The Canadian Paradox by Barry Sheehy, 17 Sep 2026
Editor's Note
Capt. Barry Sheehy's article addresses the question of how Canada, a country with so many advantages, got itself into such a sorry economic state. Canada's golden age began in the post-WWII era with a rise in economic activity, living standards and optimism, and reached its peak with the celebration of its Centennial at Expo 67. But its decline was soon to begin, as political power remained heavily concentrated in Ontario and Quebec and failed to respond to changing realities, most notably the economic rise of an oil-rich Alberta. While political leaders in Ottawa had always tended to deal cautiously in matters of provincial jurisdiction, Prime Minister Pierre Elliott Trudeau used his majority Liberal government as a blunt instrument, employing the War Measures Act to resolve the FLQ crisis in Quebec and trampling on provincial powers to take over the oil and gas industry in Alberta. The overreach by the government of the senior Trudeau was exceeded by his son Justin, who invoked the Emergencies Act to brutally crack down on the peaceful protest against Covid vaccine mandates known as Freedom Convoy 2022.
Canada's decline has accelerated during the last 15 years. As its economic indicators have headed downward, it has grown in authoritarianism and bureaucratic regulation and remains politically fragmented. Quebec is consistently unhappy despite receiving a disproportionate share of equalization payments, with the ever-looming threat of separation. Fed up with federal interference and regulations, many Albertans are also contemplating separation. But all is not yet lost, according to Capt. Sheehy. Canada can save itself, he argues, but only if it changes direction – and fast. Given its resources, landmass, educated workforce and political stability, it could, and must, become an energy and AI superpower. Canada could move beyond its role as an exporter of commodities and increasingly become an exporter of energy, manufactured products and computation. Capt. Sheehy describes in detail how he proposed that this could be done. The problem, of course, is that what he proposes is "the antithesis of everything Ottawa has prioritized in the during the previous 10 years or more." And so it remains an open question whether Canada will pull itself out of its downward spiral or continue on its path of self-destruction.
Part 1: How One of the World's Richest Countries Lost Its Economic Way — and the Painful Road Back
Few nations possess Canada's extraordinary advantages. Canada is blessed with vast reserves of oil, natural gas, hydroelectric power, uranium, potash, timber, fresh water, and critical minerals essential to the twenty-first century economy. It has one of the world's longest coastlines, access to three oceans, and an active fisheries industry. It has a highly educated workforce, stable democratic institutions, and abundant agricultural land. And it is located next door to the largest consumer market on earth. For generations, Canada was regarded as one of the world's premier destinations for investment, immigration, and opportunity.
But today, by most key measures of per-capita economic performance, Canada is falling behind peer countries in the G7 and OECD (Organisation for Economic Co-operation and Development).1
Productivity growth has slowed alarmingly, and business investment has tumbled. Capital increasingly seeks opportunities elsewhere, including Canadian capital. Real GDP per capita has fallen behind that of the United States, and the gap has widened noticeably in recent years. Despite an economy that has grown in size due to immigration-driven population growth, many Canadians increasingly feel they are working harder simply to maintain the standard of living previous generations took for granted.2 Boomers with their pensions secured and houses paid may be comfortable and complacent but the generations behind them are seeing their prospects narrow. This is the Canadian Paradox. A country this rich, with every possible natural advantage, should not be falling behind. Yet we are:
GDP per Capita Is Falling
Canada's real GDP per capita has lagged behind many OECD countries in recent years, despite overall GDP growth. Population growth through immigration has masked weak productivity growth. The OECD specifically highlights Canada's GDP per capita falling behind the United States and many OECD peers.3
Labour Productivity Is Falling
Canada's labour productivity has been growing at one of the weakest rates in the OECD. The OECD states productivity is now the principal constraint on higher living standards and notes that Canada's productivity level has declined further relative to top-performing economies.4
Business Investment Is Weakening
The OECD identifies weak business investment as one of the principal causes of poor productivity. Investment per worker has fallen because population has grown much faster than capital investment. By 2023, real business investment per worker was only 85% of its 2014 level.5
Capital Stock Is Slowing
Canada's capital available per worker has grown too slowly, leaving workers with less new machinery, technology and equipment than stronger-performing competitors.6
Investment Is Fleeing Abroad
Canada's inward foreign-direct-investment stock has fallen while Canadian direct investment abroad has grown and now substantially exceeds foreign direct investment in Canada.7 Canada's own CPP Investments held $119.2 billion in Canadian investments at March 31, 2026—about 15% of its $793.3-billion portfolio.8 Only a few years ago this was well over 20 percent. This is a vivid example of Canadian savings being directed out of Canada. The domestic weakness is clearer in business investment per worker: outside the extraction sector, real investment was already broadly flat from the early 2000s to 2014, and aggregate investment per worker then fell sharply.5 This decline of business investment per worker is normally associated with developing countries rather than a member of the G7.
