Canada faces a once-in-a-generation opportunity to stake a serious claim in space

Alexander MacDonald is NASA’s former chief economist and the author of The Long Space Age: The Economic Origins of Space Exploration from Colonial America to the Cold War.

Colonel Chris Hadfield is a former RCAF fighter/test pilot and thrice-flown CSA astronaut. He directs and advises multiple businesses, leads a global tech incubator, and is a five-time best-selling author.

Canada is beginning a consequential phase of rearmament. With military budget increases planned at historic highs that haven’t been seen since the Second World War – the new NATO target is 5 per cent of GDP, which could mean annual defence spending of as much as $150-billion by 2035 – the economic consequences of this necessary action stand to be profound.

But that depends significantly on the extent to which these expenditures develop new industries, technologies and capabilities within the country.

If we want to maximize the chances that our defence expenditures increase economic growth as well as security and sovereignty, we need to ensure we invest in the capabilities required to succeed in the future of warfare, not the past. For Canada to maximally benefit, we should invest primarily in domestic companies that produce new technologies with dual-use applications, including AI, space, quantum computing, nuclear, drones and robotics. Among these, space defence deserves priority – warranting at least 5 per cent of the targeted 5 per cent, or $7.5-billion annually by 2035.

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There are four primary reasons why Canada should give significant priority to space systems as part of our national defence and dual-use industrialization strategy: the rising importance of space systems to national defence overall; Canada’s specific geopolitical and national defence situation; the growing economic global value of space systems; and the existing strength of the Canadian space industrial base.

Over the past two decades, space systems have become globally foundational to national defence. Advanced nations communicate across their forces through satellite telecommunications. Reconnaissance satellites collect intelligence and detect targets. Position, navigation, and timing (or PNT) satellite constellations guide precision payloads. Space-based early-warning detection systems remain critical for monitoring global nuclear-missile launches. While SpaceX’s Starlink constellation in the Russia-Ukraine war has received public attention, this represents only a fraction of space’s growing military role.

This dependence has triggered a corresponding rise in counterspace capabilities: space systems that can destroy, disable, or interfere with other space systems. The United States, Russia, China and India have all demonstrated anti-satellite missile capabilities; China and the U.S. have invested heavily in satellite proximity operations and space refuelling infrastructure, while Russia has demonstrated the capability to launch nuclear weapons into orbit that could disable low-Earth orbit satellites through electromagnetic pulses. There is a broad understanding that if there is a war between peer or near-peer nations, it is very likely that some of the first maneuvers and shots will occur in space.

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If Canada wants to maintain its sovereignty and defend against future adversaries, we need advanced space systems for battlefield communications, intelligence and target detection, as well as space control, which includes developing counterspace capabilities. As a major Arctic nation, our NATO and Five Eyes allies are looking to Canada to lead in the defence of the Arctic, where space systems play an outsized role due to the region’s vast territory and limited human presence. Removed by geography from the primary theatres of concern in Europe and the Indo-Pacific, Canada will have a comparative advantage in contributing space systems to allied efforts relative to ground-based, maritime or airborne systems.

While the national security imperative for advanced space systems is the driving rationale for Canadian space defence expenditures, it is also a growing area of economic opportunity. The global space economy is projected to nearly triple from US$630-billion in 2023 to US$1.8-trillion in 2035. Government space budgets worldwide are shifting toward military expenditures, too. In the United States, NASA’s proposed budget for the next fiscal year is a historically low US$18.8-billion, while the U.S. Space Force‘s budget would surge to an unprecedented US$39.9-billion. Japan, meanwhile, has targeted a tenfold increase in its space investments, driven by defence interests, and Europe is increasing its space investments with a similar motivation.

If Canada signals that it will allocate one-twentieth of our total NATO commitment to space defence, it would transform the investment landscape for our space sector and attract significant global capital. This convergence of military necessity and economic opportunity represents one of the highest amounts of leverage currently available to the Canadian government in its economic and technology-related decisions.

None of this would be possible if Canada was only an emerging spacefaring nation with limited capabilities. But remember that Canada was the third nation in space. Today, Canadian companies such as MDA, Telesat and Kepler, among numerous others, provide world-class satellite manufacturing, space robotics, telecommunications, Earth observation and space situational-awareness capabilities.

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The 3 Canadian Space Division, which was established in 2022 and is now under the command of Brigadier-General Christopher Horner, has already identified all the capabilities above – including counterspace systems – as essential for national security. We should make it a national priority to be second-to-none amongst our NATO and Five Eyes allies in the fielding and utilization of space defence assets.­­­

The importance of space systems to defence means that it would be reasonable to target 5 per cent of our new NATO commitment to be spent on Canadian space defence and dual-use systems. Although most of the expenditure would still be made in later years, making such a commitment today could help catalyze a vital set of changes across government procurement, civil-servant culture, and Canadian scientific and technology ambition with a single, transformative policy decision.

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What could such a commitment buy Canada over the course of the next 10 years? With 5 per cent of our NATO target of 5 per cent of GDP allocated to space, Canada could simultaneously achieve: leading Arctic satellite communications, Arctic Earth observation, and global quantum satellite communications capabilities within NATO and our Five Eyes allies; a fleet of space satellites capable of collecting situational-awareness data; a fleet of space satellites capable of engaging in counterspace activities, as co-ordinated with allies; a world-leading dual-use digital twin of Earth that would benefit military and climate resilience operations; multiple domestic sovereign orbital launch and satellite production capabilities; and a sovereign constellation of PNT satellites. These wouldn’t just be military assets – they’re dual-use technologies that would drive civilian innovation, create high-skilled jobs, and position Canadian companies to capture growing global markets. They also speak to Canadian ideals, as well as offering real opportunities for economic benefits and meaningful contributions to allied efforts.

For Canada to survive and thrive in the 21st century, it needs to see itself as a global leader of the future – and dual-use space investments provide one of Canada’s best opportunities to lay out a distinctly Canadian vision of global leadership. Canada is committed to the long-term peaceful uses of space, and one of the best ways to have leverage in the global decisions related to its uses will be to have meaningful equities and assets on the table.

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The Carney government’s commitment to increasing defence expenditures represents a once-in-a-generation opportunity to lay the foundation for a new era of Canadian technology-led growth. To catalyze this opportunity, we must ensure these NATO-related expenditures flow to domestic advanced technology companies through hardware and service procurement. The resulting national champions will not only safeguard sovereignty throughout the 21st century, but win global markets in the decades ahead.

Space defence investment on the scale above would instantly vault Canada to top-tier world leadership in this critical domain. It would signal to allies that we’re serious about burden-sharing while playing to our strengths. It would demonstrate to adversaries that we will not cede the ultimate high ground. Most importantly, it would show Canadians that defence spending can drive innovation, create opportunities, and build the industries of tomorrow.

So let’s start by embracing a dynamic and assertive future for Canada in space, today.