David Tournier
Partner

David is a partner in the firm’s Business Law group and heads its Infrastructure and Major Projects practice, which also leads the firm’s work in the Energy sector. He has extensive private practice experience, particularly in banking and project finance, insolvency, and private equity. He also served as Vice-President and Corporate Secretary of IFFCO Canada, a joint venture established by Indian investors, developed in partnership with a leading Québec industry participant, and supported by an interministerial committee in connection with a major industrial project.

In recent years, David has represented start-ups, multinational companies, and investors active in engineering, green industrial projects, and information technology. He is also deeply involved in Québec’s infrastructure sector as a board member of the Conseil des infrastructures, co-chair of the organizing committee for its Grand Forum, and a member of its Finance and Investments Committee. He regularly engages with public authorities to support the development of civil, industrial, and energy infrastructure, including on issues relating to energy supply, private capital participation, and infrastructure financing. David is also the author of two JurisClasseur treatises and a frequent speaker on matters central to his practice.

Jessy Menard
Partner

Jessy Menard is a lawyer in the Business Law Group and the Infrastructure and Major Projects Group. In his practice, he represents and advises stakeholders on a range of infrastructure projects, including transportation infrastructure, wind farms and airport operations. He also advises corporations and institutional investors on a broad range of transactional matters, including acquisitions, sales, and mergers.

Jessy combines his legal training with prior experience in management and strategic planning. He holds an MBA from Université Laval and previously worked for the Ministry of the Environment, the Fight Against Climate Change, Wildlife and Parks as a Strategic Planning and Performance Evaluation Advisor. In that capacity, he assisted close to one hundred public bodies in preparing social responsibility plans and defining performance indicators. He also contributed to the development of the 2023–2028 Government Sustainable Development Strategy and its monitoring framework.

This experience enables him to bring clients a perspective that is at once legal, strategic and operational, which is particularly valuable in complex matters involving organizational, regulatory or governance issues. He stands out for his professionalism, analytical mindset, ability to mobilize multidisciplinary teams, and commitment to delivering rigorous and innovative legal solutions. Jessy advises clients on complex and high-stakes matters with a focus on providing practical, rigorous and innovative legal solutions that take into account both legal requirements and strategic vision.

PUBLIC CAPITAL, ACCELERATED APPROVALS AND THE REALLOCATION OF PROJECT RISK

Introduction

Canada enters 2026–2027 at a significant economic and geopolitical inflection point. Its commercial relationship with the United States remains indispensable, reflecting deeply integrated supply chains, energy infrastructure and investment flows. That relationship has nevertheless become over the past year more difficult and less predictable, as tariffs, trade-policy uncertainty and broader geopolitical tensions have exposed the risks associated with Canada’s dependence on a single dominant export market. The federal government is consequently seeking to deepen ties with Europe, Asia and other partners, diversify export markets and strengthen Canada’s capacity to attract global capital.

This repositioning contributes to reshaping infrastructure policy, but it is not the only driver. Aging assets, the energy transition, AI-related electricity demand, defence spending and chronic capacity constraints were already forcing a rethink. What the geopolitical shift has done is accelerate the response. Canada is taking a more active public-sector role in project development by deploying equity, guarantees and targeted funding; federal and provincial governments are seeking to reduce internal and regulatory barriers; and public authorities are adopting progressive and collaborative delivery models where conventional fixed-price risk transfer is no longer economical. These measures are concentrated in sectors considered essential to economic security and international competitiveness, including energy, critical minerals, transportation corridors and related industrial infrastructure.

Public capital becomes risk capital

The most significant federal financing announcement of 2026 is the Canada Strong Fund. Announced on 27 April 2026, the Fund is to receive an initial C$25 billion federal contribution over three years and invest alongside private investors in strategic Canadian projects and companies, including infrastructure, energy, mining and advanced manufacturing. It is intended to operate at arm’s length through a new Crown corporation led by an independent board and chief executive.

The Fund is not simply another grant program. Because the Canada Strong Fund is expected to invest on commercial terms, potentially as an equity participant, it will occupy a different place in the capital structure from a lender, guarantor or subsidy provider. In a project-financed transaction, its participation may require negotiation of governance rights, reserved matters, information rights, dilution protection, transfer and exit rights, distribution priorities and the consequences of default. Lenders will also require clarity on subordination, future funding obligations and the interaction between the Fund’s consent rights and enforcement, cure and step-in arrangements. Because the Fund is expected to invest principally through minority positions, its participation should not be treated as a federal guarantee of completion or debt repayment.

The Fund will sit within an increasingly dense federal financing architecture. The Canada Infrastructure Bank’s statutory capital envelope has been increased from C$35 billion to C$45 billion. The Indigenous Loan Guarantee Program has been doubled from C$5 billion to C$10 billion and expanded beyond energy and natural resources to major projects across the economy. The Build Communities Strong Fund was also launched with C$51 billion over ten years and C$3 billion per year thereafter for public and community infrastructure.

