.