A report released by the International Institute for Sustainable Development, and Environmental Defence has warned that Canada’s continued expansion of oil and gas production risks billions in future investment.

It found that Canada’s oil and gas industry is highly exposed as 81% of its oil and 44% of its gas is exported.

Under current global policies, 5% of projected capital investment in Canadian oil and gas production between 2025 and 2040 is expected to be ‘stranded’ in ‘economically uncompetitive projects.’

This rises to 39% under current global net-zero pledges, and under the scenario aligned with the Paris Agreement’s 1.5°C rises to 66%.

The report revealed that much of the capital that has already been invested will fail to deliver commercial returns.

‘We need to stop thinking of oil and gas expansion as a safe bet for Canada’s economy because it is quickly becoming the opposite,’ said Steven Haig, Policy Advisor for the International Institute for Sustainable Development.

The report highlights that not only is Canadian oil expensive compared to other international producers, but export routes rely heavily on trade with the United States, which is experiencing increased geopolitical risk.

The report calls for stronger alignment between domestic policy and international climate goals.

In June 2025, Canada’s First Ministers met in Saskatoon, Saskatchewan to discuss building a more resilient Canadian economy.

One of the topics of discussion was how the country must work to get Canadian natural resources and commodities to domestic and international markets. This includes ‘critical minerals and oil and gas pipelines supported by the private sector, that provide access to diversified markets including Asia and Europe.’

The First Ministers also agreed to ‘build cleaner and more affordable electricity systems to reduce emissions.’