GOVERNMENT FUNDING & NEWS

 New “Buy Canadian” policy gives foreign firms with subsidiaries in Canada the same preferential treatment as homegrown, Canadian-headquartered companies

The Government of Canada’s new “Buy Canadian” policy will allow foreign firms that do business in Canada to get the same preferential access to government contracts as homegrown companies headquartered in the country.

The policy, now being rolled out, sets clear direction for federal departments and agencies to prioritize Canadian suppliers and Canadian content in their purchasing decisions.

The approach initially includes two key policies, with additional policies to follow, designed to strengthen Canada’s economy and supply chains. The policy applies to federal departments and agencies, as well as federal grants and contributions programs, and will be extended, where possible, to Crown corporations and their subsidiaries.

The policy applies to procurements, valued at $25 million and over, that are core components to Canada’s industrial base and reinforce Canada’s strong and resilient economy. The policy will be extended to contracts valued at $5 million or more by spring 2026.

Under the policy, priority will be provided to “Canadian suppliers” by awarding them additional points during the bid evaluation process. More points will also be awarded based on the amount of Canadian content offered by each bidder, which includes manufacturing, research and development, and other economic activities that occur in Canada.

The government considers “Canadian suppliers,” in addition to companies grown and headquartered in Canada, to be foreign firms that do business in Canada. This would include wholly owned subsidiaries of companies headquartered in other countries.

For example, Alphabet, Amazon, Apple, Meta and Microsoft all have wholly owned subsidiaries and significant operations in Canada. Under the Buy Canadian policy, all would be given the same preferential access to federal government contracts as homegrown, Canadian-headquartered companies such as Cohere, OpenText, and AltaML.

So would Canadian subsidiaries of U.S. multinational defence companies, such as Lockheed Martin, General Dynamics, Boeing, L3Harris Technologies, Northrop Grumman, and Raytheon.

That has implications for federal contracts under the $81.8 billion over five years allocated for National Defence in federal Budget 2025, and how that money will be spent.

The Council of Canadian Innovators (CCI) has called on the federal government to make economic sovereignty its No. 1 priority to ensure the planned spending in Budget 2025 – including more than $140 million in new spending – benefits Canadian-headquartered companies, not foreign firms.

Government needs a “serious conversation” about economic sovereignty, as well as a clear and legislated definition of a Canadian technology company and what constitutes a sovereign Canadian company, the CCI said.

In response to the government’s launch of its Buy Canadian policy, Laurent Carbonneau, the CCI’s director of policy and research, said for such a policy to be effective, “it needs to meaningfully incentivize the government to work with authentically Canadian companies.”

“The government’s stated intention to reform procurement to deliver greater economic benefits to Canadian firms is a step in the right direction, but if policies functionally allow Canadian branch-plant operations of foreign hyper-scalers to call themselves ‘Canadian companies’ then the wealth and intellectual property generated by the tech sector will continue to leak out of Canada,” Carbonneau said in a statement.

"Countries all over the world use procurement to support their homegrown companies, and drive innovation in their economies, he noted.

A strong Buy Canadian policy, he added, can be a useful tool to boost government capabilities and deliver real economic benefits – jobs, investment and the creation of intellectual property that drives wealth creation.

"When governments buy from homegrown Canadian companies, they’re doing far more than issuing a purchase order. Government contracts send a clear market signal that acts as a validator, and allows a company to scale operations more quickly. All of this is especially true in the realm of innovative new technologies and services,” Carbonneau said.

The Buy Canadian policy requires the use of Canadian-produced steel, aluminum and wood products in large federal construction and defence contracts valued at $25 million or more, where at least $250,000 worth of these materials are required and a Canadian source of supply is available. Materials must be manufactured or processed in Canada, not simply sold by Canadian companies.

The policy applies to projects such as buildings, bridges, roads and defence goods, like ships and aircraft parts. Suppliers must certify their use of Canadian materials before bidding and maintain records during the contract to confirm compliance.

In addition to existing procurement policies, the federal government will be launching the new Small and Medium Business Procurement Program in spring 2026. This initiative, in partnership with Innovation, Science and Economic Development Canada, will enhance access to federal procurement opportunities for Canadian small and medium businesses, the government said. Public Services and Procurement Canada

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Evan Solomon, federal Minister of Artificial Intelligence and Digital Innovation, announced a combined investment – through the Regional Artificial Intelligence Initiative – of over $19 million for 20 growing AI and tech businesses and organizations to help adopt AI across industries and bring new solutions to market faster. The funding recipients are: A.I Vali Inc., Applied Brain Research, Armilla AI Inc., B3 Systems Inc., Cardea Health Inc., Cogent Real-Time Systems/Skkynet, Ecosystem Informatics Inc., Fairly AI (o/a Asenion), Heirlume Inc. (o/a Haloo), Islands, JSI, Leni, Lumeto/Spatial Industries Group, Mesh Scheduling Inc., Okos Smart Homes Inc., Ontario Brain Institute, SigmaRPA Inc., Sibli, Spoonity Inc., and Zighra Inc. As part of this investment, the Ontario Brain Institute is receiving $2 million to strengthen Ontario’s AI ecosystem by expanding its Centre for Analytics program that will provide companies with secure, bias-free AI tools to implement brain health solutions. Federal Economic Development Agency for Southern Ontario

The Government of Canada signed a five-year memorandum of understanding with Quebec-based AI company Coveo Solutions Inc. Shared Services Canada and Innovation, Science and Economic Development Canada will work with Coveo to explore the deployment of Canadian-developed, AI-powered enterprise solutions  across the federal government. Through this collaboration, the government will assess how generative and agentic AI, advanced search and personalized recommendation technologies can improve service delivery for Canadians, reduce administrative burden and make government operations more efficient and responsive. The focus will be on identifying practical use cases that modernize internal operations, increase productivity and deliver better, faster services to people and businesses across the country. This agreement supports the government’s broader commitment to building a more efficient, innovative public service while growing Canada’s AI ecosystem. Shared Services Canada

The Government of Canada is defending its decision to award a contract worth up to $1.1 million for advice on deploying artificial intelligence to a Canadian branch of Deloitte, a global consulting firm that is under fire for recent AI-related blunders. However, Employment and Social Development Canada said there will be consequences if the company violates the conditions of the work. The department awarded the contract to Deloitte Inc. in September, before the firm acknowledged it relied on AI for research citations in a report it prepared for the Government of Newfoundland and Labrador. The firm said it needed to revise that report to correct erroneous citations. The false citations have prompted some critics to call for stronger oversight of public contracts with consulting firms and their use of AI. Employment and Social Development Canada’s contract with Deloitte is one of seven that federal Public Services and Procurement Canada signed with the firm this year, collectively worth about $72 million, a department spokesperson said. The work includes consulting, accounting and auditing services. The Canadian Press

The Government of Canada selected the Canadian Climate Institute to lead the development of made-in-Canada sustainable investment guidelines (also known as a taxonomy). The climate institute will work with Business Future Pathways, an investor-led initiative, bringing together representatives of major financial institutions and technical experts. These guidelines will become an important tool for investors, lenders and other stakeholders, by credibly identifying “green” and “transition” investments. The Canadian taxonomy will be a new, voluntary market tool that will be aligned with and broadly compatible with other major, science-based taxonomies and frameworks around the world, the government said. Immediate next steps include establishing a new independent Taxonomy Council to review and ultimately approve investment guidelines. This Council and its advisory groups will include independent experts and representatives from academia, the financial sector and civil society, climate scientists, and Indigenous representatives.  The Council is expected to finalize investment guidelines for three priority sectors by the end of 2026 to establish the made-in-Canada taxonomy, and complete three additional priority sectors by fall 2027. Finance Canada

Environment and Climate Change Canada (ECCC) launched an engagement on changes to the minimum national stringency standards for industrial carbon pricing, known as the federal benchmark criteria. Feedback received will help inform changes to the federal benchmark in 2026 to ensure that all industrial carbon pricing systems in Canada drive emission reductions and provide certainty for investments in decarbonization while enabling companies to remain competitive in the global marketplace. Industrial carbon pricing is a key pillar of Budget 2025’s Climate Competitiveness Strategy. It gives large industrial emitters an incentive to reduce emissions that cause climate change while keeping their costs low to protect against the risk of carbon leakage. Well-designed carbon markets create opportunities for Canadian businesses to generate revenues from investing in cleaner production while ensuring the long-term value of those investments, Ottawa said. Canada’s clean technology industry continues to be a driver for economic activity, contributing $40.6 billion to Canada’s GDP and more than 224,000 jobs to the economy in 2023. ECCC

