2025 Canadian Infrastructure Trends

Written By Geoff Stenger, David Macaulay, Jason Roth, Mark Kortbeek, Yannick Beaudion and David Hodge

The Canadian infrastructure space saw significant volumes of projects announced and transacted in 2024, primarily driven by government incentivizes and the development of eligible projects through the investment tax credit (ITC) regime.  For 2025, this means there are still a considerable number of projects in the queue for development, however, significant questions exist for the infrastructure industry this year, which include:

1. how many of the planned projects will actually proceed?
2. what new projects will seek to benefit from the ITC regime?
3. will any changes to the US IRA result in capital moving to or from Canada?
4. will there be a "tariff war" and does it result in capital leaving Canada?
5. what uncertainties will the "tariff war" create in the global supply chain and what does that do to the Canadian dollar and the cost/competitiveness of Canadian projects?
6. will the "tariff war" result in the development of major energy projects in western Canada or pipelines across Canada?
7. data center demand and the power industry.  How big of a market will this be and what does it do to our power grid?
8. where will we see artificial intelligence (AI) in the infrastructure market and what are the implications?
9. when will there be a federal election and will a change in government impact any public infrastructure projects planned or in development?

In 2025, strong demand for major Canadian infrastructure projects is likely to persist due to population growth (up 10 percent since 2019), aging infrastructure, the need for additional housing, current government incentives for energy transition, advancements in AI and the need for power generation and data centers, development of healthcare and education facilities¹, government spending in a time of low economic growth, and the Bank of Canada lowering interest rates.² In speaking with various clients across the country, there is general optimism in the infrastructure market in 2025, however, political uncertainty in Canada and the United States continue to be areas of concern.

2024 Canadian Infrastructure Deal Activity

A busy 2024 of infrastructure transactions (as addressed in our blog, Momentum Shift: Canada's M&A Landscape in 2025) was headlined by emerging sectors such as telecommunications (US$45.29 billion on 22 deals) and utilities (US$21.81 billion on 37 deals). As well, five of the top ten Canadian M&A transactions of 2024 were in the infrastructure space exemplifying the growing interest in Canadian infrastructure investment.

Canada's infrastructure investment climate is encouraging, with an all-time high projected total investment value of over C$300 billion into Canada's 100 largest Canadian public infrastructure projects.³ The transit sector leads in total investment followed by transportation and energy.  The total projected investment value is C$8 billion more than in 2024 and C$100 more than in 2018. The 2025 list includes 15 new projects valued at C$22 billion,⁴ including hospitals, energy initiatives, and water/wastewater projects.

2025 saw an uptick of reliance on public-private partnerships (P3s) with over C$76 billion expected to be funded by P3s. Additionally, eight of the 20 largest projects on the 2025 list involve P3s or private funding.

The infrastructure deficit in Canada is estimated to be $270 billion.⁵ Private investment can help alleviate this deficit by enabling governments to allocate more funds elsewhere.⁶ Countries such as Australia, New Zealand and the United Kingdom have successfully executed this by coupling national commissions with private-sector investors. The Canada Infrastructure Bank is already planning to use $5 billion in private funding for public transit projects.⁷ Alternative contracting models could also be used to encourage an influx of private investment, especially in traditional public assets, and could assist the Canadian government to continue to increase infrastructure spending in 2025 and beyond. Will this start to be used in Canada in 2025 and beyond?

