Canadian Urban Transit Research & Innovation Consortium (CUTRIC) 55 York Street, Suite 1401 Toronto, ON

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1 Canadian Urban Transit Research & Innovation Consortium (CUTRIC) 55 York Street, Suite 1401 Toronto, ON March 25, 2016 Honourable Mary Polak, Minister of Environment Government of British Columbia Victoria, B.C. Dear Honourable Mary Polak, Minister of Environment, Subject: Climate Leadership Plan - Submission The Canadian Urban Transit Research & Innovation Consortium (CUTRIC) is a national innovation consortium that supports, develops and helps to co- finance advanced collaborative research projects between industry and academia in the thematic areas of zero- and low- emissions transportation and vehicular systems, connected and autonomous vehicles, light- weight materials for advanced vehicular design, and Big Data- driven optimized transit networks. British Columbia boasts several world- class research groups and private sector companies that are at the cutting edge of innovation and manufacturing in areas related to fuel cell propulsion, battery electric propulsion, compressed and liquefied natural gas propulsion, and data- driven analytic optimization of transit and transportation networks. CUTRIC s industry and academic stakeholders in British Columbia include B.C. Transit, Westport Innovations, Ballard Power Systems, University of British Columbia, University of Victoria, Simon Fraser University and several other companies that are aiming to de- risk high- cost, advanced innovation projects in the province. Attached, as part of this submission, are a series of high- level, early- stage project proposals demonstrating shovel ready projects that could be launched in British Columbia within the next 6 months. These projects will generate globally relevant intellectual property (IP) that will help to drive down greenhouse gas (GHG) emissions from transportation systems and vehicles and generate job growth in the green knowledge economy in B.C. [Please note NOIs have been submitted to Ministry offices directly, rather than to this open portal of communication, to ensure the protection of commercial interests and potential IP among industry and academic stakeholders.] To date, the Government of Ontario has invested $10M in provincial funding for CUTRIC projects; the Government of Quebec has invested more than $10M via Innov- EE, Prima and Prompt (local innovation groups) in support of CUTRIC- styled innovation projects as well. Canadian Urban Transit Research and Innovation Consortium (CUTRIC) Consortium de recherche et d innovation en transport urbain au Canada (CRITUC) Faster. Smarter. Greener. Rapide. Intelligent. Vert. 55 York Street, Suite 1401 Toronto, ON M5J 1R

2 We are requesting here that as part of its Climate Action Strategy the Government of British Columbia invests in local technology development and innovation projects in B.C. that will help to reduce GHG emissions and great job growth in the following sectors of the economy: 1. Low- and zero emissions propulsion technologies (battery electric, fuel cell electric, CNG/LNG/RNG propulsion). 2. Light- weight advanced materials. 3. Autonomous and connected vehicular systems and sub- systems (sensors, signals, control systems, and cyber- security of those systems). 4. Big Data optimization analytics for transit and transportation networking. All CUTRIC projects are designed to be co- financed by the province in which they take root and by the federal government. Currently, CUTRIC works with the National Sciences & Engineering Research Council (NSERC), Social Sciences & Humanities Research Council (SSHRC), and Sustainable Development Technologies Canada (SDTC) to gain federal co- financing for each of its projects. We are also working with NRCan to obtain significant new co- financing for large scale integration demonstration trials such as next generation, optimized fuel cell electric bus integration trials based on the new federal budget released on March 22 nd Based on the preliminary, early- stage Notifications of Intent (NOIs) submitted as part of this document, along with the CUTRIC B.C. Business Plan which outlines predicted numbers and sizes of projects to take root in B.C. over the next four years (Cycle 1 & Cycle 2) we request the province earmark $11.7M over four years to support advanced innovation projects in the region starting in Please do not hesitate to contact me if you have further queries. I would welcome the opportunity to meet with government representatives individually or with industry and academic stakeholders in British Columbia to help advance this file and ensure that job- generating GHG- reducing technologies are designed, developed, commercialized and manufactured in B.C. in the near future. Respectfully, Josipa G. Petrunic, Ph.D. Executive Director Canadian Urban Transit Research & Innovation Consortium (CUTRIC) Enclosure (1) CC: Ministries of Transportation, Energy & Mines, Jobs, Tourism & Skills Training, Technology, Innovation & Citizen Services; Advanced Education, and B.C. Transit Canadian Urban Transit Research and Innovation Consortium (CUTRIC) Consortium de recherche et d innovation en transport urbain au Canada (CRITUC) Faster. Smarter. Greener. Rapide. Intelligent. Vert. 55 York Street, Suite 1401 Toronto, ON M5J 1R

3 CANADIAN URBAN TRANSIT RESEARCH & INNOVATION CONSORTIUM (CUTRIC) CONSORTIUM DE RECHERCHE ET D INNOVATION EN TRANSPORT URBAIN AU CANADA (CRITUC) Prepared for: Government of British Columbia Government of Canada Prepared by: Dr. Josipa Petrunic, Executive Director Date: 1 March 2016 (Revised 22 March 2016) CONFIDENTIAL DOCUMENT

4 Table of Contents INTRODUCTION... 2 INDUSTRIAL & INNOVATION CONTEXT... 3 Innovation Consortium Models...4 Model 2: Consortium for Research & Innovation in Aerospace in Quebec (CRIAQ)...5 CUTRIC STRUCTURAL FRAMEWORK... 7 Technology Readiness Levels (TRL 1 8)... 7 Consortium Stakeholders...8 FUNDING RATIOS: CYCLE 1 PROJECTS, 2016/ / R&D TARGET AREAS: CANADIAN CLUSTERS OF EXPERTISE & INNOVATION BENEFITS TO CANADA BENEFITS FOR CUTRIC MEMBERS & PROJECT STAKEHOLDERS PROJECT FUNDING REQUEST R&D Projects: Cycle R&D Projects: Cycle British Columbia Contribution Request: $11.7M/Four Years* Federal Contribution Request: $185M/Four Years Funding: Transition Year Operation Requirements CUTRIC FOUNDING MEMBERSHIP TIER STRUCTURE CUTRIC BENEFITS TO FOUNDING MEMBERS CUTRIC GOVERNANCE STRUCTURE... 0