The Government of Canada announced nearly $16 million in funding for investment in methane emissions reduction technologies across Canada. Eight projects will receive funding through the Energy Innovation Program’s Methane Measurement and Mitigation call for proposals, launched in 2024 in support of Canada’s Methane Centre of Excellence. In addition, further funding through the Energy Innovation Program will provide continued support to Carleton University’s development of measurement-based inventories of methane emissions in the midstream oil and gas sector, first announced in May 2024. The government also announced final regulations to reduce methane emissions from the oil and gas sector and landfills across Canada. The Enhanced Methane Regulations apply to onshore oil and natural gas production, gas processing plants, liquefied natural gas, and transmission facilities. The new regulations require a 75-percent reduction in oil and gas methane emissions by 2030 (relative to 2012 or 2014 levels). Through a memorandum of understanding signed in November 2025, the federal government has given Alberta until 2035 to achieve the same 75-percent methane reduction target. With landfills accounting for 17 percent of Canada’s methane emissions and three percent of the country’s greenhouse gas emissions in 2023, the Landfill Methane Regulations provide a consistent approach to reducing landfill methane emissions in publicly and privately owned municipal solid waste landfills, the government said. Owners and operators of regulated landfills will be required to monitor the landfill surface, landfill gas recovery wells, and equipment used to control landfill methane emissions. The government estimates that between 2028, when the regulations begin taking effect and 2040, Canada will realize a cumulative greenhouse gas emissions reduction of 304 megatonnes of carbon dioxide equivalent and 1,593 kilotonnes of volatile organic compounds, helping to avoid $36.3 billion in climate change impacts while providing $257 million in health benefits for Canadians. Environment and Climate Change Canada

The Canada Water Agency announced over $4.5 million in funding for 39 new freshwater projects. This includes 34 projects under the EcoAction program (23 for community-led initiatives and 11 for sustainability and innovation) and five projects under the Fraser River Freshwater Ecosystem Initiative. Administered by the Canada Water Agency, EcoAction supports projects that apply sustainable approaches to improve freshwater quality, ecosystem health and stewardship. Similarly, the Fraser River Freshwater Ecosystem Initiative supports projects that advance science and knowledge, collaboration and engagement, and on-the-ground actions to reduce nutrients and contaminants in the Fraser River basin. Canada Water Agency

The Business Development Bank of Canada (BDC) introduced its new Defence Platform to support Canadian companies working in defence and national security. Through this platform, the federal Crown corporation will deploy up to $4 billion in financing, advice and investment solutions to help businesses in the sector innovate and grow. The platform will also help attract additional private and allied country investment into Canada’s defence ecosystem. The platform is intended to deliver a target of:

• $3.5 billion in financing and advisory services to help Canadian businesses scale, diversify and participate in the value chains of major defence contracts and national projects focused on sovereignty. These efforts will support SME capacity building and the production of defence goods.
• $500 million in investments, delivered through three streams, to accelerate defence innovation and strengthen the broader innovation ecosystem.

BDC’s support will focus on supply chains and direct sales destined for Canadian defence and security entities and their allies. Priority will be given to businesses operating in sectors critical to national security, including manufacturing, critical minerals, robotics, quantum computing, aerospace, artificial intelligence, cybersecurity, and dual-use technology. BDC

The Government of Canada plans to embed 50 corporate leaders in key government roles after adopting a business group's proposal – even naming the program after the group, according to a briefing note. Build Canada, funded by major Canadian tech and industry players, proposed changes to a federal program that would quickly embed 50 business executives in the federal public service to “improve the government’s technical capabilities to accelerate AI adoption, strengthen defence capabilities, improve strategic procurement, negotiate optimal trade agreements and more,” said the policy brief. In short order, the federal government gave the group exactly what it asked for and named the revamped program: Build Canada Exchange.  “The government needs to consider whether the interchange program does not constitute a serious conflict of interest and must make Canadians aware of what measures will be taken to ensure that Canada's public service, as well as Canadians’ data and information, are not exploited for commercial gain by the tech sector,” Simon Enoch, a senior researcher at the Canadian Centre for Policy Alternatives, told Canada’s National Observer. But Dan Kelly, CEO of the Canadian Federation of Independent Business, supports the move “to bring in fresh ideas and energy from the private sector . . . Ensuring the views of entrepreneurs and startups are included will be important to ensuring any advice does not just lean into the perspectives of giant multinationals.” Canada’s National Observer

The Government of Canada, through Canada Enterprise Emergency Funding Corporation, is providing a $115-million loan to Arctic Canadian Diamond Company Ltd., the operator of the Ekati Diamond Mine located along Lac de Gras. U.S. tariffs, coupled with low global diamond prices, inflationary pressures and sustained supply chain bottlenecks, are proving a challenge to navigate. This loan through the Large Enterprise Tariff Loan facility will help the Ekati Diamond Mine continue operations and protect valuable jobs in the community, Ottawa said. The government said it recognizes that the Ekati Diamond Mine contributes significantly to the territory’s economy. Finance Canada

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Federal government rejects some key recommendations on how to improve public service productivity

The Government of Canada released a report by six-member Working Group on Public Service Productivity assembled by the Treasury Board, a day after the group’s final report was obtained by Radio-Canada through access to information.

The federal government accepted most of the group’s recommendations on finding ways to make the public service more productive – but rejected some key recommendations.

Almost one year after the group’s scheduled interim report was to be first delivered (with two other deadlines added), it finally saw the light of day, David McClaughlin, a public policy and governance professional and former chief of staff to prime minister Brian Mulroney, wrote in his substack.

The report’s Friday release the day after Parliament rose for the Christmas holidays “does not suggest a burning desire to share its delights with taxpayers and draw undue attention to its recommendations,” he said.

No news release, no ministerial statement, no publicity at all accompanied the Report’s quiet posting on the Treasury Board Secretariat (TBS) website, he noted.

It’s not a full ‘report’ as such, McClaughlin pointed out. It is a list of recommendations only. No background information, research, data or explanation is offered in accompaniment. 

The Working Group Report produced a wide waterfront of 19 recommendations grouped under five headings:

• Improve the measurement of public service productivity – two recommendations.

• includes developing overall productivity measurements for the public service as well as for direct service delivery.

• Support a productive public service workforce – seven recommendations with 22 distinct actions.

• includes fostering a culture of productivity, leadership, performance management, training and skills, diversity, equity and inclusion, and bringing in private sector leaders.

• Deploy the power of technology, including AI – four recommendations with four distinct actions.

• includes investing in AI technology and training, establishing an AI working group, and investing in small and medium-size innovative public service projects.

• Review government programming and spending from a productivity perspective – two recommendations with nine distinct actions.

• includes systematic program review with a federal roles and responsibilities and productivity perspectives, and improve program evaluation.

• Improve internal structures, processes, and rules – four recommendations with six distinct actions.

• includes re-sequencing the cabinet and Treasury Board Secretariat decision-making process, strengthening management and leadership for ongoing public service reform, streamlining rules and applying a productivity perspective, and increasing budget discipline.

“Accurate and transparent measurement of public service productivity is essential to improving outcomes for Canadians. Without reliable data, it is difficult to assess the effectiveness and efficiency of government services or identify areas for improvement,” the group’s report said.

The federal government dismissed out of hand all the report’s longer-term recommendations meant to get at the structural underpinnings of poor public sector productivity, McClaughlin said.

The government said in its response: “Some working group recommendations, while of interest, do not readily align with government priorities, so are not being actively considered at this time. These include recommendations related to the following:

• measuring productivity across Canada’s public sector.
• establishing an independent organization to exercise a leadership function for evaluation in the public service.
• re-sequencing the Cabinet decision-making process.
• appointing a senior official whose full-time function would be to oversee the general management and ongoing reform of the public service.

No explanation was given for rejecting these recommendations, McClaughlin noted, even though they offered potential to foster stronger productivity “winning conditions” within the bureaucracy by targeting key machinery issues aggravating poor productivity.

Given the lag time between the arrival of the report – during transition from Trudeau to Carney – and its grudging public release post-budget, it is difficult to measure exactly the impact (“dare I say, productivity”) of the Working Group on Public Sector Productivity, McClaughlin said.

Budget 2025 does advance progress in this area, implying that the Working Group’s report did have influence, he acknowledged.

“Its report provides at least a nominal benchmark for what should be done,” he added.

“But the virtual closing of the book on the report that TBS has now done, suggests this will be the last outside word we will hear about government productivity for the foreseeable future,” McClaughlin said.

“If we’re really not serious about measuring overall productivity, then why should we assume that productivity is going to improve?” said Stephen Tapp, CEO and chief economist at the Centre for the Study of Living Standards, a non-profit focused on economics research, the Ottawa Citizen reported.

Tapp, who has written recently for the Macdonald-Laurier Institute on slouching productivity in the public sector, said other countries such as the United Kingdom have done more work to improve productivity measurements, particularly looking at outputs and outcomes.

Michael Wernick, a former clerk of the Privy Council, said that he was “disappointed” by the government’s sidestepping of the recommendation on measuring productivity, despite recognizing its challenges.