Highest Household Debt and Housing Inflation
Canada has among the OECD's highest household debt rates. Meanwhile housing affordability has deteriorated with mortgage servicing costs becoming a significant economic vulnerability. Young families today have fewer and fewer prospects of achieving the living standards of their parents, especially owning a home.9
Deadly Decline in Productivity:
1950s: +4.3%/year
1960s: +3.6%/year
1980s: +1.4%/year
Modern long-run performance: roughly 1% or less.10
Rising Tax burden:
1965: 25.0% of GDP
2024: roughly 35% of GDP 11
The average Canadian family spent 42 percent of its income on taxes in 2025, according to a Fraser Institute study, exceeding what it spent on housing, food and clothing combined.12
Federal deficit:
1966–67: approximately 0.7% of GDP. Budget 2025 projected a federal deficit of for 2025 is nearer 8 percent.13
How important is productivity growth? If it grows at 3.5% annually, output and living standards double in roughly 20 years. At 1%, doubling takes approximately 70 years. That difference overwhelms almost everything else in determining Canada's fiscal crisis.
Food Insecurity and Out Migration
There is no greater sign of economic weakness than food insecurity, especially in one of the richest agricultural nations on earth. Food bank usage has doubled since 2019 reaching 2.2 million visits. Children and the working poor are increasingly relying on food banks to survive. Food insecurity is a source of anxiety for one in four Canadians.14
The combination of ever-rising cost of housing, food and fixed costs including taxes, have caused many young Canadians to give up on the country and leave, bringing on a serious out-migration crisis. It is those leaving that is the problem. The majority of Canadian emigrants in 2021 were between 20 and 44 years of age.15 These are citizens at the peak of their earning and tax paying years. Worse, they are disproportionally well trained and well educated—the very people we cannot afford to lose.
The University of Waterloo, one of Canada's finest science and engineering schools, illustrates the problem. A 2018 study of graduates from Waterloo, Toronto and UBC found especially high U.S. migration in software engineering (66%), computer engineering (30%) and computer science (30%).16 The broader pattern points to a brain-drain.
There are two warning signs for any economy in trouble: capital flight and emigration of your best and brightest. Capital flight is the early warning, it moves first but emigration follows. Canada has had both these warning lights flashing red for some time.
Mass immigration was used to bolster the national Gross Domestic Product, even as the per capita GDP fell, and this strategy put intolerable strain on the nation's housing stock, social services and infrastructure. It was and remains an unsustainable solution both economically and culturally.
Canada's Golden Era (1950-1968)
It wasn't always this way. From the postwar period through the late 1960's, Canada experienced consistent growth. Productivity, wages, and living standards all rose. The baby boom produced a rapidly expanding, educated labour force. Manufacturing expanded dramatically especially in Central Canada. Oil, gas, mineral extraction, forestry, agriculture and hydroelectric power all expanded. Canada attracted Foreign Direct Investment and put Canadian capital to work at home. Capital investment per worker grew and so did productivity. Living standards rose. Access to America's powerful consumer market with programs like the "Auto Pact" made a big difference.17
Money poured in to grow industries like oil and gas, mining. Auto manufacturing, chemicals, steel, aluminum and finance expanded. During this period Toronto overtook Montreal as Canada's business and finance sector. This was a sea change given Canadian banking had been born in Montreal. Western Canada emerged from the shadow of Ontario and Quebec to become a powerhouse of energy, mining and agriculture.
During this period, Canada had active immigration primarily from eastern and southern Europe, and later from Asia. These new Canadians had a reputation for working hard and using their skills to build families, communities and buying well-earned homes. Their frugality and abhorrence to going on public assistance was legendary. When help was needed, it was provided largely through the local community and church. Canada was blessed to have them.
This period of optimism reached its apex in 1967/68 with Expo 67 and Canada's Centennial. Canada adopted a new maple leaf flag and looked to repatriate its constitution from Great Britain.18 Our military commitments to NATO and NORAD were then still credible. Canada was flying high.
When and How Did Canada Lose its Way?
Ironically, it is precisely at this moment of euphoria that Canada began to lose its way. It has all the making of a Greek tragedy, where success breeds pride and pride breeds hubris, which invites nemesis. Amidst the euphoria, no one stopped to consider whether Canada's political and economic structure, which had produced success, was reaching the edge of its utility. Repatriating the Constitution, selecting a new flag, and official bilingualism were symbolic steps into the next century but did not signal a reinvention of Canada's basic 1867 structure. In terms of real power, it still resided in Central Canada; nothing had changed.
By the end of the 1960's, the limits of Canada's 1867 political structure were starting to fray. The Maritime Provinces, which joined Confederation as prosperous partners, were fast becoming dependent on wealth transfer from Ottawa, largely funded by prosperous western provinces.
Canada's propensity to protect industry in central Canada through regulation and tariffs had steadily pried Atlantic Canada away from its natural markets in New England and Europe. Over time they became economic dependencies. Meanwhile, Western Canada was booming and funding much of the transfer payments now going to Quebec and Atlantic Canada. The east was growing poor while the west was booming and increasingly angry. Centrifugal forces were pulling at Confederation but no one in Ottawa noticed. Meanwhile power remained solidly anchored in the center with Quebec and Ontario.
From the beginning, Canadian Confederation was structured to give central Canada inordinate influence over policy, not just foreign and military but economic policy. In a parliamentary system, power flows to wherever the most votes are concentrated and this was central Canada. The one way to offset this imbalance was with a Senate representing the provinces along the US model. This option was abandoned early in favor of a Senate appointed by the government in power which became a shameful nest of sinecures and payoffs.
Constitutionally, Canadian provinces had significant power over key sectors like energy, minerals, health care and education but a central government with a parliamentary majority and enormous taxing power had the capacity to invade these areas of provincial jurisdiction. The only brake on this power was the innate prudence of past Canadian leaders who displayed an inherent caution in governing this vast nation of very different regions and cultures. They had the wisdom to tread lightly.
