Why Quebec leads in clean tech — so far

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In a hangar-like space an hour from Montreal, workers in safety glasses carefully jockey huge aluminum arches into rows, like ribs, before switching on a whining drill to screw them into place.

The object takes shape — one of the world’s most recognizable shapes, a yellow school bus.

But that’s the only thing familiar about this bus. It’s all-electric, a wild pipe dream until just three years ago, when the first three like it hit the roads.

What has happened since then has been nearly as unfamiliar, at least in a province that’s historically had very little auto production. The manufacturer, Lion Electric, will have put 300 buses into operation by the end of this year, and it’s now completing one bus per day to meet demand. It employs 190 people in the small town of St. Jerome.

Lion Electric isn’t just Quebec’s or Canada’s biggest producer of electric school buses — it’s the continent’s biggest.

Quebeckers in a few circles may have seen this coming, however. Long before the era of climate anxiety, the province inadvertently became a perfect incubator for clean-tech inventions. Lion is one of several Quebec-based electrification-related startups that have suddenly jumped to the top of their markets.

Still, having a head start doesn’t necessarily mean holding onto it. As the rest of the world catches on to this global technological race, Quebec’s homegrown successes could still be eclipsed.

E-buses are healthier for kids

Lion’s founder, Marc Bédard, gets much of the credit for his company’s fast rise. Like all successful entrepreneurs, he took a risk.

In 2011, when he began working on his own all-electric bus, “everyone thought he was crazy,” says Patrick Gervais, Lion Electric’s spokesman. “There were no subsidies at that time.”

Bédard had previously been on the board of Les Entreprises Michel Corbeil, a major manufacturer of diesel school buses. His strategy for Lion was simple but shrewd.

While people have quickly accepted the reliability of electric cars, potential buyers are still wary of bigger electric vehicles.

Buses and trucks generally need to travel long distances — transport trucks, for instance — or to be in service all day long, as in the case of city buses. It’s hard to build a battery with the power, long life and quick recharging capacity to give these vehicles a big enough range.

School buses are different. “They do a run in the morning, can charge at lunchtime, do a run in the afternoon,” says Gervais. “It’s not that scary,” he says. Buyers can think, “‘if anything happens we can recharge over lunch — OK, I’m gonna try it.”

Plus, e-buses are healthier for kids. Many studies have raised alarms about the harm to children’s developing lungs from diesel fumes. E-buses can wait by school curbs without idling, and they’re also silent, allowing children to talk at normal volumes.

So, when Lion put its first e-bus on the market, it was a school bus. It followed later with other products, including, as of last year, a minibus, and, this year, a transport truck designed for urban deliveries.

The market followed, as a handful of local governments began to set aside money to subsidize the switch to electric school buses — California more than anywhere. Lion Electric set up a satellite office in Sacramento, the state capital, in 2018. This July, California ordered at least 200 more buses from Lion over the coming years.

Those early moves positioned Lion to strike similar deals in other green-minded states, especially New York, where a voucher program allowed one school district to begin a pilot program last year. Massachusetts has its own pilot program that includes three Lion buses, and Michigan bought its first 11 electric school buses from the company. Washington and Colorado has expressed interest, and Virginia recently made a bigger commitment, promising to fund 1,050 electric school buses by 2025.

Lion has gone further than seizing on existing funding pools; it’s been trying to expand demand. In California, it opened an “experience centre,” a sort of training camp where anyone from mechanics to professors can come tinker with an electric school bus. It will open a second such centre in Albany, NY, on Oct. 10.

Hydro-Québec 'expanding their customer base'

Still, Lion’s lightning-quick progress has never been as simple as smart strategy. Much of it has to do with Quebec’s uniqueness—not for its language, in this case, but rather its power behemoth, Hydro Quebec.

Many non-Quebeckers don’t understand the implications of the public utility's dominance, established during the Quiet Revolution of the 1960s. While other provinces branched into nuclear and other power sources, Quebec stuck faithfully to the idea of hydropower, hugely expanding its dam system in the belief that cheap power would fuel an industrial renaissance.

That turned out to be the case, though not without the wrenching tradeoffs Cree and Inuit peoples paid by permitting the flooding of massive tracts of traditional land.

Decades later, it’s clear that an unexpected side effect was drastically cutting carbon emissions. Scientists’ understanding of hydropowers’ emissions has evolved over the years—it’s not zero—but once built and after running for a few years, hydro dams emit far lower carbon pollution than natural gas or coal-fired power plants. Quebec has long had Canada’s lowest greenhouse gas emissions per capita.

Some of the other benefits haven’t been as well documented. In the ensuing decades, Quebec saw a concentration of brainpower and entrepreneurialism around power transmission, electric motors, charging systems and anything else electrification-related.

Hydro-Quebec often had a direct hand in that. In the early years, it needed a cutting-edge transmission system—transformers, switchgear—and it searched globally for the answer. “Hydro basically said, ‘This is what it’s going to be; now, suppliers, give us what we need,’” says François Bouffard, an electrical engineering expert at McGill University.