“There are parts of government that are difficult to measure: the productivity of national defence or emergency management or the productivity of weather forecasting,” Wernick said. “But there are big parts of government where looking more closely at the relationship between inputs and outputs will uncover some really important issues.” David McClaughlin substack, Ottawa Citizen

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The Government of Ontario and the Government of Canada signed a cooperation agreement aimed at significantly streamlining environmental approvals for major infrastructure and resource projects through a new “one project, one process, one decision” model now in effect. The agreement will remove duplicative and overlapping federal impact assessments from Ontario’s environmental assessment process to build infrastructure faster and unlock resource development across the province. Under the new model, a project that would have previously been subject to both a federal impact assessment and a provincial environmental assessment will now only be subject to Ontario’s environmental assessment process. Doing so will streamline regulatory processes, shorten review timelines, bring certainty to project proponents and help to attract more investment into Ontario’s economy, the Ontario government said. The agreement also includes a side letter between both levels of government where the Impact Assessment Agency of Canada commits to completing its review of the assessment of the roads to the minerals-rich Ring of Fire region in northern Ontario no later than June 2026. Govt. of Ontario

The Government of Ontario launched the $500-million Critical Minerals Processing Fund (CMPF), which will provide strategic financial support to projects that accelerate the province’s critical minerals processing capacity and strengthen domestic supply chains. The CMPF will strengthen the province’s position as a global leader by ensuring critical minerals mined in Ontario are processed and refined in Ontario, by Ontario workers, the government said. The CMPF complements the government’s ongoing efforts to unlock the economic potential of Ontario’s mineral resources sector in the Ring of Fire and across Northern Ontario. The CMPF will be delivered through Invest Ontario, the province’s investment attraction agency. Govt. of Ontario

The Government of Ontario and the state Government of New York signed an agreement to work together to advance the development of affordable, reliable and clean nuclear power. As part of this agreement, Ontario Power Generation (OPG) and the New York Power Authority (NYPA) signed a memorandum of understanding that will leverage Ontario’s global nuclear leadership to advance the development and deployment of nuclear technologies, including large-scale reactors and small modular reactors (SMRs), to meet the growing electricity demand and protect long-term energy security. Ontario is home to the first grid-scale SMR under construction in the G7, as well as three nuclear generating stations, with a track record of delivering multiple large-scale refurbishments on time and on budget. Under the agreement, Ontario and New York State will work to:

• Share expertise in the development and deployment of advanced nuclear technology.
• Educate the public about the economic and environmental benefits of advanced nuclear technology.
• Explore opportunities to expand the trade of electricity between Ontario and New York.
• Collaborate on initiatives to strengthen the nuclear workforce and identify opportunities for joint OPG-NYPA projects that create jobs in both jurisdictions. Govt. of Ontario

The Government of Ontario, in partnership with the City of Toronto, announced its support for Toronto’s bid to headquarter the newly established Defence, Security and Resilience Bank (DSRB). As a global financial services hub, Canada’s economic engine and a centre of technology, research and international business, Toronto brings together the conditions a major global institution needs to operate successfully: stable capital markets, sophisticated investors, a deep talent base, reliable global transportation links, extensive consular services and a predictable, rules-based environment within a G7, NATO-allied country, the Ontario government said. Toronto also hosts Canada’s most diverse and innovation-rich defence and dual-use technology ecosystems, with industry leaders in aerospace, AI, cybersecurity, quantum, robotics, autonomy, geospatial systems, space technologies and advanced manufacturing, the government said. The DSRB is a multilateral lending institution modelled after the World Bank. The bank is designed to meet the complex security needs of democratic nations by providing long-term credit and liquidity to industry suppliers of all sizes, as well as helping streamline multinational procurement. Govt. of Ontario

The Government of Québec is selling the former Northvolt site for $315 million. The government took possession of the 171-hectare site after a Quebec judge declared the North American subsidiary of the Swedish electric vehicles battery producer insolvent in September. The land, which is 25 kilometres east of Montreal, has ample road access, a completed logistics area and authorization to connect to local drinking and wastewater networks. The Quebec government invested $510 million in Northvolt to help build a $7-billion gigafactory capable of producing “the cleanest batteries in the world.” This included a loan of $240 million the company used to buy the land, with the land itself as collateral. The investment in the battery maker was part of a plan to jump-start Quebec’s battery production industry, which has since sputtered amid a pivot away from electric vehicles in North America. The Logic

The Government of B.C. is providing $33 million for research equipment and facilities for Canada’s Immuno-Engineering and Biomanufacturing Hub (CIEBH), a national consortium of more than 50 academic, industry, not-for-profit and health system partners led by the University of British Columbia (UBC) that aims to establish 100-day, start-to-finish drug development in B.C. for Canada. The investment supports three projects led by UBC researchers, and one led by researchers at Simon Fraser University (SFU):

• the advanced therapeutics manufacturing facility (ATMF).
• the AVENGER project that seeks to create a flexible vaccine library.
• the PROGENITER project focused on antibody treatments.
• the Bridge Research Consortium focused on vaccine and immune-supporting innovations.

CIEBH is expected to attract and train top talent and provide local businesses with more opportunities to collaborate with academia, expand their operations, innovate and compete on a global scale. UBC also broke ground on “The Edge,” a six-storey building that will house the ATMF project when it is completed. Govt. of B.C.

The Government of Nova Scotia is investing in a $30-million project with Dalhousie University to conduct research for companies interested in drilling exploratory wells for onshore natural gas. The government said it may take ownership stakes in drilling projects to potentially give taxpayers a share of the profits. Dalhousie will administer a program in which the university’s researchers and the private sector will study the estimated 198 billion cubic metres of onshore natural gas in the province. Dalhousie will issue a call for exploration proposals in the first quarter of 2026. Companies, however, will still need regulatory approval from the provincial Department of Energy before any drilling can begin. The program will offer financial incentives to companies as they explore natural gas reserves with a commitment to share their findings with researchers. All the data will be part of a public research paper to be published before the end of 2026. Operators will be able to apply for up to 100-percent reimbursement of their exploration expenses. The Canadian Press

RESEARCH, TECHNOLOGY & INNOVATION

AI researchers Yoshua Bengio, co-founder of LawZero, and Joelle Pineau, chief AI officer at Cohere, and six others are jointly committing a total of US$1 million to the OpenReview Foundation. The group also includes Doina Precup, a McGill University professor and research lead at Google DeepMind’s Montreal office. “At this time when the impact of artificial intelligence is expanding at an unprecedented pace, we must ensure that this infrastructure supporting open scientific exchange and debate in AI has the resources to stay strong, innovative, independent, and secure,” they said. The group invited researchers, leaders and beneficiaries of AI to demonstrate their commitment to scientific dialogue by joining the roster of OpenReview supporters. The non-profit OpenReview Foundation runs a software platform that the organizers of AI’s major academic conferences like NeurIPS (on neural information processing systems) and ICLR (International Conference on Learning Representations) use to manage the screening of scientific papers. Many significant AI breakthroughs first appeared in presentations and on posters at those events; scientists and companies then recycle and build on top of them. OpenReview.net

St. John’s, Newfoundland-based AI-powered software developer CoLab announced it joined the NVIDIA Inception program, NVIDIA’s global ecosystem of AI innovators. Both companies are focused on bringing AI into the physical world, where product development is governed by physics, materials, safety constraints and long timelines. From vehicles and industrial equipment to medical devices and energy infrastructure, these products depend on engineering teams working through design iterations to meet performance, cost and reliability requirements. Engineering teams rely heavily on advanced modeling, simulation and digital twins to predict how designs will perform before anything is built. CoLab’s vision is to serve as the Engineering Operating System for the AI era: a human-in-the-loop decision-making interface where engineers collaborate, assess trade-offs and make critical calls using AI-generated insights. By dramatically reducing the time it takes to move from one design iteration to the next, CoLab believes teams can collapse design cycles from months to days (or even hours) without removing engineers from the process. Through the NVIDIA Inception program, CoLab will explore how NVIDIA technologies can complement this approach in a structured decision-making workflow. HPCWire

GPTZero, the startup behind an artificial intelligence detector that checks for large language model (LLM)-generated content, found that 50 peer-reviewed submissions to the International Conference on Learning Representations (ICLR) contain at least one obvious hallucinated citation – meaning a citation that was dreamed up by AI. ICLR is the leading academic conference that focuses on the deep-learning branch of AI. The three authors behind the investigation, all based in Toronto, used their Hallucination Check tool on 300 papers submitted to the conference. They found that 50 submissions included at least one “obvious” hallucination. Each submission had been reviewed by three to five peer experts, “most of whom missed the fake citations.” Some of these citations were written by non-existent authors, incorrectly attributed to journals, or had no equivalent match at all. Their report notes that without intervention, the papers were rated highly enough that they “would almost certainly have been published.” GPTZero

Red River College Polytechnic will expand its applied research capacity thanks to a $3.3-million investment from Prairies Economic Development Canada. The Government of Manitoba also contributed $3.3 million. The investment will be used to establish the Innovation Garage, a flexible project space where academic researchers and industry partners will work on heavy equipment and vehicle (HEV) research and development. The project will establish a space for applied industrial-scale collaborative research and HEV development, a microgrid lab, and a hydrogen and fuel cell lab. It will also support RRC Polytech’s Clean Technology and Advanced Manufacturing program. Red River College Polytechnic

Four partners in Quebec – Cégep de Trois-Rivières’s Centre de métallurgie du Québec, Institut national de la recherche scientifique (INRS), Université du Québec à Trois-Rivières, and Innofibre – are collaborating to create a new state-of-the-art facility for the energy transition. Supported by $7.6 million, including $6.87 million from the Government of Québec,  and industry partners, the platform will enable the INRS-UQTR joint research unit to research battery materials, storage and production of decarbonized hydrogen, and industrial process decarbonization. In addition to researchers, students and interns will have access to the facilities and will be able to develop their skills in a hands-on manner. INRS

