Energy: Doing Business in Canada 2026
This chapter is part of our Doing Business in Canada guide, designed to help global investors navigate the legal, regulatory and strategic considerations that affect investment decisions, execution, and long-term success in Canada.
Energy
Canada’s combination of significant natural resources, institutional stability, technical capability and access to long-term capital offers abundant opportunities across conventional energy, electricity generation and transmission, transition technologies, and related infrastructure.
Canada’s energy sector is diversified, as it is one of the largest producers of oil and natural gas, has growing liquefied natural gas (LNG) export capacity, has extensive hydroelectric capacity, and continues to support investment in natural gas-fired generation, renewable power, and nuclear energy. The energy landscape also includes carbon capture, use and sequestration (CCUS), hydrogen, battery storage, electrification and industrial decarbonization. This variety creates multiple entry points for investors and project proponents.
Canada is also well connected with global capital. International investors have long participated in Canadian energy through asset acquisitions, joint ventures, project development, project finance, infrastructure funds, strategic investments and offtake-linked development. That pattern is likely to continue as Canada expands export capacity, modernizes electricity systems, and develops new energy infrastructure.
Canada is best understood as a stable but procedurally complex market. The legal framework is generally predictable, but projects often require carefully sequenced approvals across different levels of government, continuous stakeholder engagement and Indigenous consultation and accommodation.
Sector Overviews
Oil and Gas and LNG
Oil and gas are central to Canada’s economy and to its role in global energy markets. Western Canada is the main centre for upstream development, midstream infrastructure, and export-oriented investment. For foreign businesses, opportunities extend beyond producing assets to infrastructure, processing, transportation, services, CCUS and other emissions-reduction initiatives and integrated export projects.
The oil sands continue to dominate production in Canada, but there is significant growth potential in unconventional, high-output shale and tight rock formations like the Montney, Duvernay, and Horn River Basin, with the Montney being one of the largest resources globally. A key challenge for the oil and gas sector continues to be limited export capacity, particularly to global markets outside of the United States.
LNG is an important part of an evolving picture because it is changing how international investors assess Canadian natural gas. Canada has long had a large resource base, and LNG development is creating a more direct link between domestic production and overseas demand. The commencement of LNG Canada’s first exports in June 2025 was a significant milestone. As export capacity develops, foreign companies may find opportunities in supply of feed gas, liquefaction, LNG offtake, joint ventures, supporting infrastructure and related financing.
Power: Natural Gas, Renewables and Nuclear
In Canada, each province has its own generation mix, demand profile, regulatory structure, procurement process and utility model. For foreign entrants, the electricity markets and regulations in each province will differ significantly from other provinces.
Natural gas-fired generation remains important in several jurisdictions as a source of reliability and dispatchable capacity. Renewable power continues to attract investment, particularly where provincial governments or system operators are procuring supply or advancing decarbonization. Nuclear energy also remains a significant part of the Canadian market, particularly in Ontario (which is constructing the G7’s first small modular reactor and is in the process of refurbishing its existing nuclear facilities).
For international companies, the Canadian power sector offers opportunities in regulated or quasi-regulated infrastructure, long-term contracted assets, development platforms, technology deployment and partnerships with utilities, public authorities, and industrial users.
Transition Opportunities: CCUS, Hydrogen and Battery Storage
Canada’s transition economy has been developing rapidly. CCUS has become a significant area of focus, particularly in regions such as Alberta with concentrated industrial emissions, suitable geology, and policy support. Hydrogen continues to attract public and private interest, especially where it may support industrial decarbonization, export opportunities or heavy transport. Battery energy storage systems are becoming more important as provinces seek greater flexibility, resilience, and integration of variable renewable generation.
These sectors can be attractive to foreign entrants because they reward technical expertise, innovative structuring and comfort with developing regulatory frameworks. As in other advanced energy markets, the legal and commercial architecture for transition projects is still evolving, and timing may be as important as technology.
Foreign companies should assess these opportunities carefully. Incentives, interconnection rights, offtake arrangements, permitting pathways and utility relationships may determine whether a project is financeable. Investors with patience and strong local partnerships may find Canada to be a useful platform for early and scalable participation in next-generation energy infrastructure.
Data Centres and Rising Electricity Demand
Digital infrastructure is increasingly shaping electricity planning in Canada. Data centres, particularly those tied to artificial intelligence and large-scale computing, are drawing greater attention to load growth, grid expansion, and connection policy.
Ontario’s Independent Electricity System Operator, for example, forecasts higher long-term demand from data centres and identifies AI-related facilities as one driver. As of July 2025, data centres had requested 6,500 MW of new load, or about 30% of Ontario’s 2024 peak demand. By 2035, the data centre industry is expected to account for about 13% of new electricity demand in Ontario. To respond to this forecasted increase, Ontario has enacted statutory measures for certain “specified load facilities,” including data centres, under which connection or reconnection may be evaluated based on factors such as economic impact, job creation, and energy intensity.
In British Columbia, under Bill 31, the Energy Statutes Amendment Act, British Columbia and BC Hydro launched a competitive allocation process in January 2026 to manage electricity demand from AI and data centre development in the province. Prospective data centre projects must participate in a competitive selection process administered by BC Hydro. The process is intended to support new development while preserving electricity capacity for established industries.