This innate caution began to disappear by the early 1970's following the euphoria of Canada's Centennial. A majority government in Ottawa, without the brake of a Senate protecting regional interests, had the power to behave like a unitary state. Canadian leaders had traditionally shied away from this option recognizing its inherent danger.
In the 1970's through the 1980's that caution was thrown to the wind. The War Measures Act, a monster conceived during First World War hysteria, was employed like a sledgehammer during the FLQ crisis in 1970.19 Few Canadians objected, not recognizing that this was essentially a civil war between federalist and nationalist factions inside Quebec that mutated into a national crisis. The whole country was drawn into the drama that played out almost exclusively on the streets of Montreal. This was always primarily a Quebec fight, which the federalists under Pierre Trudeau were determined to win. The threat from a tiny, crazed, violent FLQ was never the main issue. These crazies had miniscule support and were always going to lose. In the end, it was competent, old-fashioned police work which ended the tragedy and not the army in the streets.
This willingness to exercise government power to solve local problems would be displayed again during the national Energy Program in 1980, only this time Alberta was the victim. To protect the interests of central Canada the Federal government took control of Alberta's oil and gas industry. This move was unprecedented. Imagine if Ottawa had proposed taking control of Quebec Hydro for Canadian national interest?20
This same tilt toward excess would emerge again when Justin Trudeau, during COVID lock downs imposed the Emergencies Act to crush a largely (western originated) blue collar Freedom Convoy. This protest was from beginning to end a peaceful exercise in civil disobedience. Yet people were arrested and beaten, bank accounts seized, property confiscated and old people in wheelchairs trampled by police horses–all to address what was always a legal and amazingly peaceful protest. The violence witnessed was generated not by the protestors but the government.
The legal record speaks for itself. When the Emergencies Act was contested in Federal Court its invocation was found to be unconstitutional and illegal with term like "unreasonable and unlawful."21 This finding was supported by two levels of Canadian courts. To avoid having to deal with the political and legal fallout the Federal Government appealed to the Supreme Court. This was nothing more than an attempt to postpone accountability.
This tilt away from cautious governance toward aggressive use of central government power over the last several decades should alarm all Canadians. It is a textbook illustration of what nascent authoritarianism looks like. At the very least it signaled a significant change in the norms by which Canada had been governed.
Tilting in the Wrong Direction
In the last 15 years, Canada has experienced a demonstrable decline in almost every important economic indicator. The numbers are irrefutable. Every measure of wealth is going in the wrong direction. Don't be fooled by monthly or quarterly dead cat bounces. It is the long-term trends that matter and they are moving in the wrong direction. Our economy is not growing. What is growing is the size and reach of government.
If you are looking for growth look no further than the size of government, public employment, public salary levels, public debt, government intrusion in private affairs and, yes, taxation levels. They are all growing.
Of all these ills none is more pernicious than excessive regulation. Our economy is being regulated to death. And the problem isn't just at the Federal level. Provincial regulators have been equally busy, and municipal agents are themselves busy making it hard to build and grow communities. Forget pipelines or ports for a minute, try getting permission to build a driveway, garage or house extension? Regulations and taxation are sucking the life out of Canada's economy.
The government of Pierre Trudeau, elected in 1968 with such high expectations, began this fatal tilt toward excessive government. He expanded Ottawa's bureaucracy, raised taxes, increased debt to unsustainable levels, declared war on investment with FIRA (Foreign Investment Review Act)22 and imposed the draconian War Measures Act. Trudeau effectively nationalized Alberta's energy industry. He left the country more divided and economically weaker than he found it. The fracture that may ultimately break Canada began here.
Trudeau's excessive spending created such a fiscal mess that bond markets in New York threatened to saddle Canada with a credit rating comparable to bankrupt Argentina. This was the challenge inherited by the next Liberal government of PM Jean Chrétien and Finance Minister Paul Martin. To their great credit they grasped the nettle and balanced the budget but only after imposing crushing cuts in programs across the board. It wasn't popular but it was necessary. Some programs like Health Care have never recovered. The Conservative government of Stephen Harper, 2006-2015, generally governed with a degree of fiscal discipline and delivered a balanced budget to incoming Prime Minister Justin Trudeau. But memories are short in Ottawa and Pierre's son soon cranked up the spending machine. He reassured Canadians that "the budget would balance itself" even as he undertook a wild spending spree. Deficits soared and fiscal discipline collapsed.
Not to be outdone by his father, Justin imposed martial law in the form of the Emergencies Act against blue collar truckers who objected to draconian and now proven unnecessary Covid regulations. Do you recall being told where to place your feet at the checkout counter in a store as if that mattered a whit in combating Covid? How many useless masks were you told to wear? One, two, or was it three? We couldn't visit friends, relatives or even neighbours. Small businesses were ordered closed and many never recovered. A portion of Canada's middle class was wiped out.
And along the way, Justin Trudeau gutted Canada's Charter of Rights and Freedoms, one of his father's supposed greatest achievements.
If the Shoe Were on the Other Foot?
Imagine if a government elected out of the western Canada appointed an Alberta-based Minister with the stated aim of taxing, restricting and reducing Quebec Hydro and Ontario Auto production under the guise of a greater environmental good. After all, both industries have environmental impact. The stated goal of this government would be a "Just Transition" away from these problematic industries. How would Quebec and Ontario react?