A five-person team from Victoria, B.C.-based Centre for Ocean Applied Sustainable Technologies took second place at the Ocean Hackathon Grand Finale in Brest, France, beating out teams from around the world as the only entry from North America. The team was made up of five students from University of Victoria, University of British Columbia, Northern University and the British Columbia Institute of Technology: Yi (Leon) Zhen, Noel John, Udbhav Kansal, Dom Torres and Polina Erofeeva. They won 3,000 euros for Ocean Drift, their project that uses artificial intelligence to analyze ocean currents in the Strait of Georgia and help optimize search and rescue operations. This year's global event brought together finalists from 10 countries, with 57 teams competing in total. A Malaysian team took first place for an AI system that helps fish farm operators reduce waste and boost profits. Langley Advance Times

Calgary-headquartered Tetra Digital Group, parent company of Tetra Unity and Tetra Trust, Canada’s first fully regulated digital asset custodian, announced that CAD Digital successfully conducted a series of test transactions for its fiat-backed token, CADD. During the tests, Wealthsimple and National Bank successfully transferred CADD to one another, demonstrating how digital Canadian dollars can move securely and efficiently across institutions. This marks a major step toward CADD’s expected Q1 2026 launch and demonstrates real-world progress in building a safe, compliant and fully transparent form of digital money for Canadians that can be utilized for payments and transactions, Tetra Digital Group said. CADD is designed to be the first fully regulated Canadian stablecoin issued by a financial institution. The stablecoin will be backed 1:1 by Canadian dollars held domestically under Canadian law and built on institutional-grade custody, settlement and compliance infrastructure through Tetra. The federal government tabled legislation governing stablecoins in November. BusinessWire

 Vancouver-based biotech company AbCellera announced it entered into a settlement and patent license agreement with Massachusetts-based instrumentation firm Bruker Corporation, resolving the patent litigation between the two companies globally. As part of the settlement, Bruker will pay AbCellera $36 million up front as well as future royalty payments on sales of Bruker's Beacon^® Optofluidic platform products worldwide through the life of the licensed patents. AbCellera

U.K.-based solar startup Awendio Solaris said it plans to invest $1 billion to develop a solar cell and module manufacturing facility and global R&D centre in Montréal-Est, Quebec. The company’s goal is to establish one of North America's largest fully integrated silicon solar photovoltaic manufacturers, with the ambition to create close to 1,000 high-quality manufacturing and R&D jobs while primarily serving the U.S. market as well as the Canadian market, and leveraging a fully north American supply chain. Awendio Solaris said it’s working to develop a state-of-the-art facility capable of delivering up to 2,500 megawatts (MW) of annual production capacity in its first phase, with plans to scale to 5,000 MW. The company is partnering with Montreal-headquartered Broccolini, which will be responsible for the development and completion of the facilities, including key steps linked to acquiring the site. Three First Nations –Naskapi Nation of Kawawachikamach, Wendat Nation, and Kanien’kehá:ka of Kahnawà:ke – have agreed to join as investor-partners in this project. The company is still working to line up financing and secure a power supply for the facility from Hydro-Québec. Awendio Solaris is targeting financial close by the end of Q1 2026, to make a final investment decision, with an anticipated construction start in Q2 2026 and volume production beginning in 2028. Awendio Solaris

Calgary-based geothermal developer Eavor Technologies said it has officially started delivering power to the German grid from its first commercial facility using its Eavor-Loop™ technology at Geretsried in Germany. Eavor-Loop™ uses closed-loop multilateral wells in its geothermal system to generate 24/7 clean heat and power. The company said the system does not require future re-drilling, water sourcing or treatment, resulting in minimal maintenance and operating costs compared to other geothermal technologies over project lifetimes. “The technological and commercial success at Geretsried validates the project as a blueprint for wider European and global rollout as regions seek stable, locally derived carbon-free energy sources with minimal land and water usage,” said Fabricio Cesário, head of project delivery and operations at Eavor GmbH. Eavor Technologies has received at least $179 million in Canadian federal funding – and potential for an additional $4 million if milestones are met – even though the company built its first commercial facility in Germany, which guaranteed long-term power prices (feed-in tariffs) and grants from the EU Innovation Fund. Eavor Technologies

Massachusetts-based Mantel Capture announced it would begin designing a carbon capture project with an undisclosed oilsands producer in Alberta, where it plans to capture about 60,000 tonnes of carbon dioxide and generate 150,000 tonnes of high-pressure steam per year. The initiative is supported by Alberta Innovates and will integrate Mantel’s molten borate carbon capture system into existing steam-assisted gravity drainage oilsands operations. Unlike traditional capture methods, Mantel’s molten borate carbon capture technology integrates directly into high-temperature industrial operations, like boilers or heat recovery steam generators, to capture CO₂ while recovering process heat as clean steam. The resulting process reduces energy losses by 97 percent and produces a 99.9-percent pure CO₂ stream that’s ready for sequestration or utilization without additional treatment, the company said. Mantel’s first demonstration project at Kruger Inc.’s Wayagamack pulp and paper mill in Quebec will capture 2,000 tonnes of CO₂ per year. Mantel Capture

The $16.5-billion oilsands group Pathway Alliance’s carbon capture and storage (CCS) project planned for northern Alberta could use most of the surplus water in the Cold Lake-Beaver River basin, potentially forcing water rationing in the province, according to research by a Stanford University researcher. The project is a linchpin of the “grand bargain” energy agreement signed by the federal and Alberta governments in November. Research by Lorenzo Rosa, a CCS specialist at Stanford University’s Carnegie Science Institute, found that the Pathways project could use as much as 740 litres of water for every tonne of carbon dioxide (CO₂) captured. By 2050, this would work out to an annual usage of 5.9 billion litres from the Beaver River basin system, which is projected to have only nine billion litres of reserve in dry years – a volume that is dropping rapidly due to climate change-driven drought. Pathways Alliance has never publicly revealed its forecasted water usage for the project. The impact of water use by CCS facilities in Alberta would be “manageable,” according to modelling by Calgary-based WaterSmart Solutions commissioned by the Alberta government earlier this year. The Pathways CCS project would connect 20 onsite oilfield CCS plants capturing and piping CO₂ about 400 kilometres to a central storage hub in Cold Lake, northeast of Edmonton, for injection deep underground. The federal government has so far ignored calls for an environmental impact assessment of the Pathways CCS project — including a formal request from eight First Nations in Alberta. Canada’s National Observer

VC, PRIVATE INVESTMENT & ACQUISITIONS

Illinois-headquartered medical supply company Medline Industries raised US$6.26 billion in the biggest global initial public offering (IPO) of 2025. Blackstone, Carlyle, and Hellman & Friedman bought control of Medline in 2021 for approximately US$34 billion. The company’s shares began trading on the New York Stock Exchange at $35 per share, representing a 21-percent jump over its initial public offering price of US$29. Momentum continued throughout the session, with the stock closing its first day of trading at US$41, translating into a gain of more than 41 percent from the IPO price. The strong performance immediately valued Medline at approximately US$54 billion. Africa Business Insight

Ontario Teachers’ Pension Plan (OTPP) has made multiple investments in San Francisco-based data analytics and AI software company Databricks, which is raising a US$4-billion Series L investment. OTPP first invested through its venture capital arm, Teachers' Venture Growth, in 2023, when Databricks raised US$500 million, and again in last year’s US$10-billion raise. OTPP also backed Databricks’ US$1-billion growth round this September. Databricks said the Series L funding will advance product development across three strategic products, helping customers build data intelligent applications. Databricks

Canada Pension Plan Investment Board (CPP Investments) signed an agreement to establish a A$14-billion (€8 billion) European data centre partnership with Sydney, Australia-based Goodman Group. The 50-50 partnership involves an initial total capital commitment of A$3.9 billion (€2.2 billion) to develop a portfolio of data centre projects in Frankfurt, Amsterdam and Paris. The Goodman European Data Centre Development Partnership (GEDCDP) is CPP Investments’ first data centre partnership in Europe, significantly adding to its data centre portfolio. GEDCDP’s portfolio comprises four projects totalling 435 megawatts (MW) of primary power and 282 MW of IT load. All projects provide speed to market with secured power connections, planning permits and substantially progressed site infrastructure works, enabling construction starts by June 30, 2026. CPP Investments

London, U.K.-headquartered chatbot and agentic AI firm PolyAI (which has offices in San Francisco and New York City, raised US$86 million in Series D growth capital, a round co-led by Canada’s Georgian Partners. PolyAI develops autonomous voice agents based on proprietary AI models, capable of managing complex phone conversations for industries such as financial services, healthcare, and entertainment. In a highly competitive market, PolyAI differentiates itself by using in-house developed AI models, unlike rivals that build on third-party technologies such as OpenAI. This technological autonomy has allowed the company to streamline customization, deployment and interaction security – aspects valued by corporations with high regulatory standards. The Startup Ecosystem