Alberta has positioned itself as a hub for AI infrastructure while introducing interim limits on large‑load connections. In June 2025, the Alberta Electric System Operator announced a two-phased connection strategy, including a one-time, interim limit of 1,200 MW for load projects of 75 MW or greater that do not require new transmission system reinforcements or upgrades. A second phase is expected to establish a longer-term framework addressing new reliability standards, tariff redesign, cost allocation reviews, and updated forecasting.
Legal and Regulatory Framework
Federal and Provincial Roles
Canada’s constitutional structure is central to energy regulation. Provinces have exclusive legislative authority over exploration for non-renewable natural resources within the province, the development and management of those resources, and sites and facilities for the generation and production of electrical energy. In practical terms, provincial law will often govern upstream oil and gas activity, electricity generation, and many forms of energy infrastructure.
Federal law nevertheless remains important, particularly where a project is subject to a federal impact assessment, and involves fisheries, navigation, nuclear regulation, offshore development, interprovincial pipelines, exports, Indigenous rights, competition law and foreign investment review. A project may therefore be primarily subject to provincial laws and agencies, while still requiring significant federal approvals.
For foreign companies, regulatory analysis in Canada should begin with the specific project, location and approval pathway, not with broad national assumptions.
Streamlined Approvals, but Continuing Complexity
Canada is seeking to improve major project delivery. Recent federal measures have promoted a “one project, one review” model intended to reduce duplication among levels of government and described the Major Projects Office as a central point for coordinating approvals and financing for major developments. These measures are important policy signals, particularly for international investors concerned about timing and overlap between federal and provincial processes.
That said, approvals for energy projects in Canada can still be lengthy and highly fact-specific. Complexity may result from the number of regulators involved, the environmental and social effects at issue, infrastructure dependencies, Indigenous consultation and accommodation requirements, public scrutiny or litigation risk. In many cases, the key commercial question is not whether a project is legally possible, but whether it can be approved and built within a timeline that supports the investment thesis.
Indigenous Consultation and Partnerships
The rights of Indigenous peoples are a central feature of Canadian energy development. Where governmental decisions may adversely affect asserted or established Aboriginal or treaty rights, the government has a duty to consult with and, where appropriate, accommodate Indigenous groups. In practice, project proponents carry out consultation in whole or in part, notwithstanding that the government remains ultimately responsible for ensuring that consultation is adequate.
For foreign investors, Indigenous issues should not be treated as a narrow compliance matter. They are often integral to project design, transaction timing, stakeholder strategy, and long-term project resilience. In many parts of Canada, Indigenous communities are not only rights holders that must be consulted, but also potential equity partners, service providers, employees, hosts and commercial counterparties.
Successful project development depends on early, respectful and commercially informed engagement with Indigenous communities. A reactive or purely procedural approach may create delay and friction. A strategic approach may improve project certainty and support long-term operations.
Increasingly, Indigenous groups are participating in projects through equity partnerships with project proponents. The federal and a number of provincial governments have created Indigenous loan guarantee programs to facilitate these investments. While complex, Indigenous equity participation can drive alignment, support future growth, and achieve reconciliation objectives.
Entering the Market
M&A, Joint Ventures and Project Development
There is no single route into Canada’s energy sector. Foreign companies commonly enter through acquisitions of established businesses or assets, strategic minority investments, joint ventures, farm-ins, development partnerships, and greenfield development. The most suitable path depends on the investor’s objectives, operational capabilities and tolerance for execution risk.
Acquisition-based entry can provide immediate access to assets, management teams, permits, counterparties, and local expertise. Joint ventures may be preferable where a local partner offers regulatory familiarity, technical capability, market relationships or Indigenous or community ties that would be difficult to replicate quickly. Direct project development may offer greater control and upside, but it also creates greater exposure to permitting, construction and stakeholder risk.
For many foreign entrants, the market-entry decision is therefore a question of where value lies on the spectrum between speed and control.
Project Financing and Capital Availability
Canada has a sophisticated financing market for energy and infrastructure projects. Domestic and international banks, private credit providers, infrastructure funds, pension investors and, in some cases, government-supported financing all play important roles. The market is familiar with project finance structures, acquisition finance, reserve-based lending, infrastructure debt and long-duration contracted assets.
Financeability still depends on project fundamentals. Lenders and investors will focus on revenue certainty, construction risk, counterparty quality, regulatory stability, interconnection or takeaway rights and the allocation of delay risk. In transition sectors in particular, capital may be available in principle but selective in practice.
Canada offers foreign companies a substantial but complex energy investment market. Its strengths include resource depth, legal stability, sophisticated capital markets, sector diversity and a growing need for infrastructure across conventional and emerging energy systems. These strengths operate within a regulatory and commercial environment in which local knowledge, project discipline, and stakeholder strategy remain important.
For foreign investors, the central point is that Canada rewards preparation. A company that understands the provincial nature of the market, the continuing role of federal oversight, the importance of Indigenous engagement, and the practical realities of approvals and timing will generally be better positioned than one that assumes legal stability alone will make execution straightforward.
For a complete view of investment, regulatory and sector considerations, explore the full Doing Business in Canada guide.
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