5 INTRODUCTION The Canadian Urban Transit Research and Innovation Consortium (CUTRIC) / Consortium de recherche et d innovation en transport urbain au Canada (CRITUC) was incorporated in August 2014 with the financial support from the (not-for-profit) Canadian Urban Transit Association (CUTA) / Association Canadienne du Transport Urbain (ACTU). CUTRIC s mission is to enhance and enable industry-academic collaborations in the development of the next generation of technologies for Canadian transit systems. These solutions will help to drive forward innovation in transportation in Canada, leading to job growth and economic development. These solutions will help to drive down fuel consumption, reduce wasted assets and avoid needless operational costs for transit operators, thereby saving taxpayers money over the long term. Finally, these solutions will help to make buses, trains, trolleys and other road vehicles used by transit systems more efficient and less fossil fuel intensive over-time, thereby supporting the country s shift to a low-carbon economy. CUTRIC is dedicated to matching industry needs to academic capacities and capabilities, including laboratories, highly qualified personnel, and equipment. The national industry and academic champions leading this initiative include the Canadian Urban Transit Association (CUTA), B.C. Transit, Thales, Ballard Power Systems, Metrolinx, Brampton Transit, Oakville Transit, York Regional Transit (YRT), Durham Regional Transit, Region of Waterloo, the National Research Council (NRC), Plug n Drive, Oxford County Council, Red River College, University of Ontario Institute of Technology (UOIT), York University, University of Waterloo, the University of British Columbia, the University of Victoria, and L Université du Québec à Trois-Rivières. CUTRIC is dedicated to supporting industry-led research and development (RD&) projects across Canada, focusing on advanced public transportation systems, including low emissions battery electric, hydrogen fuel cell electric, and renewable natural gas propulsion technologies, as well as light-weighting solutions, digital and data analytics solutions, command and control software solutions, and transit planning solutions. Vision Mission To make Canada a global leader in transportation-related research, development and innovation by supporting industry-academic collaborations that bring advanced thinking, design, and manufacturing to Canada. To foster the development of cutting edge technologies, services, and solutions for Canadian transit and mobility systems through industry-academic collaborations. To organize, coordinate, and support the clustered growth of RD&D (research, development and demonstration) related to alternatively fuelled propulsion systems for vehicles (including electric, fuel cell, and natural gas buses, trains and other mobility vehicles), big data and data analytics software solutions (for operational cost reductions among operators), advanced signalling and control systems, autonomous and driverless system solutions, digital securitization solutions for communications, consumer/rider applications. Objective To create robust transportation innovation and manufacturing ecosystems in Canada that support the growth of an integrated supply chain encompassing start-ups, small to mid-sized enterprises (SMEs), original equipment manufacturers (OEMS) and large global corporations.

6 INDUSTRIAL & INNOVATION CONTEXT Acting on the advice of its industry and transit members, CUTA founded the Canadian Urban Transit Research and Innovation Consortium (CUTRIC) / Consortium de 3echerché et d innovation en transport urbain au Canada (CRITUC) as an independent, not-for-profit corporation in August CUTA provided the organization with seed financing in the form of a zero interest loan and in kind administrative support starting in March CUTRIC commenced operations the same month with the appointment of Dr. Josipa Petrunic as Executive Director & CEO. CUTRIC s launch in 2015 marked the first steps towards a coordinated set of provincial-federal funding policies aimed at supporting research, development, and demonstration (RD&D) in Canada s transit, transportation, and mobility manufacturing sectors. CUTRIC s overarching objective is to help create the conditions necessary for an industrial renaissance in Canada s transportation manufacturing sector. This includes supporting start-ups, small to mid-sized enterprises, suppliers, and original equipment manufacturers (OEMs) through collaborative research and development projects that are co-financed by public-private partnerships starting in Specifically, CUTRIC will support projects in low-emissions, lightweight, digitally connected, highly efficient, user-friendly modes of transportation for both on road and rail mobility applications. CUTRIC s Historical Development In 2011, an expert panel forged by the federal government and led by Tom Jenkins produced an innovation analysis report entitled, Innovation Canada: A Call to Action (Review of Federal Support to Research and Development Expert Panel Report). The Jenkins report (R&D Review Secretariat, 2011) speaks to Canada s worsening track record in realizing commercialization gains on R&D investment. It notes specifically a lack of support for organizations seeking to move from successful research projects into the world of successful commercial products. Working against this backdrop, CUTA funded its own analysis of the situation vis-à-vis transit and transportation manufacturing and innovation. The 2013 CUTA-commissioned report, produced by Raymond Chabot Grant Thornton, explored the extent to which the transit industry contributes to research, development and innovation in Canada and it analyzed the state of innovation capacities and capabilities across the transit sector in Canada. Entitled, R&D and Innovation in the Canadian Transit Industry, the report contained the first analysis of innovation within Canada s national transit industry. The authors of the report first contextualized the situation by noting concerns over Canada s transit and transportation innovation investments are situated within a broader dilemma namely, Canada s lack of proportional R&D spending, which is in decline in general. At the time of the report s publication, Canada ranked 20 th of 27 developed nations in R&D spending by businesses, as a percentage of gross domestic product (GDP). Additionally, Canada spent less on R&D than most of it peers, which meant that by 2013 it had become a middle-of-the-pack performer among economically advanced countries. (CUTA/ACTU, 2013) R&D and Innovation in the Canadian Transit Industry found problems arise at an early point along the innovation spectrum for transportation stakeholders. Key conclusions from the analysis include the following claims: 1. Canada s transit industry has limited involvement in government support programs for R&D. A key barrier to obtaining co-financing from federal agencies for high-risk, transit and transportation innovation projects are the complicated funding processes for grants that do not target transit-specific needs. Transit-related activities such as in kind contributions of drivers, routes, and other services by transit operators are frequently deemed ineligible contributions from the perspective of industry matching requirements within federal funding programs. This prevents most transit innovation projects from moving forward with any significant degree of federal co-financing support. 2. There is no coordinated federal strategy for transit and transportation innovation i.e. research, development and demonstration (RD&D) projects, rather than infrastructure investments which plays negatively into the wider innovation concerns facing Canadian manufacturers. Transit innovation funding is different from transit infrastructure spending in general; while infrastructure may receive federal focus, innovation does not.