Montreal-based Amiral Ventures raised $40 million for its first fund that aims to lead early-stage deals amid a domestic downturn for venture capital. The venture firm held its first close of a targeted $75-million fund after nearly three years of fundraising. The Quebec government anchored the fund through Investissement Québec, Desjardins Capital wrote the first cheque, and nearly 50 investors and entrepreneurs joined as limited partners, including the co-founders of Quebec startups BrainBox AI and Workleap. Amiral Ventures plans to back 15 tech companies between the seed and Series A stages, with annual revenues typically between $750,000 and $1 million. BetaKit

Toronto-headquartered Portage Ventures led a US$30.5-million funding round for Thread Bank, a local Tennessee bank turned fintech. Additional participation in the round included Rockmont Partners and other strategic investors. Backed by new capital, Thread said it aims to continue its recent growth and momentum, scaling and broadening its “embedded banking” offerings to drive the industry forward and serve as a model for fellow community banks. BusinessWire

Toronto-based fraud-prevention company Tuhk Inc. raised US$6 million in a round led by U.S.-based FINTOP, a venture capital firm specializing in fintech, with participation from Lloyds Banking Group and Capital One Ventures. Tuhk’s distributed platform aims to revolutionize payments by enabling secure, real-time collaboration among merchants, banks and service providers to combat the global US$10.5 trillion cybercrime threat. Tuhk said the funding will be used to supercharge the company’s imminent launch in the U.K., U.S., and Canada alongside major banks and merchants. Tuhk

Calgary-based cleantech company Carbonova raised $5.1 million in an equity financing round to help build its first commercial demonstration unit. The facility will convert captured carbon dioxide and natural gas into 25 tonnes of carbon nanofibres per year, with commissioning targeted for mid-2027. Carbonova's patented process turns greenhouse gas emissions into high-performance carbon nanofibres that the company said outperform alternatives like carbon black, graphite and carbon nanotubes. Once the demonstration unit is running, Carbonova plans to build a full-scale plant and deploy modular units at industrial sites around the world. Carbonova's also secured $4.38 million in grant funding from Emissions Reduction Alberta. Carbonova

Toronto-based startup Peripheral Labs raised US$3.6 million in a seed funding round led by
Silicon Valley giant Khosla Ventures, with participation by Daybreak Capital, Entrepreneurs First and Transpose Platform. As students, Peripheral co-founders Kelvin Cui and Mustafa Khan worked on driverless cars for the University of Toronto’s racing team. They’ve turned their work on motorsport sensors into Peripheral’s product, which combines cameras and software to generate video from a wide range of angles, so that broadcasters and leagues can let fans watch the action from whatever viewpoint they want. TechCrunch

Ottawa-based startup Turbopuffer, founded in 2023 by former Shopify engineers Simon Eskildsen and Justine Li, secured fresh funding to scale its AI search infrastructure. The company, which aims to make every byte searchable, has attracted clients such as Anthropic, Atlassian, Cursor, and Notion. Turbopuffer has grown its sales tenfold and its headcount fivefold in 2025, managing trillions of vectors and tens of petabytes. The startup received an undisclosed amount of funding from Lachy Groom and Thrive Capital. Turbopuffer continues to optimize its search engine, combining vector and full-text search using object storage, to help AI clients search data more efficiently. Startup Ecosystem Canada

Calgary-based crypto firm Balance announced its expansion into the U.S. market through the acquisition of Digital Value Transfer Rails (DVTR), a Wyoming-based, multi-state licensed digital asset custodian and money transmitter, giving Balance immediate operational reach across a majority of U.S. states. Financial terms of the deal weren’t disclosed. In addition to digital asset and fiat custody, DVTR can also perform trading and staking services, directly or through third-party providers. The DVTR acquisition will let Balance help financial institutions launch products such as stablecoin issuance and payments, tokenized deposits and digital asset credit card payments, the company said. BusinessWire

Montreal-based professional services firm WSP Global Inc. announced it has entered into an agreement to acquire Connecticut-based power and energy service consultancy TRC Companies. WSP said the proposed acquisition, for a total cash purchase price of US$3.3 billion, will position WSP as the largest engineering and design firm in the U.S., “supercharging” its power and energy offering and enhancing its capabilities across water, infrastructure, and environment. To help pay for the deal, WSP will sell about $850 million in shares, including a $118-million private placement deal with Quebec public-sector pension fund manager La Caisse, WSP’s largest shareholder. WSP

Calgary-based AI- and sensor-powered minerals detection company GeologicAI announced its acquisition of Finland-based Lumo Analytics. Financial terms of the deal – which will see Lumo’ technology and team both join GeologicAI – weren’t disclosed. Lumo has developed a device that uses a technique called laser-induced breakdown spectroscopy (LIBS) to rapidly analyze the composition of drill core samples. LIBS uses a high-energy laser pulse that vaporizes a tiny spot on a rock to create a short-lived plasma that emits light that reveals the elements present within it. For the mining sector, this means faster geochemical insights directly at the source, enabling more efficient exploration and resource evaluation. With the addition of Lumo Analytics’ technology, GeologicAI said it extends its resource knowledge systems offerings to the detection of rare-earth elements and light elements as well as other elements. GeologicAI

St. John’s, Nfld.-based Altius Minerals signed a deal to buy Toronto-based Lithium Royalty Corp. in a stock-and-cash deal valued at about $520 million. Altius CEO Brian Dalton said the deal creates strong value for shareholders by adding a significant pipeline of operating, development and evaluation stage assets. Under the agreement, Altius has agreed to pay $9.50 in cash or 0.24 of an Altius share for each Lithium Royalty share. The total amount of cash available under the offer is limited to one-third of the offer, while the number of shares available is capped at 11.5 million. Lithium Royalty CEO Ernie Ortiz is expected to join Altius’s corporate development team following the closing of the transaction. The Canadian Press

REPORTS & POLICIES

Canada’s digital sovereignty: From buzzword to blueprint

OPINION

By John Roffolo and Peter Shi

John Ruffolo is Founder and Managing Partner at Maverix Private Equity and Peter Shi is  Associate Partner at Maverix Private Equity. This op-ed first appeared here on Medium.

Let’s stop pretending “digital sovereignty” is some abstract academic concept. It’s not. It’s about control. Control over our data, our communications, our AI, our money, our mobility, our food, our health care, and our defense. It’s about whether Canadians actually own their digital future or just rent it from other countries.

We love to talk about “innovation” and “sovereignty” in the same breath, but the truth is this: Canada doesn’t really own much of its digital destiny today. Our data sits on servers controlled by foreign companies. Our satellite communications depend on foreign systems. Our AI runs on foreign cloud infrastructure. Even our emerging digital money supply, stablecoins, is being built elsewhere.

We’re a tenant in the digital economy. We get access, but no ownership. We’re on the verge of becoming digitally colonized into a serfdom. When you rent from foreign powers, you surrender not only control but the ability to capture the economic upside that drives prosperity and standard of living.

That should make every policymaker, founder, and investor deeply uncomfortable. Digital sovereignty is about our economic survival.

What digital sovereignty actually means

When we think of sovereignty, we picture borders, land and flags. Digital sovereignty works the same way, but just in cyberspace.

At its core, it means Canadian data, communications and infrastructure are stored, governed and secured under Canadian law. Not someone else’s.

To have sovereignty, we need:

1. Physical infrastructure: servers, satellites and networks have residency in Canada and controlled by Canadian companies, and operated by Canadians.
2. Legal infrastructure: Canadian regulation and jurisdiction over how that infrastructure operates.
3. Economic control: the ability to tax, procure and invest in it strategically.

Why it matters

We learned during COVID how fragile global supply chains are. The same is true of our digital supply chains. The unseen networks that move our data, power our AI, and run our financial systems are under threat.

If a foreign government can legally compel access to our data (see: the U.S. CLOUD Act), or if we rely on satellites owned by foreign entities to connect remote regions, or if our AI compute is tied to U.S. export controls, then we’re not sovereign.

We’re exposed.

This isn’t anti-American or anti-globalization. It’s about ensuring that Canada isn’t digitally colonized.

Here are some examples:

Example 1: Satellite communications – the sky isn’t neutral.

Start with space.

Satellite communications are no longer just about beaming internet to remote communities. They are the 21^stcentury equivalent of railroads, highways and power grids.

Today, much of our satellite connectivity runs through foreign systems such as Starlink (SpaceX), OneWeb (French-owned), and others. If access, pricing, or policy terms ever shift for geopolitical or commercial reasons, Canada could find itself at the mercy of foreign interests.

This is where Canadian innovation can shine. Toronto-based Kepler Communications is a great example. They are building a homegrown low-Earth orbit satellite network designed to move data securely, efficiently, and globally.

If we’re serious about sovereignty, we need to back companies like Kepler. Not with slogans, but with procurement dollars. Every time Ottawa signs a contract for satellite capacity, it should ask: Does this strengthen Canada’s sovereign capability?

Short term, we can share capacity with allies or invest in Canadian-led constellations.

Medium term, we must scale Canadian systems that serve defense, critical infrastructure and northern communities directly. These are large-scale nation-building projects, deemed to be in our national interest.

Canada’s vast geography forced us to build the infrastructure others take for granted. The Transcontinental Railway, for example, was a major project that made a large country much more accessible and connected. Canadian satellite constellations fit the mold as well. They underpin Arctic sovereignty, wildfire monitoring, and rural connectivity.

