Canada’s Infrastructure Moment

A new era of Canadian industrial development

The Calgary Stampede - the annual exhibition and rodeo held in early July - has long been a barometer of the state of the Calgary and Alberta economies. Despite Alberta’s diversifying economy, the sentiment at corporate parties and political pancake breakfasts surrounding the 10-day event is still driven by the ebbs and flows of the energy industry. After a decade of angst and disappointment around energy development, dotted with ephemeral moments of commodity-price strength, this year’s Stampede had the feeling of a turning point in energy and industrial development in Canada.

Stampede 2026 has provided the backdrop for a series of consequential infrastructure and energy announcements that, if executed, will have a profound impact on the direction of the Canadian economy. An incomplete list of projects and agreements announced around the Stampede includes Meta’s gigawatt-scale data center, a proposed West Coast pipeline, progress on LNG Canada Phase 2 and Ksi Lisims LNG, the North Coast Transmission Line, West Coast port expansions, the Pathways Carbon Capture agreement, and funding for the George Massey Tunnel Replacement Project. Collectively, they suggest that Canada is again trying to translate its resource endowment into private capital formation, export diversification, and productivity growth.

It is difficult to understate the importance of renewed capital formation for the Canadian economy. Real non-residential private-sector capital formation peaked in late 2014 and never fully recovered from the collapse in energy prices in 2014–2015. Booms in residential spending post-COVID and an increasingly active government helped offset part of the decline but have been unable to completely fill the gap left behind by the energy industry. Rapid population growth also means that headline capital spending can overstate the underlying trend: on a per-capita basis, Canada’s capital stock has been under pressure.

Private non-residential investment is a key input into labour productivity, wage growth, and fiscal capacity. A more durable industrial capital-spending cycle would therefore have implications that extend beyond public equities.

Pipes, Pipes, and More Pipes…

Pipeline development has become shorthand for Canada's broader difficulty building large industrial projects. Environmental concerns, land-use conflicts, Indigenous rights issues, regional politics, and regulatory complexity have all contributed to project deferrals and delays. The grand bargain struck between Prime Minister Carney and the Premiers of British Columbia and Alberta has set the groundwork for a less acrimonious environment for long-haul crude and natural gas pipelines in Canada.

At the centre of the current discussion is a proposed one-million-barrel-per-day West Coast Pipeline designed to improve tidewater access and grow Canadian crude exports toward Asian markets. The proposal would complement existing and planned export egress on Enbridge’s Mainline System and SouthBow’s Prairie Connector project, potentially extending the growth runway for Canadian oil producers into the early 2030s. The projects would create demand not only for pipeline capital, but also for upstream production, condensate, natural gas, storage, gathering and processing, and construction services.

LNG is the parallel opportunity. LNG Canada Phase 2 and Ksi Lisims LNG would materially expand Canada's West Coast LNG capacity and support activity in natural gas production, midstream infrastructure, power transmission, marine services, and industrial construction.

Political and regulatory resistance to pipeline development began to break with the completion of the crude Trans Mountain Expansion (TMX) and the natural gas Coastal GasLink (CGL) pipelines, brought into service in 2025 and 2024, respectively. The TMX and CGL pipelines underscore the broader economic impact these projects can energize. TMX increased Canada’s crude export capacity by 900,000 barrels per day and opened Asian markets to Canadian heavy oil exports. The project reduced Canada’s dependence on U.S. Midwest refineries, tightened heavy oil price differentials, and enabled upstream oil and condensate capital spending. The CGL pipeline did the same for natural gas-directed drilling in Northeast British Columbia. TMX and CGL (along with LNG Canada Phase 1) are real world proof points of the impact large infrastructure projects can have on the broader economy.

…but More Than Just Pipes

It would be a disservice to all the parties involved to focus too narrowly on pipeline development. The actions taken by the federal and provincial governments over the last 18 months have created a positive environment for investment in data centers, critical minerals, mining, electrical transmission, port infrastructure, shipbuilding, Arctic infrastructure, nuclear waste repository, and defense spending.

The explicit project support is in addition to a host of other policies designed to encourage capital spending in the 2025 federal budget. The budget included the opening of the Major Projects Office and “one project, one review” approvals, federal financing via the Canadian Infrastructure Bank and Indigenous Loan Guarantee Corporation, and the Productivity Super-Deduction, designed to accelerate depreciation and immediate expensing to reduce effective tax rates. These actions collectively create a policy environment that ought to encourage private capital spending across the economy.

Meta’s announced gigawatt scale data centre set to be built in Sturgeon County Alberta highlights the opportunity for Canada more broadly. Alberta has targeted the industry with a bespoke regulatory environment to leverage excess power generation capacity in the province and a “bring your own generation” policy long-term. Power remains a common bottleneck for the industrial economy. The federal government has targeted several transmission projects to interlink Canada’s low-cost, low-carbon hydro generation with intermittent renewable and base load natural gas generation to provide cost effective and reliable power to underpin industrial spending.

Canadian Equity Implications

The S&P TSX Composite is a poor proxy for the Canadian economy. That has worked in Canadian equity investors’ favour over the last decade, with Canadian equity benchmarks posting reasonable gains against a mixed domestic economic backdrop. The Canadian large cap and small cap indexes are heavily weighted toward financials, mining & energy, transportation (railroads), and telecoms versus a more services- and manufacturing-oriented economy.