7 Inefficiencies related to current and existing transit and transportation systems are not being addressed through any coordinated innovation strategy. There is little awareness among federal funding agencies of the transit manufacturing sector in general i.e. a supply chain with original equipment manufacturers generating thousands of jobs in Canada. CUTRIC as a Mechanism for addressing CUTA s Transit Vision 2040 Innovation Strategy CUTRIC s establishment and launch in 2015 constitutes the first step towards addressing the innovation gaps outlined in R&D and Innovation in the Canadian Transit Industry (2013). Additionally, CUTRIC was set up to also address CUTA s own Transit Vision 2040 roadmap goals, which identify the need for industry stakeholders in Canada to harness technology and innovation so as to create lower cost, more efficient, userfriendly and environmentally sustainable transit systems of the future. Transit Vision 2040 highlights the need for Canadian industry stakeholders to generate technological solutions supportive of new mobility patterns, including declining driver licence holding rates among young people, changing urban land-use patterns, and new technologies and transportation services on offer. Transit Vision 2040 is driven by a vision of integrated urban mobility where people are able to move easily from place to place in urban areas according to their own needs, which is enabled by the coordination and optimization of all modes. In sum, CUTRIC has been established to coordinate innovation needs among private and public sector transit, mobility and transportation stakeholders. It is tasked with bringing together industry and academic capabilities to drive forward innovation projects. It is working with the National Research Council (NRC) to plan a commercialization pathway in the future for the innovations emerging from stakeholder projects. And it designed to seek co-financing from private, municipal, provincial and federal sources for the purposes of de-risking the costs associated with these projects. The end goal is to produce an industrial renaissance in Canada in the areas of low-emissions, light-weight, digitally connected, highly efficient, user-friendly transportation systems across all modes of transit, including bus, rail, trolley, and on-road transit vehicles within the next five years. Innovation Consortium Models CUTRIC has assessed numerous Canadian and global models for innovation consortia to determine best practices worldwide. Innovation consortia can be successful in supporting the dense integration of industrial capacities with academic capabilities across respective industrial sectors. Model 1: Fraunhofer-Gesellschaft The Fraunhofer-Geseelschafter (or Fraunhofer, as it is commonly referred to) constitutes a decades-old model for innovation driven by the federal government of Germany. The Fraunhofer network of institutions resembles Canada s own National Research Council (NRC) network of national research, development, innovation and commercialization centres. However, the Fraunhofer has a longer-standing history in terms of supporting industry-led collaborative academic research and development projects in using a decentralized network of university and college laboratories in combination with private sector and public sector laboratories and capacities. In brief, the Fraunhofer-Gesellschaft is the largest organization for applied research in Europe. It maintains 66 institutes and research units. The majority of its 24,000 staff is qualified scientists and engineers. It generates 2 billion in annual research projects (mostly industry-academic collaborations). More than 70 percent of its research revenue is derived from industry-led contracts that are co-financed by the public sector. The German federal and regional Länder governments contribute approximately 30 percent of the organization s operational revenues on a yearly basis. The Fraunhofer-Gesellschaft operates using a model of collaborative, consortium-based research that enables cooperative alliances between industry and academia so as to assure the exchange of ideas driving competitiveness among Germany s innovators and manufacturers and generating world class intellectual property outputs, thereby allowing partner companies to penetrate new markets globally with advanced technology solutions. The Fraunhofer-Gesellschaft is also networked into major European laboratories (public and private) outside of Germany; it has established and works within an international community of centers of excellence to leverage and optimize regional capacities for particular projects and research themes across the European Union. This supports a constant and ongoing competitive edge for European research, development and innovation globally.

8 Affiliated international research centers provide ongoing global reach and integration into regions of importance to support present and future scientific progress and economic development. In Ontario, the Fraunhofer has established one of its global outreach centres in London, ON in partnership with Western University. The Fraunhofer-Gesellschaft provides a general model to use in understanding the mechanisms by which CUTRIC could grow over the long-term (i.e. over the next 5 to 25 years) into a globally relevant hub of research expertise and commercialization capability in advanced transportation technologies, by partnering with and integrating into the national research and commercialization network already established through the National Research Council (NRC) federally and other pre-existing public laboratory facilities in Canada (e.g. NRCan s Canmet Materials Laboratory). Model 2: Consortium for Research & Innovation in Aerospace in Quebec (CRIAQ) More locally, the Consortium for Research & Innovation in Aerospace in Quebec (CRIAQ) serves as an immediate model demonstrating how CUTRIC can be structured in the short-term (i.e. the next one to 10 years) to support regional innovation across Canada in advanced transit and transportation solutions. Starting in the 1970s, the Government of Quebec took the initiative to fund the operational and research start up of a series of industry-academic collaborative consortia in the province dedicated to varied areas of industrial innovation. In 2002, it began funding an industry-led consortium in aerospace innovation namely, CRIAQ. CRIAQ s mission is to increase the competitiveness of the aerospace industry by enhancing the collective knowledge base in aerospace through improved education and training of students. Today, CRIAQ constitutes a self-sustaining, membership fee-based consortium that supports aerospace innovation across Quebec and nationally through the launch of its sister organization namely, the Consortium for Aerospace Research & Innovation in Canada (CARIC). CRIAQ benefits from direct operational and research funding support from both the governments of Quebec and Canada (through Industry Canada). This ongoing long-term support has enabled CRIAQ to grow the number and scale of the projects it has supported over the years. CRIAQ focuses on pre-competitive, early-stage research and development projects, while the newly launched CARIC (which operates at a national and global scale) supports higher-level commercialization projects in aerospace. CRIAQ s R&D system is based on five pillars of innovation. 1. Collaborative research (industry-academic) 2. Open innovation process / shared IP ownership 3. Training through research projects (HQP development) 4. Promotion of aerospace sector nationally and internationally 5. National and international collaborations (encouraging foreign direct investments) To date, CRIAQ has achieved the following economic and industrial outcomes: 113 completed and currently in-progress innovation projects (heavily clustered in Quebec) $114.1M in total value of projects completed and currently in progress $15M estimated value of projects currently in the development stage (i.e. future projects) 57 fee-paying industrial partners/members 19 fee-paying universities and research centre partners/members $1.45M additional funding to researchers and students through CRIAQ projects As of 2015, the aerospace industry across Canada numbers more than 400 companies. It supports more than 80,000 direct jobs and generates $22.2 Billion in annual sales. Canada s aerospace industry is deemed to be the 5 th largest national aerospace industry in the world. CRIAQ has been credited at the provincial and federal levels with the successful existence of a robust and innovative aerospace manufacturing and supply chain in Quebec today. In Quebec, there are 234 companies active in aerospace innovation and/or manufacturing. Collectively, they support more than 42,000 jobs and $11.7 Billion in annual sales globally. More than 70 per cent of Canadian aerospace R&D is concentrated in Quebec.

