Queensland and the Northern Territory have rejected the Australian federal government's proposals to mandate that AI datacentres use renewable power. They described Prime Minister Anthony Albanese's plans to regulate the technology as “underdeveloped ideas that hand increased power to Canberra”.
This federal-state dispute over energy policy comes as S&P Global, an economic rating agency, has warned that power consumption from datacentres could increase five-fold by 2035, reaching 10% of Australia’s total consumption. The agency also suggested that a mismatch in delivery timelines for datacentres and renewable energy projects could lead to a significant rise in energy bills.
Despite the opposition, the federal Labor government has stated its intention to proceed with plans to implement energy and water usage rules for datacentres. It also aims to develop “nationally consistent” regulations for AI, even without full state agreement. The federal government is also exploring price protections to shield Australians from potential energy bill increases linked to the datacentre boom.
A meeting of state and federal energy ministers on Tuesday discussed the Albanese government's expectations for datacentre development. The Prime Minister had previously pledged to legislate binding standards for AI companies, covering aspects such as location and energy use. These standards would require datacentres to generate renewable energy, minimise water use, and maximise energy efficiency. New datacentres would also have a “legal obligation” to underwrite new power supply, cover grid connection costs, and contribute at least as much energy to the grid as they consume.
Queensland had previously raised concerns about a renewables mandate at an energy ministers’ meeting in May. On Tuesday, the Northern Territory joined Queensland in rejecting further proposals and agreements regarding datacentres. However, a communique indicated that all states, with Queensland and the NT opposing, backed the commonwealth’s plan for nationally consistent rules on datacentres, including underwriting new renewables, offsetting power use, and mandating no price impacts for consumers.
David Janetzki, Queensland's state treasurer and energy minister, stated, “Queensland will always support proposals that deliver affordable, reliable and sustainable power, however, we will not support underdeveloped ideas that hand increased power to Canberra at the expense of Queenslanders.”
Federal government sources have indicated that the opposition from Queensland and the NT will not hinder Albanese’s roadmap, and work to deliver nationally consistent rules will continue. Federal energy minister Chris Bowen is expected to provide more details on the government's plans at the National Press Club next week, ahead of a national cabinet meeting in August and another energy ministers’ summit in September.