With the National Energy Program in 1980 Ottawa effectively seized control of the Alberta oil and gas industry and crushed its economy, plunging the west into an economic depression. Jobs were lost, careers destroyed, homes repossessed, marriages cratered under the stress. That wound is still bleeding.
Even FIRA (Foreign Investment Review Agency) aimed at regulating foreign investment was aimed primarily at western energy. Suddenly in the 1970's foreign capital looking to invest in western energy was considered suspicious, especially American capital. Ironically, it was US capital that originally developed western oil and gas. Canada's Montreal- and Toronto-based banks showed little appetite for investing in exotic western energy in its critical and risky early days of development. It was American capital and expertise that stepped into the gap.
Now consider how Ontario and Quebec would react to a similar set of circumstances? Especially if they lacked the electoral clout to blunt the assault orchestrated on them by their own national government?
Source: Government of Canada, Just Transition Task Force, 2019.
And then there is the Unending Quebec Conundrum
Beginning in the 1970's, Canada turned an inordinate amount of attention and resources toward keeping Quebec inside the Confederation. All federal institutions became bilingual under the Official Languages Act, even in regions with no francophone population. Promotions in the bureaucracy and across the Armed Forces required candidates to be fluently bilingual. Applicants for federally appointed Superior Court positions were required to state their level of bilingualism before being appointed, even in areas with no francophone community. All commercial packages were required to be bilingual. Canadians generally supported these reforms in hopes of pacifying Quebec and holding the country together. It was worth a try. This was followed by transferring buckets of Federal money into the province. More than half of all Equalization Payments now go to Quebec even though it represents only 22% of the population. Quebec is scheduled to receive $13.9 billion of the $26.2-billion Equalization envelope in 2026–27.23
Canada made a good faith effort to hold the country together but let's face facts, it hasn't worked. Quebec is just as unhappy today as it was at the beginning of this cycle. And Quebec is about to elect another separatist government that will hold yet another referendum. Along the way western provinces paying the bill are becoming increasingly angry.
Killing the Golden Goose
In the last ten years, the Justin Trudeau government with Energy Minister Steven Guilbeault in the lead, declared a regulatory war on oil, gas and mineral extraction. Even agriculture came under Gilbeau's baleful eye for using fertilizer. At its most extreme environmental policy from think tanks like the World Economic Forum regarded even food production as a risk to the environment. Meanwhile in western Canada energy, agriculture and mining were critical industries. Ironically energy was one of the few economic sectors in Canada still attracting foreign capital.
Part 2—The Way Back
I began this exercise with the assumption Canada had dug itself into such a deep hole, there was no way out. But as my Jesuit educators taught me "writing clarifies thinking" so I emerged with a ray of hope. The present mess can be turned into a win but only if we change direction and policy now. Attached is a list of some needed policy changes. The question is can Canada's 1867 political structure produce these changes? That remains to be seen. That is the issue of the day. There is no question things need to change but can we politically make the necessary changes?
Canada's Last Bolthole: Become an Energy and AI Superpower Now
There remains one last bolthole, one strategy that puts Canada on the road to recovery, but it is the antithesis of everything Ottawa has prioritized during the previous 10 years or more. Canada must commit itself to becoming a true energy and AI superpower. The good news is all the elements are present. It can be done but do we have the will to do it?
Canada possesses an unusual combination of assets: enormous oil and natural-gas resources, major nuclear capabilities and expertise, one of the world's largest supplies of uranium, exceptional wind resources, vast amounts of developable land, a cold climate, abundant water, political stability, rule of law, proximity to the United States, a highly educated workforce and an established international reputation in artificial intelligence.
Taken separately, these are important advantages. Combined into a deliberate national economic strategy, they could provide Canada with an opportunity to become one of the world's largest centres for AI computation and energy-intensive advanced industry. No other nation on earth is better positioned to pursue this wining strategy.
This strategy would establish a national objective of increasing Canadian oil, natural gas, nuclear and wind energy production by approximately 50% over ten years, while simultaneously developing 10–30 GW of AI and advanced data-center capacity.
Hydroelectric production would be assumed to grow in the range of 25 percent made possible by investments in Churchill Falls and Newfoundland. If Hydro Quebec were to tap into Nova Scotia's offshore Wind West development this growth could approach 50 percent. In any case hydro will remain essential for grid balancing and firm electricity supply.
The economic strategy would have two mutually reinforcing components:
1. Expand Canada's energy economy.
Increase production, infrastructure investment, exports and government revenues from oil and natural gas while dramatically expanding nuclear and wind electricity generation.
2. Convert energy abundance into higher-value economic output.
Use a significant portion of Canada's new electricity supply to attract AI data centres, advanced manufacturing, critical-mineral processing, hydrogen and ammonia, defence manufacturing and other energy-intensive industries.
Canada would therefore move beyond its traditional role as an exporter of commodities and become increasingly an exporter of energy, manufactured products and computation.
AI: A Global Opportunity
Artificial intelligence is rapidly becoming one of the world's largest new sources of electricity demand. The International Energy Agency projects global data-centre electricity consumption will more than double to approximately 945 TWh by 2030, with AI the most important source of the increase. Accelerated servers used primarily for AI are projected to experience electricity-demand growth of approximately 30% annually.24
Individual AI projects are becoming enormous. Traditional data centres may consume 10–25 MW, while hyperscale AI centres can exceed 100 MW. The IEA identifies announced facilities measured in the thousands of megawatts, including projects approaching 5 GW.25 The emerging global competition for AI infrastructure is therefore increasingly becoming a competition for: power + land + capital + fibre + political security. Canada possesses all five or has the capacity to develop them.
