Albanese seeks to quell datacentre disquiet as climate expert warns ‘we’ve got one shot to get the rules right’
Anthony Albanese will use Wednesday's national cabinet meeting to address growing state-level opposition to proposed federal controls on datacentre developments, arguing that a planned new AI approval law will complement rather than override state rules. The push comes as conservative-led governments in Queensland and the Northern Territory resist federal requirements that datacentres be powered by renewable energy rather than coal or gas, while the Australian Energy Market Operator warns that electricity demand from the sector is set to surge as AI and cloud computing usage grows.
AEMO's latest annual outlook found 165 datacentres are already operating nationally, with a further 225 in development, and forecasts electricity consumption from the sector could rise seven-fold over the next decade, from 5 to 34 terawatt hours by 2035-36 (potentially up to 52 TWh in a high-growth scenario), lifting its share of total demand from 3% to 13%. Albanese is expected to pursue major legislation next year covering copyright protections for creatives, security and safety standards, and minimum obligations requiring datacentres to avoid pushing up energy prices, cover their own infrastructure costs, minimise water use, and be sited away from homes, schools and farmland; projects already approved would remain subject only to existing state and territory laws. Climate Council chief executive Amanda McKenzie warned that with datacentres set to consume a huge share of Australia's power, "we've got one shot to get the rules right".
- Albanese seeks premiers' backing for new national datacentre and AI approval laws.
- AEMO forecasts datacentre power use could rise seven-fold by 2035-36.
- Queensland and NT resist renewable-only requirements for new datacentres.
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Datacentres are buildings full of computer equipment that store information and run online services, including cloud computing and artificial intelligence. They need large amounts of electricity and water, and new facilities can require upgrades to local power networks.
Australia’s states and territories make many decisions about where developments can be built, while the federal government is considering national rules for datacentres. Anthony Albanese leads the federal government; the Queensland and Northern Territory governments have raised concerns about proposed requirements for renewable power.
The Australian Energy Market Operator forecasts that datacentre electricity use could grow sharply as more services rely on AI and cloud computing. The rules matter because they could shape how the sector’s energy and water needs are met, who pays for new infrastructure, and how nearby communities are affected.
Both sides, in good faith
The strongest fair case each way — we don't pick a winner.
The case for
Environmental protection and climate change represent a collective action problem requiring coordinated national policy. With datacentre electricity demand forecast to increase seven-fold within a decade and consume 13 per cent of national electricity by 2035, the sector's energy profile will significantly influence Australia's ability to meet its climate commitments. If states compete for datacentre investment by allowing fossil fuel power, the result will be a race to the bottom that locks in high-carbon infrastructure for decades. Setting clear renewable energy requirements now, whilst the sector remains manageable, is essential to prevent future emissions lock-in.
The case against
Datacentre regulation should remain primarily a state matter, as states possess superior knowledge of their energy systems, existing infrastructure investments, and economic circumstances. Imposing federal renewable energy mandates risks deterring investment by increasing operating costs and removing the flexibility states need to balance economic development with energy security. States have invested substantially in coal and gas generation; federal requirements represent an unfair imposition of climate ideology over practical energy management. If renewable energy becomes genuinely cost-competitive, businesses will adopt it without federal compulsion, allowing market forces rather than regulation to drive efficiency.