9 CRIAQ members cite the benefits of membership as including access to streamlined and highly successful funding relationships with NSERC, IRAP and other federal funding agencies, as well as various provincial funding bodies across Canada. They also cite the benefits of having access to a constant outflow of highly trained personnel (PhDs, MScs and Post-Docs) who emerge from CRAIQ-based projects in Canada. As of 2015, the federal government funds nearly 99 per cent of CRIAQ projects submitted for review to NSERC by universities and private sector companies. This high success rate means industry and academic stakeholders benefit from the knowledge that the time and effort spent formulating collaborative research projects is not lost in failed funding bids. All CRIAQ projects are co-funded to de-risk the innovation process. The standard CRIAQ model for project funding is as follows: 50% Federal funding (NSERC, SDTC, or Industry Canada) 25% Provincial funding (Government of Quebec and/or CRIAQ Consortium funding combined) 25% Industry funding In some cases, the province contributes up to 40% of project costs. The CRIAQ/CARIC models provide specific frameworks upon which CUTRIC has been able to base its own innovation funding structure. Specifically, CRIAQ s experience in funding early-stage research projects and CARIC s more recent experience in funding later-stage demonstration and prototyping projects has enabled CUTRIC to formulate an integrated model that will encompass projects ranging from early stage research to later stage demonstration projects starting in Year One of project operations (i.e. 2016/2017).

10 CUTRIC STRUCTURAL FRAMEWORK Since March 2015, by virtue of a series of industry-academic consultation sessions and one-on-one consultation interviews, CUTRIC has identified more than 80 companies active in transit-related transportation innovation across Canada; it has also identified nearly 20 universities, colleges and cegeps active in transit-related transportation innovation across the country. Drawing on industry and academic stakeholder insights, CUTRIC has proposed an industry-led consortium structure (based on a membership fee foundation) to support and co-finance transit, transportation and integrated mobility innovation across Canada. Based on this model, CUTRIC will continue to be headquartered in Ontario (as it is currently) with Year One projects heavily focused on the Ontario transportation sector. For Cycle One projects (2016/ /2021), CUTRIC will focus on the four provinces where those companies and universities are most clustered: Ontario, Quebec, British Columbia and Manitoba. Using the CRIAQ model of project cofinancing as a guiding framework, CUTRIC s collaborative research projects will follow the structure articulated below. CUTRIC Cycle One Projects (2016/ /2021) will include: Industry-led projects ranging in TRL 1 to 6 (see below for a description of TRL levels). A minimum of two industry partners and two academic partners. o Industry members can be private enterprises or publicly backed crown corporations. o Academic members can include any university or college approved for funding by NSERC and SSHRC federally. Federal leveraging for co-financing and de-risking from existing programs at NSERC, SSHRC, SDTC, IRAP and other federal ministry and department program funds. Provincial leveraging with a minimum 20% match for R&D occurring in a given province. Consortium membership fees for all participant stakeholders (including industry, transit and academic project stakeholders). Image 1: Technology Readiness Levels (TRLs) Technology Readiness Levels (TRL 1 8) The National Aeronautics and Space Administration (NASA) first developed the Technology Readiness Levels (TRL) scale for estimating the maturity of a given technology. The scale ranges from TRL 1 to 9 with 1 representing an immature, early stage research concept and 9 representing a mature, commercialized product or service. CUTRIC projects will range between TRL 1, Basic Technology Research, and TRL 8, Technology Demonstration & Subsystem Development. In special cases, and where funding is available, TRL 7 projects exploring System/Sub-System Development may also be considered in the future as CUTRIC builds towards a commercialization agenda over the next 10 years. NASA public domain image (retrieved 15 August 2015 from

11 Consortium Stakeholders Industry Industry stakeholders lead the definition of all CUTRIC projects. Therefore, industry members are core stakeholders. They include original equipment manufacturers (OEMs), small to mid-sized enterprises (SMEs), and start-ups. Industry participants will include leading manufacturers of transportation equipment, suppliers and innovators operating in the sectors of lightweight materials, powertrain components, and software control systems. Numerous projects related to electrified transportation and fuel cell propulsion technologies will also integrate utilities, chemistry companies, battery developers, and hydrogen manufacturers/fuel cell developers as industry stakeholders. Transit Transit operators/agencies will serve as the site for demonstration projects and technology integration tests. Transit operators from across Canada (large and small) will co-design and co-develop technology demonstration projects (e.g. electric, hybrid, fuel cell or natural gas bus projects) as well as data and technology sharing projects (e.g. to develop analytic solutions and reduce operational costs). Transit operators/agencies will also provide track testing for signaling and control systems relevant to rail and rapid transit systems. Academia Academic partners will offer facilities, laboratories, students and professors whose skill sets can be leveraged to carry out advanced R&D at a competitive rate. Importantly, Canada s universities and colleges boast a solid track record in designing and developing advanced solutions for low emissions and lightweight vehicles, autonomous vehicle control systems, signalling, sensors, and controls, and data analytics software for system operational improvements. Public laboratories The National Research Council Automotive and Surface Transportation Group (Ottawa and London, ON, Boucherville, QUE. And Burnaby, B.C.), along with CanmetMATERIALS Laboratory (Hamilton, ON), will serve important research, development and commercialization roles in this initiative over the long-term. As the locus for advanced R&D projects involving batteries and energy storage, large fleet testing (including climate chamber testing), and advanced powertrain design and development, these laboratories are ideally situated to leverage proximity to the country s transportation sector.