Canada's government now estimates AI data-centre electricity requirements could reach 3–5 GW by 2030 and as much as 10 GW by 2050. The federal government's broader National AI Strategy cites estimates of approximately 5.5 GW of commercial AI compute requirements by 2030.26
The opportunity is to think considerably bigger. Instead of simply supplying Canada's domestic computing requirements, Canada should ask:
Why shouldn't Canada become one of the principal locations from which AI computation is supplied to the world?
Canada's Energy Foundation
Canada begins from an extraordinarily strong position. In 2025 the energy sector represented approximately 9.4% of Canadian nominal GDP, directly employed about 333,000 Canadians and indirectly supported another 432,000 jobs.
Canadian energy exports reached approximately $197.8 billion, compared with $54.4 billion of imports. Canada is already the world's sixth-largest energy producer, fourth-largest crude-oil producer and fifth-largest natural-gas producer.27
The proposal is to build upon this position rather than replace it.
Ten-Year Energy Objective
By approximately 2036, Canada would target:
Sector | 2036 objective |
Oil | +50% production |
Natural gas | +50% production |
Nuclear electricity | +50% generation |
Wind electricity | +50% or greater generation |
Hydro | 25% plus |
Transmission | Major national expansion |
LNG/export infrastructure | Major expansion |
AI/data-centre capacity | 10–30 GW target range |
The precise increases need not be identical in every sector. The central objective would be to increase the combined productive capacity of these energy systems by approximately 50% over ten years.
The investment requirement could reasonably reach $800 billion or more over ten years, including generation, production, pipelines, LNG facilities, transmission, ports and supporting infrastructure. This investment itself would constitute a major Canadian economic stimulus—but unlike ordinary government stimulus, it would leave behind productive assets generating income for decades. These energy- and AI-related investments are exactly the opportunities sought by large investment houses and sovereign wealth funds.
This $800-billion figure is an author's scenario assumption, not an official forecast; it should be read as an order-of-magnitude estimate pending project-level capital-cost modelling.28
Give Each Energy Source a Different Job
The strategy should not treat all forms of energy as interchangeable, rather each energy source would play a different vital role:
Oil — The Export and Revenue Engine
Expanded Canadian oil production would primarily serve international markets. A 50% expansion could potentially move Canadian production from roughly five million barrels per day toward the range of 7–7.5 million barrels per day, subject to resources, investment, transportation capacity and market demand.
The objective would be to maximize Canada's access to several markets rather than remain overwhelmingly dependent upon one customer. Pacific, Atlantic and Gulf-connected export capacity would therefore form part of the strategy.
Oil would generate export earnings → corporate income → royalties → tax revenues → capital investment → Canadian savings and investment.
Natural Gas — Export Fuel and Industrial Fuel
Natural gas would serve two purposes. The first would be expanded LNG exports to Europe and Asia. The second would be domestic use for industry and electricity generation where appropriate. Natural gas provides an important complement to intermittent renewable generation and can also support petrochemicals, fertilizer, hydrogen, industrial heat and manufacturing.
Nuclear — Canada's AI Baseload
Nuclear electricity should become one of the foundations of Canada's AI strategy. AI facilities operate continuously. They cannot economically depend upon electricity that is available only when weather conditions permit. Canada should therefore accelerate:
refurbishment and life extension of existing reactors;
new large-reactor construction where economically justified;
SMR deployment;
nuclear supply-chain expansion; uranium production and processing.
Develop a national capacity to safely store expended fuel until technology is available to reuse it. (Spent nuclear fuels has used only a fraction of its energy potential. In time the technology for exploiting this remaining energy will be available.)
Nuclear provides something extraordinarily valuable to an AI economy: large quantities of predictable electricity, 24 hours a day, for decades.
Advanced technology and proven engineering to safely store spent fuel for ultimate reuse already exists and are being deployed in places like Finland, Sweden and soon northern Ontario. If Canada were to accept storage of "Canadian uranium sold to global customers," it would create a closed loop economic engine with a unique value proposition. It would be a license to print money.
Wind — Canada's Scalable Electricity Resource
Wind provides the other side of the electricity equation. It can be deployed more rapidly than nuclear and potentially at enormous scale. Onshore wind should be expanded, while Canada's offshore wind resources—particularly Atlantic Canada—could ultimately support extremely large industrial electricity requirements. The winds off Nova Scotia's coast provide the largest offshore wind potential on earth. The technology for exploiting it already proven. Combined with nuclear, existing hydroelectric capacity, natural gas and storage creates a more robust electricity system than any individual technology could provide.
Create Canadian AI Energy Zones
Canada should not wait for individual data-centre developers to approach utilities seeking whatever electricity happens to be available. That reverses the logic required for infrastructure at this scale. Canada should identify AI Energy Development Zones capable ultimately of accommodating 1–5 GW or more of computing capacity. Each zone would offer:
large pre-assembled sites + dedicated electricity + redundant transmission + multiple fibre connections + water/cooling solutions + expedited permitting + transportation infrastructure.