2025 New Infrastructure Opportunities

In 2025, secular trends such as digitalization and decarbonization are expected to drive infrastructure investment in Canada. Industry surveys show a preference to invest in businesses involving renewable energy and data centers (large computer warehouses that store, process and manage data for digital applications) due to their alignment with decarbonization and AI.⁸

The surging advancement and demand for AI requires an unprecedented amount of computational power. For example, a ChatGPT query uses ten times the amount of power than an internet search⁹ which gives a glimpse into the magnitude of power needed to scale AI for commercial use. Globally, demand for data centers could more than triple by 2030.¹⁰ To accommodate, provincial governments have begun exploring data center opportunities, including Alberta's AI Data Center Strategy. The evolution of AI models, including the uncertainty created with the launch of DeepSeek, may impact the foregoing by offering a cheaper and more efficient AI alternative but the degree of this impact is still unknown.¹¹

The Canadian government is also promoting infrastructure investment through its $15 billion Canada Growth Fund and offering tax credits for clean energy projects.  As part of a $60 billion investment plan through 2035,¹² the Canadian government has committed to invest $10 billion in clean power and another $10 billion in green infrastructure.¹³

Provinces such as British Columbia, Ontario and Quebec, are taking steps to accelerate their energy transition through large-scale energy generation and storage projects. The British Columbia government plans to acquire approximately 3,000 GWh of clean energy annually¹⁴ which will be made possible by its $16 billion public investment into the construction of the Peace River, Site C hydroelectric dam. In Ontario, preliminary steps have been taken to build a nuclear facility larger than any of Ontario's currently operating nuclear facilities.¹⁵ In Quebec, the government is making legislative efforts to overhaul their energy-transition regulatory framework to support private sector involvement and broaden the range of production sources (addressed in our blog, Modernizing Quebec's Energy Sector: An Overview of Bill 69).  Hydro-Quebec also announced a $185 billion renewable strategy and indicated that power demand will double in Quebec by 2050 which is obviously a considerable infrastructure undertaking.¹⁶

What’s in store for fossil fuels?  Recently the oil and gas industry has had fewer large-scale infrastructure investments but developing events such as the "Trump Tariffs" appear to be raising this industry's profile and is further demonstrating the need for a strong and independent energy industry.  Data center demand and potential additional LNG demand may result in more natural gas projects and developments. Given the current geopolitical climate, and the EU's and other countries' search for alternative and reliable energy sources, Canada’s oil and gas industry could see a spike in growth.

What Do We Currently Know About the Potential Impact of the "Trump Tariffs" to the Infrastructure Industry?

The current political landscape in North American is causing short-term uncertainty in the Canadian infrastructure space and could impact Canada's infrastructure development plans. President Trump's tariffs also pose a direct challenge by driving up costs of critical materials for construction such as steel, aluminum, and American construction equipment.¹⁷ A recent Canadian Chamber of Commerce analysis suggested the tariffs could trigger a decline in trade volumes, real income and productivity in both countries, with Canada’s real income dropping by 0.9 per cent and the U.S.’s by 0.6 per cent.¹⁸ How long will the "tariff war" last and what will be the macro impacts?  It’s simply too early to tell, but regardless, companies will likely need to adapt to this new tariff regime to remain competitive.

AI in the Construction Industry

A recent industry survey showed 59 per cent of respondents believe artificial intelligence and machine learning will be major trends in construction for 2025.¹⁹ These technologies are expected to have a significant impact on the jobsite, improving daily operations and overall productivity.  Increased automation will allow teams to focus on high-value tasks and streamline infrastructure projects while integrating sustainability into their design and material selection.²⁰ Despite potential inflationary tariffs, these secular technology trends should have some deflationary impact to the construction industry.

Looking Ahead

Looking ahead in 2025, the infrastructure and construction sector is slightly more complicated compared with 2024 as the industry must navigate the impact of a change in the US government and a potential change in the Canadian government, where the philosophy of the new (or in Canada’s case, the potentially new) government significantly diverge from the previous government. While the 2025 infrastructure trends appear to be positive, it is unlikely 2025 will be business as usual.

About the Bennett Jones Infrastructure Industry Team

Bennett Jones has a market leading energy and infrastructure practice and regularly advises on the investment, financing, development and dispute resolution on large, complex infrastructure and energy projects across Canada. To discuss the developments and opportunities shaping the infrastructure landscape, please contact the authors.

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