In achieving the 2% of GDP defence spending target long sought by NATO and the U.S., Canada has made modest but historic investments in space defence. According to the 2026-27 Department of National Defence (DND) Departmental Plan, that pivot will continue with new targeted funding, including a Space Rocketry Challenge slated to receive $25 million in 2026-27 and up to $50 million annually thereafter.
DND’s 2026-27 planned spending
To support its initiatives, DND’s total planned spending for 2026-27 is set at $51.7 billion, distributed across eight core responsibilities and internal services. The largest financial allocations are directed toward Ready Forces ($14.6 billion) and the Procurement of Capabilities ($12.8 billion).
The remainder of the budget is divided among Sustainable Bases, Information Technology Systems and Infrastructure ($7.28 billion); the Defence Team ($5.38 billion); Operations ($5 billion); Marine Operations and Response ($3.65 billion); Future Force Design ($1.45 billion); Internal Services ($1.22 billion) and Marine Navigation ($307.6 million).
Of note, in an effort to increase maritime security, DND integrated the Canadian Coast Guard into the defence portfolio in fiscal year 2025/26. DND said it did this “while maintaining its civilian mandate” and which enables “closer operational coordination and enhances Canada’s ability to safeguard its waters, coastal communities, and national sovereignty.” This would suggest that the Coast Guard could have access to data from additional space assets in doing their job.
The Air and Space Force
Beyond procurement dollars, the 2026-27 plan outlines another shift within the Royal Canadian Air Force (RCAF). DND is initiating a strategic Force Structure Review of the RCAF to optimize organizational design. The explicitly stated goal is to shift away from the status quo and lay the foundation for a modern, operationally ready “Air and Space Force.”
The plan commits Canadian personnel to a comprehensive roster of multinational exercises, including the following with a space component:
- Apollo Griffin: A U.S. Space Command (USSPACECOM) event integrating military space power into multi-domain global operations to deter aggression, defend national interests, and defeat threats.
- AsterX27: A French-led exercise in Toulouse that brings together tactical space operators and operational command units from allied nations to plan and execute realistic space scenarios.
- Coalition Space Flag 26-2: Designed to prepare combined joint forces to integrate all space-power disciplines and maintain space superiority against advanced threats at both tactical and operational levels.
- Global Sentinel: USSPACECOM’s premier security cooperation effort focused on improving international operational collaboration in the space domain.
- Operation NOBLE DEFENDER: A NORAD operation demonstrating high readiness and the seamless orchestration of sea, land, air, space, and cyberspace capabilities for continental defence, reinforcing interoperability between the CAF, the U.S. Armed Forces, and Arctic allies.
- Polaris Hammer: An exercise focused specifically on the command and control of space warfighting during campaign-level operations.
- Resolute Space: The U.S. Space Force’s largest service-wide exercise, demonstrating preparedness for complex, large-scale military operations against high-end threats in contested environments.
- Thor’s Hammer: A biennial NATO electronic warfare exercise designed to test the resilience of space architectures and the ability of allies to conduct combined operations in a contested environment.
- Valiant Shield: A multinational, multi-domain field training exercise building real-world proficiency in detecting, tracking, and engaging units across sea, land, air, space, and cyberspace.
- VIGILANT SHIELD 27: A bi-national command post exercise designed to assess and enhance the readiness of NORAD and U.S. Northern Command (USNORTHCOM) in defending North America against all-domain attacks, including space.
Hardware and sovereign infrastructure
As previously reported in our Defence section, the following projects are moving forward:
- A dedicated DND launch pad: A $200 million agreement to establish a dedicated space launch facility at Spaceport Nova Scotia for DND’s use, designed to reduce the military’s reliance on foreign providers to reach orbit. This includes initial funding to three companies to develop a small launch vehicle by 2028.
- Surveillance of Space 2: For orbital domain awareness, DND has awarded a $32 million contract for a ground-based optical system to detect, track, and monitor objects in Earth orbit.
Surveillance and NORAD modernization
This optical tracking connects to a broader overhaul of continental defence. DND is advancing the Northern Approaches Surveillance System to monitor Canada’s Arctic and polar regions. Crucially, the departmental plan confirms that the Northern Wide-Area Tracking and Continuous Horizon (NORTHWATCH) program has officially replaced the Polar Over-the-Horizon Radar program. NORTHWATCH will utilize a combination of ground and space-based sensors to meet NORAD surveillance requirements and enhance the detection of activities in North American air and maritime approaches. Note, the Arctic Over-the-Horizon Radar (A-OTHR) program is still going forward and will work alongside NORTHWATCH.
R&D and NATO integration
Funding is also continuing to flow into early-stage aerospace and defence research. The Innovation for Defence Excellence and Security (IDEaS) program will launch competitive projects focusing on hybrid space architectures in low Earth orbit (LEO), spectrum superiority, and next-generation radar, alongside new targeted contests including Polar Paradigms and Drone Surge.
Concurrently, Canada is deepening its integration with NATO’s innovation network by opening the permanent North American Regional Office for the Defence Innovation Accelerator for the North Atlantic (DIANA) in Halifax, Nova Scotia. DND is launching a dedicated funding program to support Canadian firms participating in the DIANA transatlantic network.
The networking of space and cyber
DND plan emphasizes that modern space operations cannot be decoupled from cyber capabilities. To achieve the “digitalization and networking of space and cyber,” the military is expanding its cyber security cooperation in Europe and the Indo-Pacific. This includes deploying Cyber Task Forces and providing Signals Intelligence and Joint Electromagnetic Warfare support across Operations HORIZON, REASSURANCE, NEON, and UNIFIER.
Furthermore, the Military Training and Cooperation Program (MTCP) is managing funding for the Indo-Pacific Strategy, support to Ukraine, and the new Operation AMARNA. The military is expanding capacity-building initiatives with regional partners such as Indonesia, Malaysia, the Philippines, Singapore, and Vietnam—including programs advancing the Women, Peace and Security agenda—and will begin exporting Directorate of Military Training Coordination cyber courses to international military audiences.
While Canada may be at odds with the U.S. government in an ongoing trade war and is aggressively pursuing sovereign space infrastructure, it is clear DND will continue to operate directly alongside the U.S. Space Force and NATO allies in active space combat scenarios, integrating new domestic capabilities as they come online.