Potential regions could include:
Ontario: nuclear electricity, established technology sector and proximity to major U.S. markets.
Quebec: abundant existing hydroelectricity, expanding wind generation and proximity to northeastern U.S. markets.
Alberta: enormous natural-gas resources, large sites and an established energy-investment ecosystem.
Saskatchewan: uranium, natural gas, potential nuclear development and large quantities of available land.
Atlantic Canada: offshore wind, potential nuclear development, enormous land availability, Atlantic fibre connectivity and geographic proximity to Europe.
The result would resemble industrial parks—but built at an entirely different scale. A 5-GW AI Energy Zone would effectively become a new type of industrial city. The AI economy provides an opportunity to move substantially higher up the value chain. Instead of simply exporting electricity, Canada could use electricity domestically to operate enormous computing systems.
The resulting product—computation—can then effectively be exported digitally.
The same principle applies beyond AI. Abundant electricity could attract critical-mineral refining, aluminum, advanced steel, battery materials, hydrogen, ammonia, defence production, advanced manufacturing and automated industrial production.
AI should therefore be the flagship of a broader Canadian Energy-Intensive Industrial Strategy.
Potential Economic Impact
The energy-expansion scenario developed here would require more detailed econometric modeling before its effects could be presented as hard forecasts. However, reasonable scenario ranges illustrate its potential magnitude.
A 50% expansion of oil, natural gas, nuclear and wind production could plausibly involve approximately: $800 billion or more of cumulative investment over ten years. At maturity this scenario could produce a win for Canada.
At maturity, a central scenario might produce:
Measure | Central scenario at maturity |
Additional direct energy GDP | $80–115B/year |
Supply-chain and indirect GDP | $30–50B/year |
Energy-intensive/AI industry | $40–80B+/year |
Potential total GDP impact | $150–245B+/year |
Additional energy exports | $70–120B/year |
Additional employment supported | 250,000–425,000+ |
Additional government revenues | $10–25B/year |
The AI upside could eventually push the industrial contribution materially higher. Canada's existing energy industry already accounts for nearly one-tenth of nominal GDP and almost $200 billion of annual exports. Adding AI changes the proposition from simply enlarging an existing industry to creating an entirely new high-value export platform.
Canada's Political and Sovereignty Advantage
There is another asset that doesn't appear on an energy balance sheet, stability:
AI infrastructure will increasingly be regarded as strategic national infrastructure. Companies and governments deciding where to place tens of billions of dollars of servers, GPUs and intellectual property will consider rule of law, property rights, geopolitical risk, data sovereignty, national security, electricity reliability and government stability. Canada is a G7 democracy, NATO member and close American ally sharing an integrated continental economy with the United States.
Canada has also begun explicitly pursuing sovereign computing capacity. The federal government launched its AI Sovereign Compute Infrastructure Program in 2026, including approximately $890 million for the infrastructure-build component, while its broader strategy includes more than $2 billion of existing commitments toward Canadian AI compute capacity.29
The proposed strategy would dramatically increase the ambition. Canada would pursue both:
Sovereign Canadian compute for Canadian governments, researchers and businesses, and International hyperscale investment serving North American and global customers from Canadian facilities. There is no contradiction between the two.
The Critical Policy Requirement: Speed
Canada's natural resources alone will not win this competition. Capital will go where projects can actually be built in a timely manner. A national strategy would therefore need firm service standards for site approvals, environmental reviews, transmission approvals, generation projects, fibre construction and major infrastructure permitting.
A company considering a billion-dollar AI facility is unlikely to wait eight or ten years to discover whether 500 MW of electricity will eventually become available. Canada must be able to say: Here is the land. Here is the power. Here is the fibre. Here are the approvals. Here is the expansion capacity. When can you start construction?
That would mean dramatically accelerating investment and project approval processes. Properly executed this could become one of Canada's strongest investment propositions.
A Ten-Year National Mission: Canada 2036
Increase oil, natural gas, nuclear and wind energy production by approximately 50%. Mobilize approximately $800 billion of energy and infrastructure investment. Build the transmission, pipelines, LNG terminals, ports and fibre networks necessary to support that expansion. Create several enormous AI Energy Development Zones.
Use expanded oil and natural-gas exports to increase Canada's trade surplus, investment income and government revenues, and attract global capital while preserving a significant sovereign Canadian AI capability. And above all, use Canada's natural-resource advantage to build higher-value industries inside Canada.
Conclusion
Canada's economic challenge is frequently described as one of weak productivity, inadequate business investment and declining GDP-per-capita growth. This strategy attacks all three simultaneously. It would:
Mobilize hundreds of billions of dollars of capital investment.
Dramatically expand Canada's productive infrastructure.
Increase exports.
It would also increase the amount of capital employed per Canadian worker. And it would connect one of Canada's greatest traditional strengths—energy—with what may become one of the defining industries of the twenty-first century—artificial intelligence. The federal government itself estimates that Canada's electricity infrastructure may need to at least double by 2050 and cost more than $1 trillion, driven partly by AI, industrial growth and electrification.30
The question, therefore, is not whether Canada will have to build substantially more electricity infrastructure. The strategic question is what Canada intends to accomplish with it. Rather than simply meeting rising domestic demand, Canada could deliberately build ahead of demand and use abundant energy as an investment magnet.