These instruments are complementary rather than interchangeable. The CIB invests in revenue-generating infrastructure to attract private capital that would not otherwise participate; the Indigenous Loan Guarantee Program reduces financing costs for Indigenous equity participation; the Build Communities Strong Fund provides conventional public funding; and the Canada Strong Fund is intended to assume commercial ownership risk. For transaction parties, the practical challenge will be to combine them without creating inconsistent eligibility conditions, governance rights, reporting obligations or approval timetables.

Accelerated approvals reshape financing risk

Federal Bill C-5 received Royal Assent on 26 June 2025 as the One Canadian Economy Act and enacted the Building Canada Act. The latter permits the Governor in Council to designate projects considered to be in the national interest. Before listing a project, the government must publish 30 days’ notice in the Canada Gazette, consult the relevant province or territory and obtain written consent where the project falls within exclusive provincial or territorial jurisdiction.

For a listed project, the Building Canada Act deems required federal determinations, findings and opinions to be favourable. In practice, this means the government streamlines the decision path rather than waiving substantive requirements: the proponent must still satisfy the measures ordinarily associated with each authorization, but the regulatory process is compressed rather than reopened. The responsible minister issues a document that constitutes the specified federal authorizations, subject to conditions developed with the responsible departments and regulators. The Major Projects Office, launched in August 2025, serves as a single federal point of contact and supports projects through this process. By mid-2026, it had announced 15 projects representing more than C$125 billion in capital investment and was developing six transformative strategies (covering nuclear energy, LNG, critical minerals such as nickel, graphite and tungsten, trade and transportation corridors, Arctic economic and security infrastructure, and northern development).

The government was also consulting on legislative, regulatory and policy reforms under which proponents would have up to one year to complete required studies and federal review and decision-making would then take no more than one further year.

From a financing perspective, faster and more coordinated approvals can reduce development carrying costs, shorten bridge facilities and support more reliable long-stop dates in construction and offtake contracts. They may also allow some permits to be treated as staged draw conditions rather than absolute conditions precedent where the approval process provides sufficient visibility.

That said, acceleration does not eliminate regulatory risk; it changes its form. Judicial review remains available, environmental conditions attach to every authorization, intergovernmental overlaps persist, and the constitutional duty to consult Indigenous Peoples is unaffected by the speed of the process. A national-interest designation is not an unchallengeable permit, and counsel should ensure that financing documents do not treat it as one. Prudent protections include permit-specific drawstops, litigation reserves, sponsor support for delay costs and covenants requiring continued compliance with consultation and environmental obligations.

Quebec is pursuing a parallel but distinct reform through Bill 5, An Act to accelerate the granting of the authorizations required to carry out priority national-scale projects. As at the date of writing, Bill 5 had not been enacted. In the form introduced, it would permit public or private projects to be designated according to criteria including economic prosperity, Quebec autonomy, local and Indigenous interests and energy-transition objectives. A designated proponent could receive a single authorization replacing approvals under specified provincial statutes.

P3s remain important as collaborative delivery gains ground

Canada remains a major P3 market, with more than C$76 billion expected to be funded through P3 structures in 2025 and eight of the 20 largest projects involving P3s or other private funding. These figures confirm the continuing importance of private capital. A notable market development, however, is the increased use of progressive and collaborative models that permit a more selective allocation of project risk.

Several jurisdictions have formalised this shift. Infrastructure Ontario now offers a range of delivery options (from traditional fixed-price design-build and DBF/DBFM P3s to progressive design-build, progressive P3s and alliance contracts) and selects the model best suited to each project’s risk profile and market conditions. In Quebec, Bill 62, enacted in October 2024, introduced “partnership contracts” that expressly authorise public bodies to use collaborative approaches, including shared risk-and-reward mechanisms, for major infrastructure projects. British Columbia and other provinces are exploring similar frameworks. Under a progressive procurement, the owner and selected development partner work together during a development phase to refine requirements, design, pricing and risk allocation before committing to implementation. The objective is to develop the project to a level that permits more accurate pricing and assigns each risk to the party best placed to manage it.

Under a Progressive Design-Build model, the parties may establish a target price and a gainshare/painshare mechanism rather than require a fixed price at the outset. The contractor’s painshare may be capped at its corporate overhead and profit, while direct completion costs remain payable by the owner. The model offers open-book transparency and flexibility where fixed pricing would attract significant premiums, but provides less certainty as to final cost.

Progressive P3 models, including Progressive DBF and DBFM structures, retain private financing while introducing a collaborative development phase before commercial and financial close. A committed fixed price is established only once the design and pricing are sufficiently advanced. These structures seek to preserve the financing discipline of a traditional P3 while reducing the premiums and contractual qualifications that arise when contractors are asked to price immature risks.