12 FUNDING RATIOS: CYCLE 1 PROJECTS, 2016/ /2021 TRL 1-3 (early stage, pre-competitive research) For TRL 1-3 projects, the proposed matching ratio breaks down as follows: 25% industry: 25% provincial contribution: 50% federal contribution. The following guidelines will frame the selection process for successful project ideas and applications: Industry stakeholders must contribute at least 25% of the total project cost in cash and in kind. No more than 25% of the total cost for any given project can be contributed in the form of in kind contributions by industry partners (thus, at least 75% of the industry contribution must be in the form of cash). TRL 4-6 (pre-competitive, simulation, testing, prototyping) For TRL 4-6 projects, the proposed matching ratio breaks down as follows: 50% industry: 20% provincial contribution: 30% federal contribution. The following guidelines will frame the selection process for successful project ideas and applications: Industry stakeholders must contribute at least 50% of the total project cost in cash and in kind. No more than 25% of the total cost for any given project can be contributed in the form of in kind contributions by industry partners (thus, at least 75% of the industry contribution must be in the form of cash). TRL 7-8 (competitive integration trials; world-class demonstration projects in situ/on roads) For TRL 7-8 projects, the proposed matching ratio breaks down as follows: Public demonstration trials (i.e. transit): 40% federal contribution: 40% municipal contribution (FCM loan and other municipal funding): 20% provincial contribution: (+) addition 25% in-kind industry/private sector contribution. Private demonstration trials (i.e. private auto OEM trial): 75% industry/private sector contribution: 15% federal contribution: 10% provincial contribution. Image 2: Funding Ratios by TRL 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% TRL 1-3 TRL 4-6 TRL 7-8 (Public) TRL 7-8 (Private) Federal Municipal Provincial Industry

13 R&D TARGET AREAS: CANADIAN CLUSTERS OF EXPERTISE & INNOVATION The following table of capacities indicates research and innovation themes cited and identified by CUTRIC stakeholders including industry, transit, and academic stakeholders within Canada s industrial and academic sectors. Table 1 and Table 2 below are based on consultations with more than 100 stakeholders (industry, academic, and transit) across Canada between March September This includes four regional consultation sessions across Canada carried out to solidify CUTRIC s knowledge and network base with relation to advanced transportation R&D and to engage its stakeholder community on a national scale. British Columbia Regional Consultation (June 29 th 2015, hosted by University of British Columbia) Quebec Regional Consultation (September 3 rd 2015, hosted by McGill University) Ontario Regional Consultation (September 17 th, 2015 hosted by National Research Council London) Manitoba Regional Consultation (September 21 st, 2015 hosted by Red River College) These consultations have furnished CUTRIC with knowledge of industry-led areas of research and development expertise across Canada. Table 1: Consultation Outputs Indicating Research & Development Technology Areas in Advanced Transportation Research Area Description Details Battery Electric & Fuel Cell Electric Propulsion: E-Mobility Electric drive train technologies Motors Power electronics Controls Onboard energy storage technologies Battery chemistries, components, and performance Fuel cell membranes/chemistries, and performance Electric vehicle charging infrastructure (on route and stationary) Conversion technologies Diesel-to-electric conversion technologies to enable low emissions refurbishments E-drive technologies are required to hybridize or fully electrify the propulsion of a bus or other transportation vehicle. Electrification can include battery-electric power derived from grid charging directly or hydrogen fuel cell electricity derived from gridpowered electrolysis processes. Compressed & Renewable Natural Gas Propulsion Natural gas propulsion technologies Combustion technologies Fueling and storage technologies Biogas development; digester location optimization and fuel storage optimization Material Sciences New materials for chassis and & Light-weighting component parts Advanced metals and alloys with high strength, low weight properties Bio-fibers with high strength, low weight properties Composites with high strength, low Natural gas propulsion improvements require technological advancements in powertrain and fuelling technologies to support operational cost reductions and GHG emissions reductions in vehicles. Lightweight vehicles can reduce operational costs and emissions; however, they do need to meet stringent safety and performance criteria. Advanced materials combining metals with organic matter is an area of global relevance across the transportation sector today.

14 (Transit & Transportation) Big Data and Data Analytics Signaling, autonomous vehicle controls Embedded software Digital Security weight properties Algorithmic/software tools for operational cost reduction and rider experience improvements Analysis of driver data, rider data, street signaling control data, operational performance data, etc. Signaling systems to improve the performance of transit systems (both rail and bus) Vehicle-to-vehicle and vehicle-toinfrastructure signaling systems to improve system performance, reduce waste, improve rider experience On route/on road/on track signaling systems that enable autonomous vehicle systems and driverless transportation Software tools that manage powertrain systems Embedded software is computer software that controls machines or devices that are not typically thought of as computers. It is typically specialized for the particular hardware that it runs on, such as an electric powertrain system. Internet-of-things / digital security tools to support impenetrable and secure communications between parts, vehicles, and systems Onboard component part communications security (part to part communication onboard) Vehicle to infrastructure/signaling system communications security Vehicle to grid communications security (for fuelling) Vehicle-to-vehicle communication security for autonomous transportation systems Vehicle-to-consumer/client/rider communication security for riderfriendly applications Introduction of advanced analytics tools into the mainstream activities of transit systems and urban transportation networks to reduce emissions and cut operational costs swiftly and effectively while allowing for business model evolution and car ownership transformations. Autonomy in aerospace and rail systems through autonomous signaling and control systems are rapidly advancing and forming a competitive landscape for global R&D. Transferring these technologies to vehicular technologies could enable driverless transit systems both bus and rail and support the design of community pods/shuttles that serve suburban communities, helping to transport people from suburban homes to rail or bus stations for commuting purposes in a low- or zero-emissions manner. Battery technology is crucially important in the domain of electric vehicles, but how these batteries are used and managed poses new challenges and opportunities in the domain of embedded software systems. The burgeoning world of component intercommunication means that powertrains, routing systems, roads and infrastructure are increasingly equipped with electronic devices that communicate wirelessly. The possibility of hacking, corruption, and malicious external control exists at all of these nodes in the transportation communications system. Developing digital security protocols, standards, and best practices through R&D will help the secure deployment of low-emissions and advanced transportation solutions.