The national objective should be to make Canada one of the world's most attractive places to produce energy, manufacture energy-intensive products and perform artificial-intelligence computation. Canada already possesses much of what such a strategy requires: resources, land, engineering expertise, AI research capabilities, access to capital, proximity to the world's largest technology market and a stable political and legal environment.
What is missing is not the underlying resource base. It is the will to combine these advantages into a national economic strategy.
BMS
Appendix A: The List of Must Do's from OECD Recommendations
Create more predictable business conditions and encourage investment in productive assets, technology and infrastructure.
Aggressively remove regulatory and non-tariff barriers between provinces (Free Trade within Canada)
Increase competitive pressure, particularly in telecom, aviation, broadcasting, digital markets and other protected sectors
Reduce foreign-ownership restrictions except on national security grounds
Put greater emphasis on turning Canadian research into commercially viable businesses and technology
Target financing incentives toward young, innovative, high-potential companies rather than existing enterprises
Improve recognition of professional qualifications between provinces
Establish better recognition of foreign credentials across Canada
Shift taxation away from income/investment toward consumption and less growth-distorting tax bases
Bring public spending under control
Diversify exports while preserving access to US markets.
These aren't peripheral recommendations. The OECD is arguing for a more competitive, investment-oriented economy.
We would add to the list:
Shrinkage of government at all levels
Decentralization of power to provinces
A Senate appointed by the provinces
Federal government gets out of provincial jurisdictions
A free trade arrangement with the US, the freer the better as Canada's economy of scale works best north south not east west
Abandon supply management—pay off those impacted
A phase-out of transfer payments which alienate the west while subsidizing poor governance in other regions.
The Canadian Paradox
About the author
Originally from Montreal, Canada, Captain Barry Sheehy CD (Ret'd) holds degrees from Loyola and McGill Universities and the Canadian Armed Forces Decoration. After leaving the military, Mr. Sheehy entered the entrepreneurial world of business consulting, advising multinational corporate executives in more than a dozen countries throughout Europe, Japan, North America, the Middle East and the Pacific Rim. Throughout his successful business career, he has progressed a love of history to become ranked as #3 among notable Canadian historians.
His written works have appeared along side of those of Presidents Clinton and Bush, Alan Greenspan, Robert Rubin and business leaders such as Lou Gerstner, Jack Welch, and Michael Dell, Edwards Deming, Stephen R. Covey, Rosabeth Moss Kanter, Gary Hamel, Peter Senge and Tom Peters. His speaking tours have taken him to Europe, Latin America, the Middle East, India, Singapore, Hong Kong, Mexico, Canada, and the United States. He is the author of six books. in the areas of supply chain management, investment optimization and quality improvement.
Endnotes
OECD, OECD Economic Surveys: Canada 2025 (26 May 2025), especially the discussion of weak per-capita growth, low productivity and soft business investment: https://www.oecd.org/en/publications/oecd-economic-surveys-canada-2025_28f9e02c-en.html.
Statistics Canada, "Canada's gross domestic product per capita: Perspectives on the return to trend" (24 April 2024): https://www150.statcan.gc.ca/n1/pub/36-28-0001/2024004/article/00001-eng.htm.
OECD, OECD Economic Surveys: Canada 2025, "Macroeconomic developments and policy challenges": https://www.oecd.org/en/publications/oecd-economic-surveys-canada-2025_28f9e02c-en/full-report/macroeconomic-developments-and-policy-challenges_fc10c1ae.html.
OECD, Reviving Productivity Growth in Canada (29 June 2026), "The productivity challenge": https://www.oecd.org/en/publications/reviving-productivity-growth-in-canada_773dcd00-en/full-report/the-productivity-challenge_5da9b3c2.html.
OECD, OECD Economic Surveys: Canada 2025, "Raising business-sector productivity." The OECD reports that real investment per worker in 2023 was 85% of its 2014 level, while the comparable measure rose 21% in the United States: https://www.oecd.org/en/publications/oecd-economic-surveys-canada-2025_28f9e02c-en/full-report/raising-business-sector-productivity_443bcd88.html.
Statistics Canada, "Understanding Canada's innovation paradox" (24 July 2024): https://www150.statcan.gc.ca/n1/pub/36-28-0001/2024007/article/00002-eng.htm.
Statistics Canada, international investment position and direct-investment statistics, Table 36-10-0008-01 and related international-accounts tables: https://www150.statcan.gc.ca/t1/tbl1/en/tv.action?pid=3610000801.
CPP Investments, 2026 fiscal-year results and FAQ. Net assets were $793.3 billion and Canadian investments were $119.2 billion at 31 March 2026: https://www.cppinvestments.com/newsroom/cpp-investments-net-assets-total-793-3-billion-at-2026-fiscal-year-end/ and https://www.cppinvestments.com/faqs/.
OECD, OECD Economic Surveys: Canada 2025, "Macroeconomic developments and policy challenges," discussing elevated household debt, debt-service costs and housing affordability: https://www.oecd.org/en/publications/oecd-economic-surveys-canada-2025_28f9e02c-en/full-report/macroeconomic-developments-and-policy-challenges_fc10c1ae.html.
Statistics Canada, "Understanding Canada's innovation paradox" (2024), and Statistics Canada productivity tables: https://www150.statcan.gc.ca/n1/pub/36-28-0001/2024007/article/00002-eng.htm.
