Prime Minister Mark Carney speaks to construction workers as he tours a housing development in Ottawa on Nov. 6, 2025.Spencer Colby/The Canadian Press
Yrjö Koskinen is director of research at the Institute for Sustainable Finance and BMO Professor of Sustainable and Transition Finance at the Haskayne School of Business, University of Calgary.
Last year, after announcing the Ottawa-Alberta memorandum of understanding, Mark Carney walked into the Calgary Chamber of Commerce as Prime Minister and left as something closer to a folk hero. Yet, while the audience in Calgary surged to its feet, the stock market barely flinched – and what movement we did see was mostly negative.
An event-study of five key names tied directly to Alberta’s oil and pipeline ecosystem – Canadian Natural Resources CNQ-T, Cenovus CVE-T, Suncor SU-T, Enbridge ENB-T and TC Energy TRP-T – tells a sobering story. Over a window of seven trading days around the announcement, from Nov. 24 to Dec. 2, all five stocks underperformed the S&P/TSX Composite Index. Their cumulative abnormal returns – performance relative to the index – were modestly but consistently negative. In plain English, investors did not treat the MOU as value-creating news.
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That disconnect between the euphoria in the room and the skepticism in the market matters. Capital, not applause, is what ultimately decides whether a pipeline, a transmission line or a major transit project gets built. This goes to the heart of Mr. Carney’s broader ambition to put Canada back in the business of building big things again.
As for the non-reaction in the market, three main factors are likely at play – and they echo across Ottawa’s entire list of major projects, from ports and liquefied natural gas facilities to transmission corridors, critical minerals mines and big transit builds.
First, execution risk is enormous. The proposed bitumen pipeline to the West Coast has almost every kind of risk attached to it. Markets have watched this movie before: Northern Gateway, Energy East, Trans Mountain’s blown-out budget. The lesson investors took from the last decade is that Canadian megaprojects move slowly, if at all, and rarely within budget.
That pattern is not confined to pipelines. Big projects on Ottawa’s priority list – long-distance transmission lines, new port capacity, large transit expansions – face the same execution-cost uncertainty, even if the Major Projects Office is able to streamline regulatory reviews and permitting. Accepting the promise of “this project actually gets built on budget” is optimistic, no matter how big the vision.
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Second, profitability is not guaranteed, even if a project is built on budget. Investors still need to believe that the asset will earn a return above its cost of capital. Here, the picture is murky. A new pipeline brought into a world that is slowly but surely constraining fossil fuel demand is not an obvious slam-dunk, even if prospects for heavy oil are better in Asia.
Likewise, an LNG terminal or a mine looks very different depending on whether the energy transition grinds along or starts speeding up. Faced with deep uncertainty about long-term cashflows, the rational response for private investors is often to wait, postpone and learn more rather than commit to irreversible spending.
Third, climate risk itself still matters. The long-term investors who finance most major projects – sovereign wealth funds, pension plans, large asset managers – now think hard about both physical climate risks and transition risks. They are on the hook if more wildfires, floods or heatwaves impair assets, and if policy or technology shifts leave high-carbon infrastructure underused.
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A transmission line that clearly helps decarbonize the grid can be justified as a hedge against transition risk; a port or export terminal that mainly locks in higher fossil fuel shipments looks more like a potential stranded asset. Global capital is increasingly focused on whether long-lived infrastructure can earn its keep in a world of slowly tightening climate constraints. When that is unclear, cautious long-term investors simply demand a higher return – or stay on the sidelines.
None of this means Canada cannot rebuild a capacity for major projects. It does mean that the politics versus finance of building are operating on different wavelengths.
From a political perspective, “build big” is an appealing story: it promises jobs, national pride and tangible proof that government can still get things done. From a financial perspective, building big is an invitation to quantify risk, including construction risk, cost inflation, policy volatility, legal risk, demand risk and reputational risk. The small but clearly negative stock market reaction to the Alberta-Ottawa MOU is just one concrete example of that risk calculus at work.
If the goal is not just applause in Calgary, but actual steel in the ground across the country, the audience that matters most is not a room of local business leaders, but the global capital markets.