15 BENEFITS TO CANADA Technology & Economic Development In adopting an industry-led innovation consortium model that pairs industry needs with academic capacities, CUTRIC s technology research, development and innovation mission will result in the achievement of six economic objectives over the long-term. 1. Support the creation and integration of a 401 innovation highway incorporating companies and universities located in southern Ontario to northern Quebec, which attracts both national and foreign direct investment in transportation research and development. 2. Support the co-development of intellectual property (IP) hardware and software solutions that reduces operational costs for transit operators (i.e. diesel and maintenance costs), improves vehicle performance (bus, rail and specialized transit), reduces emissions through electrified and alternative fossil fuel technologies, and advances the autonomy and self-regulating nature of transit systems to improve safety, security, and performance. 3. Support the growth of start-up and small to mid-sized enterprises (SMEs) that require co-financing to engage transportation innovation with a mitigated level of risk. 4. Support the development of an employee stream of highly qualified personnel (HQP) that work on CUTRIC projects in universities before transitioning to private sector employment with sponsoring organizations. 5. Create a collaborative innovation culture that seamlessly integrates transportation innovation manufacturers, suppliers, innovators, with academics and professional researchers across Canada (specifically linking the clusters existent in Ontario, Quebec, BC, and Manitoba) into an efficient and competitive supply chain. 6. Create a collaborative innovation culture that supports long-term job growth in the Green Economy, understood as that segment of the economy that aims to produce solutions hardware, software, and social solutions that reduce waste, improve efficiency, and make human existence more sustainable on Earth. Greenhouse Gas (GHG) Emissions Reductions In adopting an industry-led innovation consortium model that pairs industry needs to academic capacities, CUTRIC s technology research, development and innovation mission will result in the achievement of three environmental objectives over the short- and long-term. 1. Immediate & short-term: Reduce GHG emissions from primarily diesel-powered buses, trains, and other public transportation vehicles by supporting the development and swift deployment of software tools to improve routes, reallocate assets effectively (sometimes by reducing the number of vehicles on road while maintaining the same level of service for riders), and improve autonomous controls for self-driving vehicle systems that perform as optimally as possible. 2. Long-term: Reduce GHG emissions from primarily diesel-powered buses, trains, and other public transportation vehicles by supporting the development and transition to hybrid, all electric, and fuel cell electric mobility, as well as improved and optimized natural gas systems. 3. Long-term: Reduce GHG emissions by developing and supporting the future deployment of effective community energy storage systems, on route charging infrastructure, and improved fuelling systems for alternatively powered vehicles in provinces where the electrical grid is deemed low emissions. More than half of Canada s greenhouse gas emissions (GHGs) emanate from transportation sources. Reducing emissions associated with transportation by increasing public transit ridership (and decreasing personal automobile usage) constitutes a central tenet of the national energy plan aimed at meeting Canada s emissions reduction goals, as outlined Environment Canada s (2013) Canada s Emissions Trends. Faster, smarter, and greener transit systems are needed to solve the problem. Riders need better services, faster services, and smarter services to enable the effective transition from private automobile usage to public transit transportation. Meanwhile, these services must themselves be low-emissions to help further reduce the impact of public transit on the environment and, thus, the socio-economic well being of Canadians. CUTRIC carries with it the possibility of designing and innovating made-in-canada solutions for transportation related GHG emissions reductions. It can also serve as a nexus for foreign direct investment by companies seeking to work with local operators in exchange for data transfers/sharing. These relationships can result in development and demonstration

16 projects that produce immediate emissions reductions for transit operators who can benefit from industry collaborations with Canadian and international companies developing analytic software and hardware tools designed to improve routes, better allocate assets (such as hybrid buses), and encourage better driver patterns to reduce the combustion of diesel.

17 BENEFITS FOR CUTRIC MEMBERS & PROJECT STAKEHOLDERS Industry stakeholders in the CUTRIC initiative have cited specific value added benefits they expect to gain from engagement in one or more CUTRIC co-development and collaborative research projects. Table 2: Top Cited Reasons for Engaging in Collaboration Research Projects in Canada TRL 1-3 TRL 4-6 TRL 7-8 Train highly qualified personnel (HQP) and develop an employee base with technology-specific skills for the future. Generate IP that provides private sector stakeholders with a competitive advantage globally. Technology demonstration testbed access (i.e. access to multiple communities, routes, roads, etc.) that generates international recognition. Gain new and creative ideas from researchers and project staffers located at universities and college laboratories. Train highly qualified personnel (HQP) and develop and employee base with technology specific skills. Training of highly-qualified personnel who can support commercial activities based on technology trials. Test risky ideas and explore unknown or poorly understood phenomena without carrying all of the financial risk for doing so (i.e. cost-sharing for high risk idea exploration and development). Test a university or public laboratory to determine whether it can deliver on promised outcomes at a rate that is more competitive than outside expertise. Help a start-up or SME grow up or help a supplier develop in-house IP by supporting technology development and testing within an established supply chain. Test a university or public laboratory to determine whether it can deliver on promised outcomes at a rate that is less expensive than hiring a private sector consulting company or private sector laboratory. Help a start-up or SME grow up or help a supplier develop in-house IP by supporting technology development and testing within an established supply chain. Determination of the capacities and capabilities of local SMEs and start-ups as technology suppliers. Public recognition and marketing benefits. Findings based on more than 30 interviews with industry and academic stakeholders in transportation innovation across Canada through CUTRIC s consultation efforts (March 2015-June 2015).