Alliance contracting and integrated project delivery go further by relying on multi-party governance, open-book costing and shared risk-and-reward mechanisms. Alliance models commonly incorporate joint decision-making, a no-fault/no-blame approach and gainshare/painshare tied to overall project outcomes. Infrastructure Ontario’s adoption of progressive and Alliance models indicates that collaborative contracting is becoming an established procurement option for complex public infrastructure.

For lenders, this evolution requires a different bankability analysis. Traditional project finance often relies on a fixed-price EPC contract, delay liquidated damages, performance guarantees and a clear allocation of cost-overrun risk. A target-price or Alliance structure may not provide those protections in conventional form. Lenders must instead assess design maturity, the governance process through which scope and price are developed, the reliability of open-book information, independent technical verification and the effectiveness of cost-control mechanisms.

Financing commitments during the development phase may therefore need to be limited, milestone-based or conditional on agreement on the target cost, final scope, construction schedule and allocation of material risks. At implementation, lenders may require larger contingencies, funded cost-overrun reserves, sponsor completion support and controls over changes to the target price. Finance documents and, where appropriate, direct agreements should address replacement rights and lender consent for changes that materially increase cost, alter scope or delay completion.

Progressive delivery also moves financing-market risk to a later stage. Procurement documents should allocate the consequences of changes in interest rates, credit margins and hedging costs, as well as the risk that lender due diligence prevents or delays financial close. The question for lenders is not whether collaborative delivery is bankable, but on what terms. Lender protection shifts from reliance on apparently comprehensive risk transfer at contract signing toward verified design maturity, disciplined governance, transparent cost development, adequate liquidity and credible completion support.

Energy security and transition infrastructure converge

Canada is increasingly prioritising energy and critical-minerals projects as instruments of economic security, trade diversification and industrial competitiveness. The emerging national and provincial pipeline spans clean and conventional generation, nuclear energy, electricity transmission, carbon-management infrastructure, liquefied natural gas and critical-minerals development.

The financing toolkit is becoming correspondingly layered. Canada’s refundable clean-economy investment tax credits cover clean technology, clean electricity, carbon capture, clean hydrogen and clean-technology manufacturing. The Clean Electricity Investment Tax Credit generally equals 15 per cent of eligible capital cost for qualifying generation, storage and interprovincial transmission property.

Critical-minerals projects are receiving targeted public support. The First and Last Mile Fund, together with the existing Critical Minerals Infrastructure Fund, is intended to provide C$1.5 billion for mining, processing and enabling infrastructure. The C$2 billion Critical Minerals Sovereign Fund is expected to make strategic investments in projects and companies, including through equity and loan guarantees. These instruments target different bankability gaps, including enabling infrastructure, insufficient sponsor equity, limited credit support and uncertain demand.

Indigenous ownership is also increasingly embedded in project structures rather than treated solely as an ESG commitment. In June 2026, federal and Ontario guarantee programmes supported approximately C$715 million of financing for seven First Nations to acquire a minority interest in the Darlington New Nuclear Project. The transaction illustrates how public guarantees can finance Indigenous equity at scale while preserving other public and private capital for project development.

Quebec provides a particularly significant provincial example. Hydro-Québec’s updated 2035 plan now targets approximately C$200 billion in investment and 11,000 MW of additional clean-energy capacity across Quebec and Labrador, together with major investment in energy efficiency, hydroelectric modernisation, transmission, wind, solar and battery storage. The programme also places greater emphasis on partnerships with Indigenous and local communities.

This strategy is supported by the legislation introduced as Bill 69 and enacted on 7 June 2025 as the Act to ensure the responsible governance of energy resources and to amend various legislative provisions. The Act created a 25-year integrated energy-resource planning framework and modified the legal architecture governing energy development, Hydro-Québec procurement and certain supply arrangements. The recently issued 2026–2050 integrated plan provides a clearer policy framework, but the bankability of individual projects will continue to depend on regulatory approvals, interconnection, revenue certainty and the allocation of construction and cost-overrun risk.

For sponsors and lenders, public support does not replace a bankable revenue model. Power projects still require credible regulated recovery, power-purchase arrangements or other contracted revenues; LNG and mineral projects require robust offtake and market assumptions; and tax-credit value depends on technical eligibility, timing, compliance and recapture exposure. The strongest structures will be those in which each public instrument addresses a defined risk rather than merely increasing the number of government participants.

Conclusion

The defining Canadian trend for 2026–2027 is not the elimination of infrastructure risk but its reallocation. Government is stepping closer to the capital structure through equity and guarantees; approval systems are being compressed; and collaborative delivery is displacing blanket fixed-price transfer in complex projects. The work is not simpler, but the direction is clear. A more layered capital stack demands more sophisticated governance, more carefully sequenced financing conditions and more credible completion support. Canada’s next generation of infrastructure will be built on the disciplined integration of public and private capital, risk by risk, contract by contract, rather than on any single financing model. As with all infrastructure, the foundations are made of paper and ink. It is the quality of the studies, the contracts and the risk allocation that will determine whether these ambitious projects move from the drawing board to the ground.

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