All are commercially compelling use cases that also create public goods that broadly benefit society. These major projects are capital intensive and requires long-term commitments that Canada can strengthen with investment dollars.

But Kepler isn’t alone. Companies like Canadian Space Mining Corporation, NordSpace, Reaction Dynamics, and Maritime Launch Services are pushing boundaries in launch systems, space exploration, and next-generation propulsion. These firms represent the backbone of a sovereign space ecosystem.

Example 2: Sovereign AI compute – From data centres to chips.

AI sovereignty is the most misunderstood concept in tech policy today. Everyone says “we need our own AI strategy,” but few grasp what that actually means technically.

Think of AI sovereignty in three layers:

1. Physical infrastructure: data centres, servers, and compute hardware that run AI models.
2. Soft infrastructure: the models themselves (like large language models, or LLMs), and the data that trains them.
3. Chipsets and photonics: the semiconductors and optical hardware that make it all possible.

• Short Term: The Physical Layer

The starting point is the data centre.

If our AI workloads live on clouds owned by Amazon, Google, or Microsoft – even if the servers are physically in Canada, the data can still be accessed under the U.S. CLOUD Act.

This is not sovereign.

Canada has homegrown players like ThinkOn, Micrologic and Denvr, Canadian-owned cloud and data centre operators that actually run under Canadian jurisdiction. We should be scaling firms like these to provide secure, sovereign cloud infrastructure for AI workloads, government systems, and critical industries.

This is the low-hanging fruit: invest in Canadian-controlled physical infrastructure that is legally out of reach from foreign surveillance or extraterritorial claims.

• Medium Term: The Software Layer

Next comes the “soft” layer – the AI models themselves.

We don’t need to replicate OpenAI or Anthropic overnight. But we do need Canadian frameworks that define how models ingest, store and apply Canadian data.

Toronto-based Cohere is a great example of how to do this right: it’s building world-class large language models here in Canada, training them responsibly, and deploying them under domestic governance.

Government and enterprise buyers should prefer sovereign models like Cohere’s for sensitive applications such as health care, defense, financial supervision –where sovereignty over data and decision-making matters most.

But here’s the nuance: when the Government of Canada invests to secure compute capacity, much of that capital ends up flowing to U.S-based companies, which own the infrastructure. In the short term, that’s understandable given the urgency and lack of domestic alternatives. However, if we continue down this path, the economic benefits such as jobs, profits and strategic leverage will accrue outside Canada.

In short: we don’t have to own everything yet, but we do need to control what’s critical.

Alongside Cohere, companies like Waabi (AI for autonomous trucking) and Ada (AI for customer support) show that Canadian companies can lead in critical AI verticals beyond language models.

Long Term: The chip and photonics layer

Then there’s the long game – the hardware itself. Never before have nation states so deliberately used industrial policy and targeted allocation of capital to steer a technology. AI is now a strategic asset, and China, France, the U.S., Saudi Arabia and others are deploying it like political currency.

Only the U.S. and China have the scale to sustain a fully self-contained AI economy. Canada on the other hand is a medium power. It is extremely difficult for us to own the full AI stack of chips, data centres and models. But a sovereignty framework forces us to think strategically: how do we build domestic or allied capacity in chip design, fabrication and advanced photonics?

We can punch above our weight in selected, and critical verticals such as optical interconnect due our talent density in photonics, and energy-efficient data centres due to an abundance of excess energy. And to be clear, we NEED to focus on these verticals if we want to play a role in the next few decades of AI.

Canada’s position in the AI supply chain will determine how much influence we have over our own digital future. By developing and owning critical components of the AI stack, we can ensure alignment with our allies and maintain access even if other countries impose export restrictions.

It gives us more leverage on the global stage. To be more explicit, if Canada is involved in a critical element of the global AI supply chain such as photonics, it ensures that we won’t be shut out when there are chip shortages, or when push comes to shove.

Canada quietly has an edge here. The Canadian Photonics Fabrication Centre (CPFC) in Ottawa is a national gem – one of the few facilities in North America capable of producing advanced photonic integrated circuits.

Companies like Xanadu, Ranovus, and Inpho are already using photonics to develop breakthroughs in quantum computing, optical interconnects and high-performance communications hardware. Kepler is launching the first photonics-based optical relay low-Earth satellite in the world.

This is our wedge. While others fight over legacy silicon, we can lead in photonics. Faster, greener and strategically distinct. But here’s the critical point: the underlying IP is what separates a tenant from a landlord, a colonial serf from a colonial master. Owning the intellectual property behind photonics and advanced chip design is what ensures Canada captures the economic upside, and not just rents access.

Without IP, even if we manufacture, we remain dependent. With IP, we control the rules of engagement.

Government can catalyze this by aligning procurement and R&D funding toward Canadian photonics leaders and ensuring organizations like the CPFC are treated as sovereign infrastructure: protected, expanded and prioritized for domestic innovation.

If we do that, Canada doesn’t just participate in the AI race, we own a lane of it.

Example 3: Stablecoins and the Financial System

Now, let’s talk about the most sovereign system of all – money.

Canada’s financial infrastructure is robust but aging. Meanwhile, digital currencies and stablecoins are redefining what “money” even means. The U.S. is advancing through the Genius Act and private stablecoin legislation. Europe has MiCA. Even developing economies are deploying digital currencies faster than we are regulating them.

If we sit idle, Canada’s digital financial sovereignty will be outsourced by default. Canada just made a huge leap forward in the right direction by announcing the draft Stablecoin Act.

The pragmatic short-term first step is the launching of Canadian-dollar stablecoins – issued or regulated domestically, governed under Canadian law, and backed by Canadian assets.

The next step is the movement from a “Level 2” solution built on a public blockchain to a fully sovereign Level 1 blockchain.

Why does this matter? Because without a Canadian-controlled L1 rail, we risk losing monetary sovereignty and economic leverage. Without it, capital will flow to foreign stablecoins, draining deposits, weakening demand for Canadian bonds, and outsourcing control of our financial rails to foreign companies.

Acting now ensures Canada shapes the rules, safeguards monetary policy, and secures its role in the digital economy.

The good news? Canada already has innovators building the foundation for sovereign rails. Companies like Transactix, which is developing tokenized payment infrastructure, and Sequence, which is building for blockchain powered payments and wallets, are proving that Canadian talent can lead in digital money infrastructure.

Acting now ensures Canada shapes the rules, safeguards monetary policy and secures its role in the digital economy.

The path to partial, then full, sovereignty

Here’s the key: sovereignty isn’t binary. You don’t flip a switch and become “digitally independent” overnight.

You build it layer by layer, decision by decision.

Start partial, end full.

• Satellites: Start with shared or co-owned constellations; evolve to fully Canadian networks like Kepler’s.
• AI compute: Start with Canadian-owned data centres like ThinkOn; move up to sovereign models like Cohere; invest toward domestic chip and photonics capability through CPFC, Xanadu, Ranovus, and Inpho.
• Stablecoins: Start with regulated Canadian-dollar tokens; move to a sovereign blockchain and eventually a national digital currency backbone.

Every procurement contract, every infrastructure grant, every tax credit should be judged by a simple question: Does this strengthen or weaken Canada’s digital sovereignty?

Why it’s urgent

The United States isn’t waiting. Europe isn’t waiting. Japan, South Korea, and even Brazil are building sovereign digital frameworks for AI, finance, and space.

Take a step back and look at how governments across the globe treat AI today. Countries are actively shaping markets to create “national champions.” These are state-backed companies designed to lead and compete globally. The scale of industrial policy is unprecedented. From AI to semiconductors, these firms are the centerpiece of national strategy, ensuring that economic and technological leadership remains aligned with political objectives.

And while the U.S. actively fortifies its digital sovereignty – kicking TikTok out of the house –Canada’s still lounging on the couch, happily renting the basement. We can – and must – do better.

If we don’t move now, we’ll find ourselves locked out of critical technologies, dependent on foreign providers for our defense communications, and watching our best AI and fintech companies get bought or relocated abroad.

Sovereignty doesn’t come from regulation alone. It comes from ownership.

So let’s get serious. Let’s build the infrastructure, own the IP, and back our own companies with procurement, capital and conviction.

Otherwise, we’ll keep exporting our ideas, our data, and our dreams – and buying them back at a markup.

Digital sovereignty isn’t about waving the flag online. It’s about making sure the flag still means something in the digital world. John Ruffolo on Medium

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Canada’s shrinking stock market has implications for future economic growth: Fraser Institute study

The number of new public stock listings (IPOs) on Canadian exchanges has plummeted while the value of private equity in Canada has skyrocketed, according to a study from the Fraser Institute.

Between 2008 and 2013, the average number of new IPOs was 47 per year, but this dropped to 16 between 2014 and 2024, with only five new listings recorded in 2024, the study said.

Since the early 2000s, the number of public companies has fallen in many countries, including Canada.

In 2008, for instance, Canada had 3,520 publicly traded companies on its two stock exchanges, compared to 2,114 in 2024.

This trend reflects: the impact of mergers and acquisitions; greater access to private capital; increasing regulatory and governance costs facing publicly traded businesses; and the growth of index investing, said study authors Ben Cherniavsky and Jock Finlayson.

