Executive Summary
In his address to WEF in January 2026, Canada’s Prime Minister Mark Carney highlighted the recent weaponization of economic integration by major powers as tools of coercion. In defence, he called on ‘middle powers’ to collectively develop alternatives via ad hoc, overlapping, issue-specific partnerships.
Energy affordability, security, and autonomy, in the context of rapidly accelerating demand for electricity, are particularly challenging for middle powers. Against this backdrop, Canada put forward its National Electricity Strategy on May 14, 2026, with the stated aim of “building new infrastructure to double Canada’s electricity supply by 2050.” Though superficially a domestic nation-building project, I argue that its structure – taken in context – makes it a natural forge for international industry partnerships and middle power coalitions.
Key Points
- Canada’s largest sources of electricity generation in 2024 were hydropower (55.4%), natural gas (16.4%), nuclear (13.9%), and wind (7.5%).
- Over $1 trillion CAD will be required to meet the Electricity Strategy goals.
- Canada relies on imports for nearly half the critical components needed for power generation and distribution, predominantly from the U.S.
Analysis
In the face of economic coercion from the U.S., Canada has sought to protect its economic sovereignty by diversifying its trade partnerships while attempting to structure them to ensure value added within the Canadian economy. In this context, Canada’s Electricity Strategy poses two challenges for sovereignty and related opportunities for international cooperation:
First, given the federal deficit, Canada is striving to mobilize private capital, potentially involving international financing and FDI. This creates a tension between attracting foreign capital and maintaining economic sovereignty, especially since Canadian controlling shares of major Canadian industrial assets are the lowest in the energy and manufacturing sectors. Moreover, while Canada continues to be attractive for FDI, it is unclear whether the country has sufficient guardrails and investment regimes in place to retain sovereignty over the resulting economic outcomes.
Second, one of the four key ambitions of the Electricity Strategy is to “make more of the technologies and components powering [the] grid” in Canada. Canada possesses some manufacturing capability and expertise in specific areas such as nuclear energy and hydropower technologies. But given the country’s reliance on electricity tech imports, accomplishing the Strategy in a way that supports sovereignty will require growing domestic production capacity.
Canada has two templates for international economic cooperation it could draw on to address these challenges. First, Canada’s foreign strategy on critical minerals has enabled specific and targeted joint projects between Canada and a range of governments and private companies, backed by international capital in exchange for long-term supply from Canada. The Electricity Strategy seeks to emulate the trade-diversification approach used in the critical minerals partnerships. Second, Canada could draw on its Defence Procurement Strategy as a model, which applies a value propositions guide to ensure that international bidders prioritize economic benefits for Canada. Comparable approaches can be seen in the Norwegian and German shared submarine fleet proposal, and Sweden’s Gripen, GlobalEye, and sovereign data centre proposals.
In contrast with traditional FDI, these templates offer ready-made solutions for attracting foreign capital in support of domestic production while attempting to maintain Canada’s economic sovereignty.
Policy Implications
- A core aspect of Canada’s critical mineral partnerships has been active federal support and facilitation for offtake agreements as a key mechanism for collaboration. This could provide a model for similar agreements in the electricity sector. Given weaponized supply-chain dependencies, middle powers should consider targeted business-to-business partnerships with Canada in this field.
- The Electricity Strategy is also an opportunity for shared development of national security infrastructure at a government-to-government level. Specifically, cybersecurity and manufacturing of essential components could follow the aforementioned Norwegian, German, and Swedish proposals.
- The two templates do not directly fill potential gaps in protective regimes against FDI ownership. These models embody mutual security interests and shared technological development. Used within Canada’s Electricity Strategy, they could provide a roadmap for how foreign investment can enhance, rather than diminish, national economic sovereignty.
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