No special carve-out for states using fossil fuel to power datacentres, Chris Bowen insists, despite new conditions
Australia’s energy minister, Chris Bowen, says planned national rules will require datacentres in every state and territory to use 100% renewable electricity backed by firming, rejecting claims that Queensland and the Northern Territory secured broad exemptions. States may seek permission to use existing coal or gas supplies, but must convince the federal regulator that this would be cheaper than renewables; the issue matters because datacentre electricity demand is forecast to grow sharply and could affect energy prices and the transition away from fossil fuels.
Queensland and Northern Territory leaders had portrayed the national cabinet agreement as allowing greater use of their gas and state-controlled power systems, including Beetaloo basin gas, but Bowen said any exemption would be assessed individually by the Australian Energy Regulator. The Australian Energy Market Operator expects datacentre power use to rise seven-fold over the next decade, while new figures show Australia’s emissions fell 1.6% in the year to March 2026; emissions are now 25% below 2005 levels, against a 43% reduction target for 2030.
- Datacentres must generally use renewable power nationwide.
- Coal and gas exemptions require proof of lower costs.
- Datacentre electricity demand is projected to rise seven-fold.
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Datacentres are large facilities that store and process information for online services, businesses and artificial intelligence. They use substantial amounts of electricity, and demand is expected to rise as more computing moves online.
Australia’s national government sets energy rules alongside state and territory governments, which manage parts of their own power systems and fuel supplies. Chris Bowen is the federal energy minister; the Australian Energy Regulator assesses requests for exceptions, while the Australian Energy Market Operator forecasts electricity demand.
The rules matter because meeting growing datacentre demand could affect electricity costs and Australia’s shift from coal and gas to lower-emissions power. Australia has a 2030 target to cut emissions by 43% from 2005 levels.
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The case for
Requiring datacentres to use renewable electricity backed by firming would help ensure their rapid growth does not lock in new fossil fuel use or undermine emissions goals. A national standard could also give investors clear expectations, while case-by-case exemptions would let states use existing coal or gas only where they can show it is cheaper.
The case against
Allowing states to seek exemptions could make the rules more practical where existing power supplies are available and renewables or firming would cost more. With datacentre demand forecast to rise sharply, using those supplies may help manage costs and keep electricity reliable while the energy system expands; state leaders may also argue that local conditions warrant flexibility within a national framework.