Cherniavsky is a corporate director and a partner at Fort Capital Partners, one of Canada’s leading independent investment banking advisory firms. Finlayson is a senior fellow at the Fraser Institute.

“Canada’s poor business climate, including many years of lacklustre business investment and little or no productivity growth, has also contributed to the decline in stock exchange listings,” they said.

At the same time, the value of private equity in Canada increased from $12.8 billion in 2008 to $93.2 billion in 2024, according to their study.

“These trends are concerning, as most Canadians cannot easily access private equity investment vehicles, so their domestic investment options are shrinking,” Cherniavsky and Finlayson said.

“The shrinking of Canada’s public equity markets should worry policy makers, regulators, business leaders, and citizens at large,” they said.

Fewer companies choosing to go (or remain) public – despite the numerous advantages of doing so – is likely to have negative implications for economic growth and the productivity and dynamism of the business sector, the study authors noted. “It also makes it harder for Canadian residents to invest in the success of domestically based businesses.”

In an advanced economy like Canada’s, stock exchanges are a way for domestic firms to raise capital and for residents to invest in the growth of successful, locally based businesses, they said.

There is strong evidence that well-functioning stock markets contribute to economic growth, productivity growth and innovation, Cherniavsky and Finlayson said.

Canada has been more reliant on public markets than most other developed countries to finance domestic businesses and support their growth, they pointed out. According to one study, in the early 2000s Canada had four times more public companies on a per capita basis than either the United States or the United Kingdom.

Recently, what can be termed regulatory “mission creep” has extended beyond the confines of strictly financial matters to include a wide and growing range of environmental, social and governance rules that are being imposed upon public companies, but often do not apply to even large non-public firms, the authors said.

“Examples include, but are not limited to, the mandatory disclosure of board and executive gender-diversity ratios and targets (with recent proposals to include ratios for sexual orientation, race, indigenous status and disability), modern slavery reports, and pending requirements for complex and sometimes abstract climate-related risks and greenhouse gas emissions.”

Smaller companies that operate in more competitive markets than the large Canadian banks, railroads, or pipeline companies (that is, just about all other industries) may be further disadvantaged by disclosure rules that furnish their competitors with information that can be strategically deployed against them, the authors said.

Their report offers several recommendations, including:

• Commit to disclosure reform.

Canadian securities regulators need to admit there is a problem with the ever-growing burden of disclosure on public companies large and small. A cross-jurisdictional consensus needs to be established that the cost to listed firms of the current practices outweighs the benefits investors are receiving from them.

• Make a commitment to reject equity, social and governance (ESG) disclosures.

Assuming Canada wants to remain broadly aligned and competitive with the United States, the recent American move away from ESG disclosures and rejection of the basic doctrine underlying ESG provides strong reason for Canada to follow suit, Cherniavsky and Finlayson said

So does the growing body of evidence suggesting that the requirements for public companies to report on their progress towards meeting various societally chosen social and environmental goals achieves little while burdening the listed companies most exposed to these pressures with higher costs, they argued.

• Dilute the influence of proxy advisors.

The expected outcry from the proxy advisor firms, along with other members of Canada’s burgeoning governance industrial complex, will be one consequence of any proposed substantive reform of disclosure requirements, including those related to ESG, the authors said. Nevertheless, they said: “It is critical that the influence of proxy advisors be significantly curtailed.”

• Introduce semi-annual reporting for public companies.

In addition to reducing the volume of material that public companies are required to disclose, Canadian securities regulators should also consider reducing the frequency of disclosure.

Specifically, the current requirement for quarterly earnings releases for TSX-listed companies could be reduced to semi-annual reporting, which is the regulatory requirement that exists in most jurisdictions outside North America.

• Reassess Know Your Client (KYC) rules.

As is the case with almost all regulations, KYC rules were designed with the best of intentions – namely, to protect investors from buying stocks that are “too risky” or complex for their financial situation.

These rules have also had the (unintended) consequence of dramatically limiting the pool of capital available to smaller cap companies, thus compounding the problems that these firms already face from funds flowing away from them and into exchange-traded funds, Cherniavsky and Finlayson said

A meaningful discussion of securities reform in Canada should include a realistic assessment of the cost-benefit equation of KYC rules, and an open debate about how much lost opportunity investors should be forced to incur and how much capital smaller Canadian companies should be prevented from accessing in the pursuit of protecting every retail investor from potential losses in the inherently “risky” stock market, they said.

• Revoke the buyback tax.

The  Canadian government should revoke the recently adopted share buyback tax, the authors said. “It may not be the direct cause of the shrinking pool of Canadian public companies, but it is a symptom of the country’s increasingly dysfunctional approach to tax policy and of a generally poor business climate.”

Another broader strategic approach to revitalizing Canada’s stagnant capital markets is to improve the business climate and the prospects for future investment and business growth, Cherniavsky and Finlayson said.

They recommended several policy reforms, including:

• Make it a cross-government priority to increase business non-residential investment in productive assets and activities, including both tangible and “intangible” capital (intellectual property, R&D).
• Recognize the sectors and activities where Canada possesses global comparative advantage, and ensure that the prevailing mix of polices does not hinder the growth or commercial success of industries that contribute disproportionately to Canada’s export base.

Unlike most peer jurisdictions, Canada’s industrial economy, export portfolio, and public equity markets are significantly weighted to natural resource sectors, both primary production and downstream processing using domestically sourced resource inputs.

The trade statistics confirm that Canada’s main “revealed comparative advantage” lies in the energy, mining, agri-food, and forestry sectors.

“To the extent that Canadian governments create an uncompetitive domestic business and policy environment for the resource-based industries that reliably generate the nation’s trade surpluses, this is likely to impede the growth of Canada’s public equity markets, discourage new stock-market listings, and weaken the entire ecosystem (brokers, bankers, analysts, fund managers, and so on) that is necessary to support deep, efficient, and diverse domestic capital markets,” Cherniavsky and Finlayson said.

• Increase public and private investment in trade-enabling infrastructure, such as ports, highways, railways, pipelines and other transportation systems that link Canada with global markets and aid the efficient movement of goods and services within the country.
• Overhaul federal and provincial tax policies to strengthen incentives for capital formation, innovation, entrepreneurial wealth creation, and business growth.

Smart tax reform means reducing Canada’s exceptionally heavy reliance on income and capital taxation, lowering top marginal tax rates, moving away from highly distortionary tax preferences for very small firms and other politically favoured sectors, and incrementally shifting more of the tax burden to consumption and other “non-mobile” activities and factors of production, the authors said.

• Streamline and reduce the cost and complexity of government regulatory frameworks and requirements affecting all sectors of the economy, notably natural resources, infrastructure development, manufacturing and transportation.
• Foster and nurture greater competition across the economy and scale back the extent and role of government-created and government-sanctioned monopolies and oligopolies.
• Eliminate interprovincial restrictions on trade, investment, and labour mobility to bolster the Canadian “common market” and encourage more Canadian companies to grow by doing business right across the country.

Concluded Cherniavsky and Finlayson: “We believe Canada’s economy will suffer if the country’s stock markets remain on the current path leading to a progressively smaller place in the financial system.” Fraser Institute

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After investing $30 billion to $40 billion in generative AI, 95 percent of businesses globally are getting no return

Despite a $30-billion to $40-billion investment on generative AI by businesses globally, 95 percent of organizations are getting zero return, according to a report by MIT NANDA, located at MIT Media Lab in Cambridge, Mass.

The outcomes are so starkly divided across both buyers (enterprises, mid-market, small and medium-sized businesses) and builders (startups, vendors, consultancies) that the report’s authors call it the “GenAI Divide.”

Only five percent integrated AI pilots are extracting millions in value, while the vast majority remain stuck with no measurable profit and loss impact.

This divide does not seem to be driven by model quality or regulation, but seems to be determined by approach, the authors said.

Tools like ChatGPT and Copilot are widely adopted. Over 80 percent of organizations have explored or piloted them, and nearly 40 percent report deployment. But these tools primarily enhance individual productivity, not profit and loss performance.

Meanwhile, enterprise-grade systems, custom or vendor-sold, are being quietly rejected, according to the report.

Sixty percent of organizations evaluated such tools, but only 20 percent reached pilot stage and just five percent reached production. Most fail due to brittle workflows, lack of contextual learning, and misalignment with day-to-day operations.

The authors said their research uncovered a thriving "shadow AI economy" where employees use personal ChatGPT accounts, Claude subscriptions, and other consumer tools to automate significant portions of their jobs, often without IT knowledge or management approval.

The scale is remarkable, they said. While only 40 percent of companies say they purchased an official large language model (LLM) subscription, workers from over 90 percent of the companies surveyed reported regular use of personal AI tools for work tasks. In fact, almost every single person used an LLM in some form for their work.

In many cases, shadow AI users reported using LLMs multiples times a day every day of their weekly workload through personal tools, while their companies' official AI initiatives remained stalled in pilot phase.

“This shadow economy demonstrates that individuals can successfully cross the GenAI Divide when given access to flexible, responsive tools. The organizations that recognize this pattern and build on it represent the future of enterprise AI adoption,” the report said.

