Listen closely to Resources Minister Madeleine King on ABC Alice Springs this week, where she was presenting at the Developing Northern Australia Conference, and you can hear Australia’s climate policy in development.
Asked about the Northern Territory’s gas reservation carve-out, what came back was a masterclass in how gas expansion with offsets and AI data centre expansion have become intertwined.
The Minister was honest about one thing. Asked whether renewables alone could power the data centre boom, she said any renewables used “will need to be supported by gas right around the country.”
Two days later, Climate Change and Energy Minister Chris Bowen stood at the National Press Club and delivered the polished version of the same message.
The headline was firm: the federal government will override any state or territory that opposes new national rules on data centres, with Commonwealth legislation forcing new AI data centres to run on renewable energy and banning those fuelled by gas.
It read as a rebuke to King’s gas comments. It wasn’t quite one. Scroll past the ban and Bowen was explicit that data centres need “renewables, backed by storage and gas peaking,” delivering power that “isn’t hostage to a fuel price set on the other side of the world.”
Gas peaking or firming, the words seem interchangeable, is not gas-fuelled in Bowen’s language, so the ban survives on a technicality, and the substance is King’s point dressed in more public relations language: renewable ambition leads the headline, gas and offsets sit in the footnotes.
Bowen’s address did not touch whether emissions from that gas peaking capacity could be offset through the Australian Carbon Credit Unit scheme. Silence on that question, from the minister who controls the scheme, is not neutral.
Here is Bowen’s chance to prove the sceptics wrong. He has been telling anyone who will listen that data centres can supercharge the renewable transition rather than derail it. That is a promise worth taking him up on.
But a promise built on banning gas while waving through “gas firming” and “gas peaking” with unlimited offsets is a promise with the gate left open, because that clever language does nothing to stop fossil-fuelled power sitting behind the peaking label from buying its way clean with ACCUs. If Bowen wants data centres to be proof his climate policy works, he cannot leave the offset question hanging. He must close it.
Part of that proof is what he doesn’t approve. Every new ACCU method is a new tap the fossil fuel industry can turn on, and native forest credits are exactly the kind of supply an industry under offset pressure goes looking for.
A data centre boom that needs firming and peaking gas at gigawatt scale will need somewhere to hide the emissions that come with it, and a fresh pipeline of forest-derived ACCUs is precisely the kind of cheap, high-volume offset that gas-backed data centres would gobble up to keep their books looking clean.
If Bowen approves new methods that open that tap, in native forests or anywhere else, he hands the data centre boom the offset supply it needs to keep burning gas while claiming to be powered by renewables.
Success on truly renewable powered AI data centres means no new ACCU methods that let a gigawatt of gas-fired firming buy its way to net zero on paper.
This matters because gas that gets burned needs somewhere to hide its emissions in the accounting books, and we already know where the fossil fuel industry goes looking.
Under the Safeguard Mechanism, big emitters don’t have to cut pollution, they can buy their way out with unlimited so-called offsets by buying ACCUs. Fossil fuel projects currently purchase around two thirds of every ACCU sold in the country. That is not an unintended flaw, it is how it’s designed to work.
Which brings us to the increasingly complicated Great Koala National Park proposal in NSW. The park itself was an election promise, taken to voters in 2015, 2019 and 2023, long before anyone mentioned carbon credits.
It was announced in September 2025, then deliberately left ungazetted while the Minns government made its final creation conditional on registering a carbon project under the Improved Native Forest Management method, turning a conservation commitment into a funding mechanism for it.
When the NSW government then barred coal and gas companies from buying credits generated by that project, after pressure was applied pointing to the dangers in these changes, it did something more useful than it probably realised.
It said an ACCU tied to protecting a forest should never underwrite the fossil fuel industry destroying the climate that forests depend on. In effect, creating the “Minns Principle.” It makes sense, and the only surprise is that it took this long for a government to say it out loud.
The trouble is Premier Minns can only apply that principle to his own park in his own state. Nothing in federal law stops anyone reselling those credits into the exact market NSW claims to be shutting out, so on its own the ban is a fence with no gate. That argues for extending the Minns Principle, not shrugging it off, and the opportunity is now sitting on Bowen’s desk.
The Safeguard Mechanism is due for review this financial year, the vehicle for turning the Minns Principle into binding federal law: the Commonwealth could rule that no ACCU, from any method, anywhere, can be surrendered against a coal or gas company’s obligations. That would close the resale loophole NSW cannot close alone, end the absurdity of a policy in which two thirds of its own credits are bought by the industry it is meant to be constraining, and give Bowen’s data centre promise something to stand on.
Bowen just showed he’s willing to override states to force a national standard. He could show the same resolve here. He doesn’t need a new idea; he needs to legislate the one the NSW Premier has already handed him.
The deeper problem is in the woods. The Improved Native Forest Management method was approved despite warnings from conservationists, ecologists, the timber industry, forest managers and unions that it doesn’t do what it claims.
Trees might store carbon for a few decades, 80 years if no fires or other climate disasters hit; coal and gas emissions linger for millennia. Trading one against the other was never sound accounting, it was sound marketing. And like most marketing, it lacks integrity.
Now overlay the AI data centre boom on this energy and offsets Gordian knot. Eleven large projects were already working through transmission approval as of March 2026, over five gigawatts of demand, with dozens more in the pipeline.
King told us gas will do the firming. Bowen told us gas peaking is part of the firming mix too, wrapped in a ban on gas-fuelled centres that doesn’t touch gas-backed ones. Neither minister has told us what happens to the emissions from that gas share, and gas firming capacity will need offsets to keep its emissions below baseline on paper.
Singapore-backed Firmus Technologies illustrates the pattern: it has bought land at Tailem Bend and Port Augusta in South Australia and is pushing ahead at Bell Bay in Tasmania, on top of its facility near Launceston, landing regional, gigawatt-scale, always-on loads on grids never built for them, in areas whose councils say they’re hearing about the plans from journalists rather than the company.
Firmus says it wants to build or buy renewable generation to match its load, and where that happens genuinely, it should be welcomed. But a developer fast-tracking approvals across three states at once, ahead of the capacity needed to back it, has every incentive to plug into whatever’s in the grid today and paper over the gap later, with more gas and more offsets.
None of this is an argument against renewable-firmed data centres. It’s an argument for reading past the headline, and for holding Bowen to his own word. He says data centres can supercharge the transition. Proving it means shutting the gate the Minns Principle only opened, so that gas firming and gas peaking cannot buy their way to net zero on paper while burning gas in practice.
Every time a minister bans gas with one hand and waves through gas peaking with the other, ask what the peaking capacity is offset against, who’s still allowed to buy the credit, and how it’s helping delay a transition away from fossil fuels.
Louise Morris is the head of fossil fuel transition, at The Australia Institute
