The Albanese government’s determination to set rules on new data centres, especially a requirement they source additional renewable energy, is a thing of wonder for a sector that has struggled to secure power deals that make their projects viable.
As prime minister Anthony Albanese sits down with state and territory leaders for a national cabinet meeting on Wednesday, all signs continue to point to the government holding the line when it comes to determining what energy sources will power the booming data industry.
That determination to support renewables has tended to avoid any mention of one important word – and a key reason to resist the push from Queensland and the Northern Territory to leverage data centre demand to bolster gas and coal power.
The missing word? Emissions.
It’s a curious omission.
After all, should the federal government succeed, the avoided emissions could rival or exceed almost any other climate policy it now has in place to hit Australia’s legislated carbon goals for 2030 and 2050, and its adopted – but not legislated – 2035 emission reduction target range.
Emission reductions are not front and centre of NSW’s new data centre guidelines, but at least they get several mentions.
“Most investors in data centre development also have targets to reach net zero emissions for their operations by 2030 or 2035,” those guidelines note.
“This implies that there is an opportunity to collaborate with industry to increase the supply of renewable energy and lower carbon emissions.”
The state has also been prescriptive when it comes to requiring data centres sign up new power purchase agreement for “additional renewable energy,” including a minimum 40% in megawatt-hour terms coming from new wind farms. (More on those guidelines here.)
In federal communications, though, it is difficult to find any mention of the emissions benefits that would flow from taking a firm stance on renewables powering the rapidly expanding AI industry.
For instance, Tim Ayres, minister for industry and innovation, was out early on ABC’s RN Breakfast program repeating the mantra that the government didn’t want “a race to the bottom on artificial intelligence standards and on … electricity, water and all of those community benefits.”
Asked whether the government might bend to demands from Queensland and North Territory that they be allowed to leverage the data centres to propel fossil energy sources, such as coal and gas, Ayres maintained that clean energy would be the priority.
“It’s absolutely essential, as we rebuild and modernise our energy system, that Australia doesn’t go backwards in terms of our electricity system,” Ayres said. “That is a system that is based on solar and wind backed by gas and backed by storage.
“That is the electricity system that we need to build to lower costs and make Australia more competitive and more resilient,” he said.
“Resilient” might be the closest word to acknowledging that an alternative energy stance that fostered additional greenhouse gas pollution.
Supporting the Beetaloo Basin gasfield, which has long been dubbed a “carbon bomb” for the scale of its expected emissions, is directly linked to attracting data centres to the NT, the territory government has repeatedly stated.
Ayres comments on Wednesday were faithful to those made last month when prime minister Anthony Albanese laid out his plans in a landmark AI speech. Legislation to set the national rules would be introduced to federal parliament by early next year.
“We will create a legal obligation for the next generation of large-scale data centres to underwrite new power supply,” Albanese said.
That obligation, the PM insisted, would particularly apply to energy.
New data centres would “pay their full share of grid connection, so no costs are passed on to homes or businesses” and they would “build new renewable generation – and firming – to strengthen our national energy resilience,” he said.
The PM made no mention of emissions in his AI speech.
Climate change and energy minister Chris Bowen echoed Albanese in his address to the National Press Club three weeks ago.
“We will use all the powers available to the Commonwealth, including Commonwealth legislation, to ensure that Australian households and Australian energy reliability is put first: even if some states have different ideas,” Bowen said.
Bowen, at least, acknowledged that emissions were part of the rationale for regulations.
“While I always prefer to work with my state and territory colleagues, the Commonwealth will not be standing by and letting a race to the bottom of states falling over themselves to attract data centres, at the cost to household bills, reliability or emissions,” he said, according to the version of his speech on the website.
As of Tuesday, Bowen was sticking to his “sensible, commonsense approach” that would require new data centres to bring their own new renewable energy, backed by gas firming.
“The alternative, which is being promoted by the federal Liberal Party and the Queensland government, would see prices go up,” Bowen told reporters in Perth. “We know in Queensland wholesale prices could go up 13%.”
“But we won’t let it happen, because we will legislate Commonwealth legislation which will apply across the country, which will ensure that those data centres only proceed if they’re in the best interests of our country.”
Bowen’s only other mention of emissions was in relation to the latest Electricity Statement of Opportunities, released yesterday by the Australian Energy Market Operator (and reported on here).
That some 9.1 gigawatts of new renewables generation and storage was added to the main national power grid last year was “a very strong result,” he said.
“It shows that we need to keep our foot on the accelerator to replace the ageing coal-fired power stations across the country, to ensure not only emissions come down, but grid reliability continues to improve.”
The data sector itself seems to be joining a few dots.
On Wednesday, Data Centres Australia released a report it commissioned that argues the country could “significantly reduce the level of global emissions from AI by building the necessary infrastructure here and exporting clean energy via compute tokens.”
Indeed, millions of tonnes of carbon emissions could be avoided if data centre development in Australia drew in demand that would otherwise be taken up in South East Asia, a region that relies more on fossil energy sources, the report by Mandala Partners found.
“Australia’s renewable energy potential is one of the attributes making it an attractive destination for data centre investment,” a DCA media statement said.
“This will be sharpened through new government policies that will take the current voluntary approach that sees data centres offset 70% of their energy use with renewable energy to a mandated 100%.
As one example cited, the report found that by hosting a 1.9GW “export opportunity in Australia would generate an estimated 3.2 million tonnes of CO2, compared to 11.9 million tonnes if hosted in Indonesia.”