The authors presented what they called five myths about generative AI in business:

1. AI will replace most jobs in the next few years. – Research found limited layoffs from GenAI, and only in industries that are already affected significantly by AI. There is no consensus among executives as to hiring levels over the next three to five years.
2. Generative AI is transforming business. – Adoption is high, but transformation is rare. Only five percent of enterprises have AI tools integrated in workflows at scale and seven of nine sectors show no real structural change.
3. Enterprises are slow in adopting new tech. – Businesses are extremely eager to adopt AI and 90 percent have seriously explored buying an AI solution.
4. The biggest thing holding back AI is model quality, legal, data, risk. – What's really holding it back is that most AI tools don't learn and don’t integrate well into workflows.
5. The best enterprises are building their own tools. – Internal builds fail twice as often.

The authors said that from their interviews, surveys and analysis of 300 public implementations, four patterns emerged that define the GenAI Divide:

• Limited disruption: Only two (tech and media) of eight major sectors show meaningful structural change.
• Enterprise paradox: Big firms lead in pilot volume but lag in scale-up.
• Investment bias: Budgets favor visible, top-line functions over high-return on investment back office.
• Implementation advantage: External partnerships see twice the success rate of internal builds. The core barrier to scaling is not infrastructure, regulation or talent, the authors noted. “It is learning.”

Most GenAI systems do not retain feedback, adapt to context or improve over time. A small group of vendors and buyers are achieving faster progress by addressing these limitations directly.

Organizations on the right side of the GenAI Divide share a common approach: they build adaptive, embedded systems that learn from feedback. The best startups crossing the divide focus on narrow but high-value use cases, integrate deeply into workflows, and scale through continuous learning rather than broad feature sets.

The data reveals a clear pattern: the organizations and vendors succeeding are those aggressively solving for learning, memory, and workflow adaptation, while those failing are either building generic tools or trying to develop capabilities internally.

Buyers who succeed demand process-specific customization and evaluate tools based on business outcomes rather than software benchmarks. They expect systems that integrate with existing processes and improve over time. Vendors meeting these expectations are securing multi-million-dollar deployments within months.

Organizations that successfully cross the GenAI Divide do three things differently: they buy rather than build, empower line managers rather than central labs, and select tools that integrate deeply while adapting over time.

The most forward-thinking organizations are already experimenting with agentic systems that can learn, remember, and act autonomously within defined parameters.

While most implementations don't drive headcount reduction, organizations that have crossed the GenAI Divide are beginning to see selective workforce impacts in customer support, software engineering, and administrative functions.

In addition, the highest-performing organizations report measurable savings from reduced business process outsourcing spending and external agency use, particularly in back-office operations.

Others cite improved customer retention and sales conversion through automated outreach and intelligent follow-up systems.

“These early results suggest that learning-capable systems, when targeted at specific processes, can deliver real value, even without major organizational restructuring.” MIT NANDA

THE GRAPEVINE – News about people, institutions and communities

Prime Minister Mark Carney announced several changes in the senior ranks of the public service, to take effect early in the New Year, including:

• Francis Bilodeau, Associate Deputy Minister of Innovation, Science and Industry, becomes Deputy Minister of Canadian Heritage.
• Shalene Curtis-Micallef, Deputy Minister of Justice and Deputy Attorney General of Canada, becomes Deputy Minister of Health.
• Chris Forbes, Deputy Minister of Finance, becomes Senior Official at the Privy Council Office.
• Christiane (Chris) Fox, Deputy Clerk of the Privy Council, Associate Secretary to the Cabinet, and Deputy Minister of Intergovernmental Affairs, becomes Deputy Minister of National Defence.
• Marie-Josée Hogue,a Puisne Judge of the Court of Appeal of Québec, becomes Deputy Minister of Justice and Deputy Attorney General of Canada.
• Michelle Kovacevic, Associate Deputy Minister of Indigenous Services, becomes Deputy Minister of Indigenous Services.
• Nick Leswick, Executive Director, Policy, Bank of Canada, becomes Deputy Minister of Finance.
• John McArthur, Inaugural Director, Center for Sustainable Development, and Senior Fellow, Global Economy and Development, Brookings Institution, becomes Deputy Secretary to the Cabinet (Economic Policy), Privy Council Office.
• Isabelle Mondou, Deputy Minister of Canadian Heritage, becomes Deputy Clerk of the Privy Council and Associate Secretary to the Cabinet.
• Alison O’Leary, Associate Deputy Minister of Finance, becomes Deputy Minister of Intergovernmental Affairs, Privy Council Office.
• Greg Orencsak,Deputy Minister of Health, becomes Deputy Minister of Natural Resources.
• Rob Wright, Associate Deputy Minister of Crown-Indigenous Relations, becomes Deputy Minister of Labour. Prime Minister’s Office

Dr. Homa Kheyrollah Pour, PhD, received the prestigious 2025 Northern Science Award and Centenary Medal from Polar Knowledge Canada. The award, which includes a $10,000 prize, is presented annually to an individual or team who have made a significant contribution to advancing knowledge and understanding of the Canadian North. Kheyrollah Pour was selected in recognition of her exceptional scientific leadership and community-partnered scholarship in freshwater lake monitoring in Canada’s Arctic and sub-Arctic region. She is an associate professor in Geography and Environmental Studies at Wilfrid Laurier University, executive director of the Cold Regions Research Centre and Canada Research Chair in Remote Sensing of Environmental Change. Her research focuses on climate-driven changes to lake ice, winter road safety and water quality in the Northwest Territories. In collaboration with local Indigenous communities, Kheyrollah Pour established an ice thickness monitoring network across the territory that integrates in situ sensor technology, remote sensing and Indigenous knowledge. The network makes ice condition data available in real-time to Northern residents, helping communities adapt and respond to increasingly unpredictable ice road conditions. Polar Knowledge Canada

Prime Minister Mark Carney announced that Mark Wiseman, former BlackRock executive, head of the Canada Pension Plan Investment Board, and longtime friend of Carney, will be the next Ambassador of Canada to the United States, replacing outgoing envoy Kirsten Hillman in Washington, D.C., on February 15. With a career spanning three decades in law, business, and finance, Wiseman has deep experience with both countries’ economies, financial markets and institutions. In addition to serving as president and CEO of the Canada Pension Plan Investment Board, he has chaired the board of directors of the Alberta Investment Management Corporation, and is a current member of the Prime Minister’s Council on Canada-U.S. Relations. Prime Minister’s Office

Jeff Adamson, co-founder of Neo Financial and of Skip the Dishes, joined the board of tech advocacy group Build Canada. Adamson said in a post on X that Canada has the people, the resources and the capital to be the most prosperous nation on earth. “But we need to get our growth engine going,” he said. “Somewhere along the way, we started treating Canada like an inheritance to be managed, rather than a project to be built. We confused stagnation with stability.” Adamson said he’s “done with that narrative,” adding “It’s time to stop waiting. It’s time to build.” Jeff Adamson X post

Lucas Matheson, who previously held an executive role at Shopify, and has led Coinbase Canada since its official launch in 2023, was hired as president of San Francisco-based Opendoor, where he’ll lead the online real estate company’s blockchain initiative and oversee corporate development and financial planning. Matheson joined Opendoor on December 22, 2025. Christy Schwartz was named chief financial officer, effective January 1, 2026. Schwartz, who has served as interim CFO, was selected after conversations with dozens of public-company CFOs across industries. Opendoor CEO Kaz Nejatian also held an executive role at Shopify before he joined Opendoor this September. Globe Newswire

New York-based Glen Coates, previously vice-president and head of the core product at Shopify, joined OpenAI. Coates said in a LinkedIn post Monday that he has joined OpenAI as head of its app platform. He’ll be in charge of integrating apps from other developers with ChatGPT, letting users employ the bot as an operating system or command centre. Coates thanked numerous people at Shopify, where he worked for the past six years. Shopify, meanwhile, hired former Cohere executive Eric Hu as its new principal designer. Glen Coates LinkedIn post

Quebec Liberal leader Pablo Rodriguez, previously a longtime federal cabinet minister, resigned in a corruption scandal over his leadership campaign. Le Devoir first reported that Rodriguez lost the confidence of his caucus after a series of controversies that began with the dismissal of former Liberal parliamentary leader Marwah Rizqy. In the weeks that followed, Rodriguez had to answer questions about alleged cash-for-votes in his leadership campaign. Quebec’s anti-corruption squad opened a criminal investigation into the Quebec Liberal Party on December 10. Le Journal de Montréal reported that around 20 donors were reimbursed their $500 contributions at a fundraiser, which is illegal under the Election Act. Rodriguez has insisted he did nothing wrong and that he wants the truth to be revealed. CTV News

Pension fund manager Alberta Investment Management Corporation (AIMCo) appointed Ray Gilmour as CEO. Gilmour has been fulfilling the role on an interim basis since November 8, 2024, after the Alberta government fired the entire AIMCo board and four top executives, including CEO Evan Siddall. Prior to joining AIMCo, Gilmour served as Alberta's deputy minister of Executive Council for more than five years. He has also held senior positions in the Alberta government, including deputy minister roles in Finance, Intergovernmental Relations, and Infrastructure. AIMCo had more than $179.6 billion of assets under management as at December 31, 2024. AIMCo

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