18 PROJECT FUNDING REQUEST R&D Projects: Cycle 1 Cycle 1 project development and launch will occur within 12 months of the date of the first bi-annual CUTRIC/CRITUC forum proposed for June Table 3: Project R&D Costs, National & Provincial (Cycle 1, /21) PROJECT R&D COSTS: National & Provincial (TRL1-8) Cycle 1 ( /2021) Base assumption (TRL 1-3) Ontario Quebec British Manitoba Total Columbia Project timeframe: 3-4 year R&D cycles Project dispersion by region 4 projects 4 projects 2 projects 1 project 11 projects Average total project costs ($3M) $12M $12M $6M $3M $33M Federal contribution: 50% $6M $6M $3M $1.5M $16.5M Provincial contribution: 25% $3M $3M $1.5M $750K $8.25M Industry contribution: 25% [cash] $3M $3M $1.5M $750K $8.25M Industry contribution: 25% [in kind] $3M $3M $1.5M $750K $8.25M Base Assumption (TRL 4-6) Ontario Quebec British Manitoba Columbia Project timeframe: 1-3 year R&D cycles Project dispersion by region 2 projects 2 projects 1 project 1 projects 6 projects Average total project costs ($5M) $10M $10M $5M $5M $30M Federal contribution: 30% $3M $3M $1.5M $1.5M $9M Provincial contribution: 20% $2M $2M $1M $1M $6M Industry contribution: 50% $5M $5M $2.5M $2.5M $15M Industry contribution: 20% [in kind] $2M $2M $1M $1M $6M Base Assumption (TRL 7-8) Ontario Quebec British Manitoba Columbia Mass [public] demonstration trial: battery electric, hydrogen fuel cell electric, autonomous bus/car/rail integration trials Project dispersion by region 2 projects 1 project 1 project 1 project 4 projects Average total project costs ($25M) $50M $25M $25M $25M $125M Federal contribution: 40% $20M $10M $10M $10M $50M Provincial contribution: 20% $10M $5M $5M $5M $25M Municipal contribution (FCM, Other): 40% $20M $10M $10M $10M $50M Part loan Part loan Part loan Part loan Industry contribution: 25% [in kind] $12.5M $6.25M $6.25M $6.25M $31.25M Total federal contribution by region $29M $19M $14.5M $13M Total federal contribution nationally Total provincial contribution: British $7.5M Columbia $75.5M

19 R&D Projects: Cycle 2 Cycle 2 project development and launch will occur within 12 months of the date of the second bi-annual CUTRIC/CRITUC forum proposed for June Table 4: Project R&D Costs, National & Provincial (Cycle 2, /23) PROJECT R&D COSTS: National & Provincial (TRL1-8) Cycle 2 ( /2023) Base assumption (TRL 1-3) Ontario Quebec & British Manitoba Total Maritimes Columbia Project timeframe: 3-4 year R&D cycles Project dispersion by region 8 projects 8 projects 4 projects 2 project 22 projects Average total project costs ($3M) $24M $24M $12M $6M $66M Federal contribution: 50% $12M $12M $6M $3M $33M Provincial contribution: 25% $6M $6M $3M $1.5K $16.5M Industry contribution: 25% [cash] $6M $6M $3M $1.5K $16.5M Industry contribution: 25% [in kind] $6M $6M $3M $1.5K $16.5M Base Assumption (TRL 4-6) Ontario Quebec & British Manitoba Maritimes Columbia Project timeframe: 1-3 year R&D cycles Project dispersion by region 4 projects 4 projects 2 project 2 projects 12 projects Average total project costs ($5M) $20M $20M $10M $10M $60M Federal contribution: 30% $6M $6M $3M $3M $18M Provincial contribution: 20% $4M $4M $2M $2M $12M Industry contribution: 50% $10M $10M $5M $5M $30M Industry contribution: 20% [in kind] $4M $4M $2M $2M $12M Base Assumption (TRL 7-8) Ontario Quebec & Maritimes British Columbia Manitoba & Alberta Mass [public] demonstration trial: battery electric, hydrogen fuel cell electric, autonomous bus/car/rail integration trials Project dispersion by region 2 projects 1 project 1 project 2 project 6 projects Average total project costs ($25M) $50M $25M $25M $50M $150M Federal contribution: 40% $20M $10M $10M $20M $60M Provincial contribution: 20% $10M $5M $5M $10M $30M Municipal contribution (FCM, Other): 40% $20M $10M $10M $20M $60M Part loan Part loan Part loan Part loan Industry contribution: 25% [in kind] $12.5M $6.25M $6.25M $12.5 $31.25M Total federal contribution by region $38M $28M $19M $26M Total federal contribution nationally $111M Total provincial contribution: British $10M Columbia

20 British Columbia Contribution Request: $11.7M/Four Years* The following table outlines the combined federal contributions required (and requested) to support all proposed projects in Cycle 1 and Cycle 2, starting in 2016 and running to the end of Note that some Cycle 2 projects may last until 2023 depending upon the technology readiness level (TRL) at the commencement date of the project. Table 5: Project R&D Costs, B.C. Contributions (Cycles 1& 2, /2023) Total contributions Total provincial contribution: Cycle 1 Total provincial contribution: Cycle 2 Total provincial contribution: /2023 Total provincial contribution: / British Columbia $7.5M $10M $17.5M $11.7M * Table 3 and 4 (previous pages) demonstrate a financing request for $17.5M/six years (i.e. for the full completion of Cycle 1 & 2 projects); Table 5 (above) scales the request to four years, starting 2016 and running to 2020/2021. Federal Contribution Request: $185M/Four Years The following table outlines the combined federal contributions required (and requested) to support all proposed projects in Cycle 1 and Cycle 2, starting in 2016 and running to the end of Note that some Cycle 2 projects may last until 2023 depending upon the technology readiness level (TRL) at the commencement date of the project. Table 6: Project R&D Costs, National Contributions (Cycles 1& 2, ) Total contributions Ontario Quebec & Maritimes British Columbia Manitoba & Alberta Total Across Regions Total federal contribution by region: $29M $19M $14.5M $13M $75.5M Cycle 1 Total federal contribution by region: $38M $28M $19M $26M $111M Cycle 2 Total federal contribution nationally: /2023 $67M $47M $33.5M $39M $186.5M

21 Funding: Transition Year Operation Requirements CUTA/ACTU members have contributed over $160K in cash and in-kind services and professional contributions over a 12- month period to support the set up and development of CUTRIC/CRITUC from March to December CUTRIC industry, academic, transit and public sector stakeholders are being asked to co-finance the following transition year of CUTRIC operations in partnership with the Government of Ontario. In December 2016, the Government of Ontario committed $110,000 in bridge financing through the Sector Support Grant for CUTRIC operations in Ontario. This funding will allow CUTRIC to continue its provincial and national project development efforts up to the launch of Cycle 1 projects, which will generate new membership revenues and basic project management fees to support on-going operational activities and project growth over the next four years.

