Welcome to Economic Insights, your twice-weekly deep dive into the major projects and policy shifts shaping the Canadian economy.

Stories we are following:

• The federal government dropped its long-awaited artificial intelligence strategy on Thursday. Prime Minister Mark Carney is pitching it as a “pro-worker” document meant to foster trust in the technology. It outlines education initiatives, upcoming legislation to protect the public and a new tech fund, but sidesteps issues linked to workforce displacement and energy-hungry data centres.
• Ottawa is pumping the brakes on fast-tracking its overhaul of the federal project assessment process. Following pushback from Indigenous and environmental groups over rushed timelines, Intergovernmental Affairs Minister Dominic LeBlanc extended public consultations into mid-summer. Legislation is expected to be tabled in the fall.

• Prime Minister Mark Carney is publicly distancing himself from Ontario Premier Doug Ford’s claims of federal backing for his pitch to expand Billy Bishop Toronto City Airport, saying he has “not yet formed an opinion.”

Federal AI strategy counts jobs created, but stays silent on ones lost (iPolitics)

Prime Minister Mark Carney, flanked by Artificial Intelligence Minister Evan Solomon, unveiled the federal government’s comprehensive AI strategy Thursday at Toronto’s Vector Institute. The messaging is framed around building a “safe, reliable, and sovereign” AI landscape, with a focus on preparing Canada’s younger workforce for a tech-driven economy.

• The vision: Carney pitched a ‘pragmatic approach’ to bridging Canada’s “major adoption gap.” The strategy outlines a public trust campaign, pledging entry-level AI literacy training for all Canadians and guaranteeing post-secondary students access to federally verified “trusted AI agents.” More details on that later, say government officials.
• The job numbers: The government claims its strategy will directly create up to 90,000 tech-related roles for youth and fuel a net increase of 250,000 jobs across the wider economy by 2031.
• Differing math: During a technical briefing for reporters, federal officials declined to share their modeling regarding potential workforce displacement, saying estimations vary widely. The Conference Board of Canada recently warned that high-adoption AI scenarios could lead to a “short-term pain” period erasing up to 555,000 existing jobs by 2030. 
• Stat can boost: Ottawa is instead routing $50 million to Statistics Canada to monitor displacement in real time.
• On funding: The document talks about a new $500-million Canadian Tech Growth Fund that would allow Ottawa to take direct equity stakes in promising domestic AI firms. The new Sovereign Wealth Fund could also come into play.
• The power crunch: Absent from the document is a roadmap for the energy grid. While the text highlights Canada’s abundance of clean, renewable energy as an asset for data centers, it does not mention the regional reality of Alberta becoming a hotbed for data center proposals, where developers are heavily eyeing natural gas to provide baseload power.

Ottawa extends consultation period for proposed project assessment changes (iPolitics)

Unlike its rushed approach to Bill C-5, the Carney government does not plan to force through its proposed regulatory changes for major projects before the end of the current parliamentary sitting.

• We hear you: The feds say they’ve received feedback from thousands of stakeholders since releasing its discussion paper last month, including requests for a longer consultation period. The window has been extended to July 22, 2026. Intergovernmental Affairs Minister Dominic LeBlanc’s office confirmed that formal legislation will now be held until the fall parliamentary sitting.
• What’s on the line: The proposed overhaul included several consequential proposals to speed up the assessment process. It seeks to impose a strict one-year limit on federal project approvals, establish a centralized Indigenous consultation hub, and exempt pipelines from undergoing Impact Assessment Agency reviews, having them carried out by the Canadian Energy Regulator, which has a more technical than holistic focus.
• The pushback: Legal and environmental experts have warned that stripping back these regulatory layers risks clearing the runway for major projects where public costs outweigh long-term economic benefits. The Assembly of First Nations and several environmental coalitions heavily criticized the initial rushed timelines, demanding full committee hearings and raising alarms over the potential fallout for species at risk.
• The blind spots: Major questions remain regarding the discussion paper’s proposal to introduce “special economic zones” where industrial projects could be pre-approved. It is still entirely unclear how closely this federal mechanism will mirror Ontario’s controversial Bill 5, leaving developers and watchdogs waiting for the fine print this autumn.

Carney says he has not formed an opinion on Billy Bishop expansion despite Ford’s claims of federal support (iPolitics) 

The political battle over Toronto’s waterfront continued Thursday with Prime Minister Mark Carney casting doubt over Ontario Premier Doug Ford’s claims that Ottawa is fully on board with his proposed expansion of Billy Bishop Toronto City Airport.

