On December 5, 2024, the Government of Canada announced its much
anticipated Canadian Sovereign AI Compute Strategy (the
Federal Strategy), which outlines how the Canadian government
intends to invest the $2 billion funding earmarked from the 2024
federal budget in building up Canada’s domestic AI
infrastructure.¹ The Federal Strategy incorporated
stakeholder feedback from researchers, industry, and civil society,
which was collected by the government in the summer of 2024 (AI
Compute Consultation).² In addition, the Government of
Alberta announced its own AI Data Centre Strategy (the Alberta Strategy)
in early December, which outlines what the Alberta government will
do to attract new, sustainable and reliable AI data centres in the
province to foster innovation, create jobs, and promote economic
diversification.³

Key Takeaways

Urgent Need to Invest in Canadian AI
infrastructure

• The AI Compute Consultation underscored an urgent need for
  Canada to invest in AI compute to lay the groundwork and secure
  supply chains for the AI ecosystem, given the rapid technological
  advancements in AI.
  

  • Stakeholders highlighted the high cost of compute and ability
    to access compute as key areas of concern. Additionally, access to
    cutting-edge computing infrastructure was seen as critical in
    developing, attracting and securing AI talent.




• The lack of Canadian AI infrastructure investments has had a
  direct impact on Canada’s ability to compete globally. Canada
  dropped 3 spots in the Tortoise Global AI Index ranking
  from being the 5th (2023) to 8th top country (2024) for AI capacity.




• In addition to keeping Canada’s status as a top global AI
  destination for innovators and investors, the Canadian and Alberta
  AI compute strategies aim to attract a portion of the estimated $2
  trillion in investments needed for data centres, electric supplies
  and communications networks globally that would be required to
  power the AI that will transform everything from education to
  healthcare.

The Federal Strategy

• The Federal Strategy aims to stem this AI infrastructure tide
  by investing:
  

  • Up to $700 million in an AI Compute Challenge (the Challenge), which
    calls for proposals to secure domestic commercial AI data centres
    and unlock billions of dollars of private sector investment.
    Priority will be given to Canadian projects that can demonstrate
    sustainability (including the use of environmentally sustainable
    energy sources and Canadian-made AI compute hardware or software)
    and a high rate of return on public investment. Applications are
    being accepted now on a rolling basis.

  
  

  • Up to $300 million for the AI Compute Access
    Fund (the Access Fund) to provide small and midsize enterprises
    (SMEs) with access to affordable compute power. It is anticipated
    that the Access Fund will launch in Spring 2025.

  
  

  • Up to $1 billion to build transformational
    large-scale public supercomputing infrastructure.

The Alberta Strategy

• The Alberta Strategy focuses on attracting AI data centre
  projects to the province that centre on power capacity, sustainable
  cooling, and economic growth.

What is ‘AI Compute’?

AI compute is the technology that powers AI. Specifically, AI
compute is a specialized stack of hardware and software involving
processors or chips, servers, storage, software, and networking,
all designed to support AI specific workloads and applications. AI
compute covers a range of different technologies from computing
chips to data servers to cloud computing.⁴

Why is Sovereign Compute Capacity Important?

In addition to keeping Canada competitive on the global AI
stage, expanding domestic AI compute capacity is essential to the
growth of Canada’s AI industry, including by increasing the
number of domestic compute suppliers to provide users with more
choices, boosting economic resilience, and enhancing the appeal of
the Canadian ecosystem through data sovereignty.

Canada’s AI Compute Capacity: A Laggard Amongst its
Peers

Compared to its G7 peers, Canada holds the lowest amount of
publicly available computing infrastructure and performance. To put
things in perspective, it was reported that as of November 2023,
Canada’s AI compute capacity represents 0.7% of global AI
compute capacity. Canada’s current computing performance
potential is half that of the United Kingdom’s, the next lowest
G7 nation. In contrast, the US is the market leader with 53% of the
global compute capacity, followed by Japan (10%) and China (6%).
Practically, this means that the lack of availability of compute
domestically puts a drag on other AI metrics where Canada excels
such as research, a vibrant AI-start up scene and
talent.⁵

The Canadian Sovereign AI Compute Strategy

The Federal Strategy, as outlined in more detail below, attempts
to bridge the AI compute gap between its current undercapacity and
the expected need in AI compute required by AI firms, researchers
and the enterprises across Canada to not only build cutting edge AI
solutions but also ensure its rapid adoption and diffusion across
the economy.