In response, in the sixties, Swiss-Swedish company ABB set up its Canadian headquarters in Quebec. Over time the company developed other products, most recently recharging technology for transit systems, including Toronto’s TTC.

Homegrown companies followed. In 1998, Hydro founded its own subsidiary, TM4, which built electric motors, control systems and power inverters for various vehicles, including ships and rail.

Lion was part of a later wave. Around 2007, when oil prices began to skyrocket, it was one in a wave of new, small, entrepreneurial electrical vehicle-related operations that popped up.

Many quickly vaulted to success in their niches. AddEnergie, founded in 2009 out of a research team at Université Laval, provides electric vehicle-charging infrastructure across Canada, along with the business tools to run it, such as billing software.

Gentec, an older Quebecois company, built a new production facility in 2006 and began to make protective elements for electrical networks. Effenco electrifies traditional heavy trucks, using hybrid technology to lower their emissions.

Hydro’s influence turned out to be complex. Companies like this, of course, could take advantage of the very cheap electricity on offer. But more than that, as a Crown corporation, Hydro-Quebec had reason to boost them, “to be supportive of any kind of effort to electrify anything,” says Bouffard. “It’s part of expanding their customer base, in some sense.”

At the same time, in a feedback loop, there was now much more technology and research to draw on, especially battery recharging stations and technology, key for companies like Lion.

“It’s chicken and egg,” says Bouffard. “If you go to Ontario, you cross the border, the availability of recharging infrastructure is nowhere as advanced as it is in Quebec. It’s night and day.”

Lastly, and hardest to quantify, was simply the idea of a place where electric vehicles could claim to be nearly zero-emission, since they were run off hydropower—a futuristic vision that investors and customers loved.

“It makes for a very good story to tell,” says Bouffard. “If we’re burning coal to recharge the batteries for those buses, the story’s not as pretty.”

A race developing

“Right now we’re way ahead,” says Gervais, the spokesman for Lion Electric.

But Lion faces much more competition now than it did a decade ago or even a year ago. Traditional school bus maker Blue Bird has sold five electric buses—the only real, manufactured competition for Lion in the continent. North Carolina-based Thomas has taken orders for its own e-school buses. New York-based Trans Tech, founded around the same time as Lion, makes mini-e-buses and has steadily grown.

“There is a bit of a race developing,” says Dan Woynillowicz, policy director at Clean Energy Canada, a think tank based at Simon Fraser University.

Luckily for Lion, this race is limited to North American-made vehicles. Their numbers are dwarfed by China’s electric vehicle production—China accounts for 99 percent of the world’s electric buses—but overseas manufacturing can’t compete here.

Less luckily, funding for startups is often seen as corporate welfare in Canada, says Woynillowicz. Most other countries leading the clean-energy transformation don’t have the same reticence. “There’s a very active role by government,” he says. “You see this in Germany, you see this in the UK, France, Scandinavia, in Japan, South Korea, China obviously.”

In the U.S., “there’s a lot of kind of political chatter…about not doing that, but the reality is, they do it, and they do it very effectively,” said Woynillowicz.

“A company like Lion that has a good product and has some early success, if they’re not able to scale up in Canada, the most likely outcome is they’ll be bought out by an American competitor.”

One alarming sign in Quebec was the sale of Hydro-Quebec’s controlling share in TM4, its electrical technology spinoff, to an American company, with its main manufacturing plant moved to China.

TM4, using Quebec provincial funding and Quebec-trained engineers, had developed state-of-the-art products, including the engines used in Lion buses.

Lion says it does hope for more support, especially in a short, crucial window of time.

“We think that within five to seven years, the price of an electric heavy-duty vehicle will be the same price as a diesel or really close to it,” Gervais says. “We need help for a couple of years but not forever.”

The federal government has announced tens of millions benefiting Canadian makers of electric city buses, like Winnipeg-based New Flyer and Quebec-based Nova Bus.

More funding has gone to recharging technology and other kinds of clean-tech firms, including a promised $600 million over five years from the Business Development Bank of Canada and $27 million from Sustainable Development Technology Canada for companies building batteries used in electric buses.

But the funding for electric school buses comes in the form of consumer rebates, giving school districts a discount if they buy electric buses. There are federal and provincial rebates, including in Quebec and BC.

Propulsion Quebec, a Montreal-based advocacy group, argues that changing public tendering processes could also help. When calls for tender go out, the group says, the lowest bid should be calculated not on the initial purchase but the total cost of owning the vehicle. Electric vehicles are more expensive to buy, but much less expensive to maintain and to power.

There’s one more option under discussion: a bigger investment from Quebec, funded by revenue from the carbon market the province shares with California. The provincial government did not respond to a request for comment.

Yet Marie Bédard, Lion’s business development manager and the founder’s daughter said “it's becoming more clear” how the province wants to spend this money, “and it’s toward heavy-duty lower-emission vehicles, which is exciting."

Soon enough, politicians may find funding electric school buses more palatable, for similar reasons buyers do: they’re an appealing baby step, especially with students striking from school over the climate, not to mention their parents’ health concerns, said Woynillowicz.

“I think it’s kind of an untapped political opportunity,” he says.