• The contradiction: For months, Premier Ford has said the federal government recognizes the immense economic and job opportunities associated with his airport proposal. On Thursday, Carney said “I personally have not formed an opinion, just to be absolutely clear, on the airport.”
• Clear positioning: This was Carney’s clearest statement to date on a proposal that has become one of the most divisive issues at Queen’s Park this spring. Carney previously described the proposal as “an interesting vision” with “big possibilities,” but now says a consultation process must happen before the feds give the green light.
• The local revolt: Carney’s caution reflects some of the concerns voiced by his Toronto-area Liberal MPs on the Hill earlier this week.
• Special economic zone: The Ford government passed the Building Billy Bishop Airport Act, legislation that removes the City of Toronto from the tripartite agreement governing the airport and replaces it with the province. The legislation also gives Ontario the power to designate the airport a special economic zone, allowing the province to accelerate approvals and bypass certain regulatory requirements.

By the numbers:

$750M: The estimated annual interest bill taxpayers will carry to service the debt needed to seed the new $25-billion Canada Strong Fund, assuming a conservative 3 per cent borrowing rate. Journal de Québec confirmed the number with Minister Champagne’s office. 

$225 vs. $76: The divide in normalized electricity system costs per megawatt-hour ($/MWh) between gas-rich Alberta ($225) and hydro-rich Quebec ($76) in 2023, according to a new C.D. Howe Institute report.

1,830 metres: The maximum total runway length the Toronto Port Authority is actively studying for Billy Bishop Airport. To reach this threshold and accommodate modern jets, the plan would require reclaiming more than half a kilometer of new, artificial land mass directly out of Lake Ontario.

Major projects watch:

– Natural Resources Canada tells iPolitics its policy group is actively looking at possible long term financing mechanisms for major electricity projects, with one provincial source saying it could involve extending loan repayment timelines from the current 30-40 years to 70-80 years. The proposal seems to be in the very early stages, with federal government officials saying they do not know if this would apply to existing funds like the CIB or the CGF, or to a new fund entirely. Finance Canada and the CIB say they haven’t been brought into that discussion yet.

– Speaking to reporters Thursday, Nova Scotia Premier Tim Houston says there are ongoing discussions, “as recently as this week,” with the Major Projects Office for transmission capacity for the proposed West Wind project. 

– Seen in the Globe and Mail: The Nisga’a Lisims Government, whose territory includes the Nass River region northeast of Prince Rupert, said it has not been consulted by Alberta or Ottawa officials and remains opposed to an oil pipeline. It issued a statement on Tuesday responding to reports of earlier discussions. “All Nisga’a citizens can rest assured that despite this ill-conceived process being advanced by the Alberta government,nothing can happen on our lands without our consent, our treaty guarantees it,” it said. “At the same time, anybody can draw lines on a map and speculate about all kinds of projects.”

– According to a recent Leger survey, two-thirds of Canadians (66%) support the agreement between the federal and Alberta governments to expand Alberta’s oil and natural gas sector. The agreement includes plans to build a new export pipeline, invest in carbon capture technology, and slow the increase of Alberta’s industrial carbon tax. Support is particularly strong among Albertans (80%), Canadians aged 55 and older (72%), men (72%), and both Liberal (76%) and Conservative (77%) voters.

Headlines:

• Ottawa expands aid for forestry sector (Brent Jang, Globe and Mail)
• Cross-party group calls on Canada to block development of superintelligent AI technology (Benjamin Lopez Steven, CBC)
• ‘Que-Berta’: Alberta, Quebec premiers eye co-operation on economy, autonomy (CP)
• New analysis finds Canada-Alberta MOU leaves emissions largely unchanged (Canadian Climate Institute)
• B.C. extends pause on new mineral claims in northern regions to 2027 (CP)
• Supersized data centres are coming to Canada. One province is at the epicentre (Kyle Bakx, Nora Young, Rukhsar Ali, CBC)
• The Environmental Cost of Artificial Intelligence: Carbon, Water, and Land Footprints (UN)
• Powering Ahead: Comparing Electricity Prices Across Canada (C.D. Howe)
• Canada’s ‘major projects’ should not come at the cost of the environment (The Conversation)
• Fact check: Poilievre and Carney on Canada’s economy (CBC)
• How high pandemic-period immigration papered over the cracks in Canada’s economy (CP)
• New signs emerging that LNG Canada 2 investment decision in works (Derrick Penner, Vancouver Sun)
• Ottawa funds mining skills alliance to build ‘talent pipelines’ (Michael MacDonald, Glove and Mail)
• A Canadian leader in nuclear fusion comes home—with big plans to make power (The Logic)
• Bruce Power gives $1M to nearby communities to help plan for growth amid new nuclear energy project (Desmond Brown, CBC)