The AI Compute Challenge

The Federal Strategy aims to allocate up to $700 million to
support projects from businesses, consortiums, and
academic-industry partnerships to pursue commercial AI data centre
projects. The government’s hope is that this funding will
mobilize private sector funding and accelerate the development of
domestic AI compute capacity. Funding will prioritize projects that
meet certain objectives:

• Building or expanding net-new AI compute capacity in
  Canada: The establishment of AI data centres, compute
  clusters, and other infrastructure, while ensuring that sensitive
  data is processed and stored domestically.




• Providing flexible and affordable compute offerings for
  Canadians: Reserving compute capacity at competitive rates
  for Canadian firms at domestic data centres and providing access to
  resources to support the growth and scaling of Canadian AI
  firms.




• Contributing to growing Canadian AI champions:
  Providing domestic, regulated compute capacity for Canadian AI
  firms.




• Advancing innovative and sustainable compute
  solutions: Ensuring that AI programs are environmentally
  sustainable and efficient and driving upstream supply benefits
  through domestic AI compute software and hardware.

Preference will be given to proposals that will lead to
“fully integrated AI data-centre solutions ready for
commercial deployment”, and that are “ready for immediate
implementation and leading to incremental compute capacity in the
near term”.⁶

The AI Compute Access Fund

The Access Fund will deploy up to $300 million to address the
high cost of compute resources and limited domestic capacity, which
are both issues often faced by Canadian AI SMEs. In particular, the
Access Fund will focus on key sectors such as life sciences,
energy, and advanced manufacturing, all of which require
high-performance compute capacity and have potential as use cases
for AI. This program will be formally launched in Spring 2025.

Building Public Supercomputing
Infrastructure

Lastly, the Federal Strategy will invest up to $1 billion to
develop world-class, large-scale public supercomputing
infrastructure for use by researchers, government, and industry in
Canada. More specifically, this investment will include the
following:

• In Spring 2025, the Government of Canada will release a
  statement of interest and a call for proposals to build, manage,
  and operate a large domestic supercomputing facility. This
  sovereign supercompute facility aims to support researchers and a
  cross-section of industry. Priority will be given to proposals that
  can utilize private capital to increase the size and scale of the
  facility and/or integrate commercial compute infrastructure for
  industry users.




• A smaller secure computing facility, led by Shared Services
  Canada and the National Research Council of Canada, will be
  established for research and development purposes, as well as for
  national security.




• Up to $200 million will be used to address the immediate needs
  of existing public compute infrastructure.

Alberta’s AI Data Centre Strategy

Like the Federal Strategy, the Alberta Strategy aims to attract
new investment in AI data centres in the province and to establish
Alberta as a global leader in the AI industry by leveraging its
natural resources, competitive tax rates and incentives, and
business-friendly regulatory environment. In particular, the
Alberta Strategy focuses on how the province can help data centres
scale through three pillars: (1) power capacity, (2) sustainable
cooling, and (3) economic growth. Alberta is the home to
world-class energy industry leaders who can help with innovative
solutions to meet the energy needs of AI firms, and its cold
climate provides natural cooling solutions. Alberta also hosts a
competitive marketplace and investment in the establishment of AI
data centres will help scale the local economy while providing jobs
across the province. Beginning in early 2025, the Government of
Alberta will collaborate with municipalities and Indigenous
communities to implement specific actions to grow Alberta-based
innovation in AI.

Next Steps

Both the Federal Strategy and the Alberta Strategy are
home-grown initiatives that aim to keep Canada competitive in the
ongoing global AI leadership race. By increasing access to
domestic, secure, world-class compute capacity and AI data centres,
these initiatives will help Canadian businesses, innovators, and
researchers continue to scale.

Footnotes

1. For more information on the AI budget, see our previous Cassels Comment on the
matter.

2. See Government of Canada, “What We Heard Report:
Consultations on AI Compute” (last modified 22 November 2024),
online: (ised-isde.canada.ca/site/ised/en/what-we-heard-report-consultations-ai-compute).

3. See Government of Alberta, “AI Data Centre
Strategy” (December 2024), online (pdf): (alberta.ca/system/files/ai-data-centre-strategy-fact-sheet.pdf).

4. The Dias, “Can Canada Compute?” (March
2024), online (pdf):(dais.ca/wp-content/uploads/2024/03/Can-Canada-Compute.pdf).

5. Ibid.

6. Ibid.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.