OECD Revenue Statistics, Canada country data. Definitions differ from broader measures of the total tax burden: https://www.oecd.org/en/topics/sub-issues/global-tax-revenues/statistics-and-data.html.
Fraser Institute, Taxes versus the Necessities of Life: The Canadian Consumer Tax Index, 2025 edition. This is the Institute's constructed "average family" measure, not Statistics Canada's national-accounts tax-to-GDP ratio: https://www.fraserinstitute.org/studies/taxes-versus-necessities-life-canadian-consumer-tax-index-2025-edition.
Department of Finance Canada, Budget 2025, Economic and Fiscal Overview, fiscal outlook table (budgetary balance of −2.5% of GDP for 2025–26): https://budget.canada.ca/2025/report-rapport/overview-apercu-en.html. Historical series: Department of Finance Canada, Fiscal Reference Tables—October 2025: https://www.canada.ca/content/dam/fin/publications/frt-trf/2025/frt-trf-25-eng.pdf.
Food Banks Canada, HungerCount 2025, reporting nearly 2.2 million visits in March 2025, double March 2019; Food Banks Canada's 2026 reporting states that one in four people experiences food insecurity: https://foodbankscanada.ca/hunger-in-canada/hungercount/overall-findings/ and https://foodbankscanada.ca/press-releases/food-banks-canada-welcomes-national-food-security-strategy-and-calls-for-continued-action-on-income-security-measures/.
Statistics Canada, "Portrait of Canadian emigration" (18 March 2026): https://www150.statcan.gc.ca/n1/pub/11-627-m/11-627-m2026013-eng.htm.
Brock University, "Brain Drain: Study shows many science and tech grads heading to U.S. for work" (4 May 2018), summarizing a survey of 3,162 graduates from Waterloo, Toronto and UBC: https://brocku.ca/media-room/2018/05/04/brain-drain-study-shows-many-science-and-tech-grads-heading-to-u-s-for-work/.
Government of Canada, "The Automotive Products Trade Agreement—Canadian Automotive Industry": https://ised-isde.canada.ca/site/automotive-transportation-industries/en/automotive-products-trade-agreement.
Canadian Heritage, "The history of the National Flag of Canada," noting the flag's inauguration on 15 February 1965 and its prominence during the 1967 Centennial: https://www.canada.ca/en/canadian-heritage/services/flag-canada-history.html.
Canadian Security Intelligence Service, "Canadian Intelligence History," on the October 1970 FLQ kidnapping crisis and invocation of the War Measures Act: https://www.canada.ca/en/security-intelligence-service/corporate/publications/celebration-of-csis-40th-anniversary.html.
Government of Canada archival material, The National Energy Program, 1980: https://publications.gc.ca/site/eng/9.699406/publication.html. The program changed federal taxes, prices, grants and public participation in the petroleum sector; "seized control" is political characterization rather than a literal legal nationalization.
Public Order Emergency Commission, Report of the Public Inquiry into the 2022 Public Order Emergency (2023): https://publicorderemergencycommission.ca/final-report/; Federal Court, Canadian Frontline Nurses v. Canada (Attorney General), 2024 FC 42: https://decisions.fct-cf.gc.ca/fc-cf/decisions/en/item/524401/index.do.
Government of Canada, Foreign Investment Review Act, S.C. 1973-74, c. 46 (assented to 12 December 1973), archived statute record: https://publications.gc.ca/site/eng/9.881589/publication.html.
Department of Finance Canada, "Major federal transfers," 2026–27 tables: https://www.canada.ca/en/department-finance/programs/federal-transfers/major-federal-transfers.html.
International Energy Agency, Energy and AI (2025), "Energy demand from AI": https://www.iea.org/reports/energy-and-ai/energy-demand-from-ai.
International Energy Agency, Energy and AI (2025). Facility sizes are announced-project figures, not necessarily completed capacity: https://www.iea.org/reports/energy-and-ai.
Innovation, Science and Economic Development Canada, Canada's National Artificial Intelligence Strategy: AI for All (8 June 2026): https://ised-isde.canada.ca/site/ised/en/canadas-national-artificial-intelligence-strategy-ai-all.
Canadian Centre for Energy Information, "Key energy, economic and environmental indicators," 2025 data: https://energy-information.canada.ca/en/energy-facts/key-energy-economic-environmental-indicators.
For comparison, Natural Resources Canada's national electricity blueprint estimates about $1.4 trillion in electricity-system capital investment through 2050 under its scenario: https://natural-resources.canada.ca/energy-sources/powering-canada-blueprint-success.
Innovation, Science and Economic Development Canada, "AI Sovereign Compute Infrastructure Program" (1 June 2026): https://ised-isde.canada.ca/site/ised/en/ai-sovereign-compute-infrastructure-program; Government of Canada, launch announcement (15 April 2026): https://www.canada.ca/en/innovation-science-economic-development/news/2026/04/canada-launches-national-initiative-to-build-large-scale-ai-supercomputing-capacity.html.
Natural Resources Canada, Powering Canada: A Blueprint for Success, estimating approximately $1.4 trillion of electricity capital investment by 2050 and presenting scenarios in which electricity use more than doubles: https://natural-resources.canada.ca/energy-sources/powering-canada-blueprint-success. See also Environment and Climate Change Canada, "Accelerating Canada's clean power advantage" (9 November 2025): https://www.canada.ca/en/environment-climate-change/news/2025/11/accelerating-canadas-clean-power-advantage.html.
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