22 CUTRIC FOUNDING MEMBERSHIP TIER STRUCTURE CUTRIC membership is based on a pay-to-play fee structure to support CUTRIC s long-term operational costs. Only those stakeholders private and public involved in actual R&D projects can be members of the organization. Those stakeholders must pay a membership fee to gain access to provincial and federal funding through the CUTRIC framework. The following table of membership tiers constitutes the proposed tier structure for Cycle 1 CUTRIC R&D projects commencing in 2016/2017. This tier structure is subject to revision by CUTRIC s Board of Directors, which will be nominated and elected from the Founding Membership base in Founding Members are asked as part of their founding membership to pay into CUTRIC s operational budget at the following tiered rates from December 1 st 2015 to December 31 st Table 7: Membership Tiers: to Cycle 1 Project Launch Member Category Description Membership Fee Range Industry Member - Large Private Enterprise 500+ employees $30000 Industry Member - Medium Private Enterprise employees $20000 Industry Member - Small Private Enterprise employees $5000 Industry Member - Very Small Private 5-20 employees $2500 Enterprise Industry Member - Micro/Start Up Private 1-4 employees $500 Enterprise Transit System Member Mega [3] buses in operation $10000 Transit System Member Large [3] buses in operation $7500 Transit System Member Medium [4] buses in operation $5000 Transit System Member Small [16] buses in operation $2500 Transit System Member Very small [53] 1-99 buses in operation $1000 Utility (Natural Gas, Electric, Other) Size agnostic $15000 Academic Member - Public University Size agnostic $8000 Academic Member College, Public Cegep, Technical School Academic Member - Private University, College, or other academic body Size agnostic $2500 Size agnostic $12000 Not for Profit Member Size agnostic $2500 Public Research Institutes Publicly financed research laboratories (including NRC, NRCan facilities, provincial labs) $10000 Government - Crown Corporation Federal $15000 Government - Crown Corporation Provincial $10000 Government - Municipal Corporation Municipalities $5000

23 CUTRIC BENEFITS TO FOUNDING MEMBERS CUTRIC Founding Members will benefit from important opportunities vis-à-vis federal and provincial investments in transit and transportation innovation over the course of the transition year ( ). Table 8: Immediate benefits for CUTRIC Founding Members ( ) MEMBER BENEFIT Board of Directors role March 2016-March 2017 Science & Technical Committee role Federal government relations Provincial government relations Branding and marketing opportunities DESCRIPTION Decision-making role as a member of CUTRIC s Board of Directors from December 2015 to December Leadership role in shaping CUTRIC s Scientific & Technical Committee framework. This committee will be responsible for approving project application submissions for federal and provincial financing mechanisms via CUTRIC starting in Representation at the federal level by CUTRIC s Executive staff as part of CUTRIC s ongoing lobbying efforts to garner a long-term funding solution for transit and transportation innovation. Efforts will be focused on Industry Canada, Transport Canada, Environment Canada, and Infrastructure Canada, as well as Tri-Council funding bodies, including NSERC and SSHRC. Founding Members will be asked to join federal lobby meetings as relevant to articulate and represent their corporate interests in the co-financing of CUTRIC projects. Founding Members will be highlighted and advertised at all federal meetings as part of CUTRIC s lobbying efforts. Representation at the provincial level by CUTRIC s Executive staff with regional ministries of economic development, industry, jobs, innovation and science and technology in the provinces of Ontario, Quebec, British Columbia and Manitoba. Founding Members will be asked to join provincial meetings on behalf of CUTRIC to articulate corporate and academic interests in the co-financing of CUTRIC projects. Founding Members will be highlighted and advertised at all provincial meetings as part of CUTRIC s lobbying efforts. Branding and marketing opportunities at all CUTRIC events and on all CUTRIC communications material (print and digital). Logos and names of Founding Members will appear visibly on all CUTRIC documentation (agendas, pamphlets, banners, etc.) and as part of all CUTRIC digital communications (website, e-blasts, surveys, newsletters, etc.).

24 CUTRIC GOVERNANCE STRUCTURE CUTRIC is an incorporated not-for-profit organization. CUTRIC is fully independent both financially and legally. The CUTRIC Board of Directors includes the following individuals. Image 3: CUTRIC Board of Directors (Elected March 2016) CUTRIC&Officers&&&Execu1ve& Commi6ee& Sue$ Connor$ Chair& Mario$ Peloquin$ Vice> Chair& Eric$ Gillespie$ Treasurer& Malini$ Giridhar$ Director& Aaron$ Lamb$ Director& Ray$ Hoemsen$ Director& Brampton& Transit& Thales& Region&of& Waterloo& Enbridge& Natural&Gas& Distribu1on& BC&Transit& Red&River& College& CONFIDENTIAL DOCUMENT

25 SUBJECT TO REVISION 26 CUTRIC& &Addi+onal&Directors& Audra& McKinley& Durham& Regional& Transit& Duane& Cronin& University&of& Waterloo& Barry&Cole& Oakville& Transit& Jus5n& Gammage& University&of& Ontario& & Ins+tute&of& Technology& Ann9Marie& Carroll& York&Region& Transit& Norbert& Haunerland& Simon&Fraser& University& David& Creery& &Woodstock& Transit& Nicole& Arsenault& York& University& Peter& CrockeA& Oxford& County& Walter& Merida& University&of& Bri+sh& Columbia& Cara& Clairman& Plug n& Drive& Richard& Chahine& Université& du&québec&à& TroisK Rivières& Michel& Dumoulin& Na+onal& Research& Council& Peter&Wild& University&of& Victoria& Patrick& Leclerc& CUTA/ACTU& Michael& Ledget& Honourary& Legal& Counsel& nonkvo+ng&