Prime Minister Anthony Albanese will intervene to override Queensland state regulations and establish unified national energy compliance standards for artificial intelligence data centers.
The federal government expects to settle new energy and water rules for massive AI data centres at Wednesday’s national cabinet meeting, despite Queensland confirming it will remain opposed to the plan. Queensland’s rejection of rules tying data centre construction to new renewables projects means the federal government will be forced to legislate to override the state.
At Wednesday’s meeting, leaders will also discuss the gun buyback scheme and the next stage of a national plan on family violence. Queensland Premier David Crisafulli has vowed to stand his ground against rules requiring data centre projects to purchase power from new renewable energy projects—backed by gas—to prevent energy-hungry facilities from driving up electricity prices. Both the Queensland and Northern Territory governments have stated they will not endorse a standard that ties data centres to renewables while excluding coal and gas.
Energy Minister Chris Bowen previously indicated the federal government intends to legislate so-called “causer pays” energy rules next year for large facilities, regardless of whether all states and territories consent. This would allow the Commonwealth to overrule dissenters and prevent developers from playing jurisdictions against one another. On Sunday, Mr Bowen reiterated that while the government prefers consensus, it will legislate to override opponents. “The Queensland government’s made their views pretty clear; we disagree with them, and we’re proceeding without them,” he said. “Queensland wants to take an open slather approach, let data centres be data centres approach. We don’t agree with that. We want data centre investment in Australia, but we want it to be in the best interest of Australians, and we’re not going to let Queensland run a race to the bottom which would see energy bills go up and reliability go down because they want data centres at any cost.”
The federal Coalition has questioned how the Albanese government plans to legally override Queensland’s energy rules, warning the move could be unconstitutional. Shadow Energy Minister Dan Tehan criticized the approach: “How is Chris Bowen going to nationalise this? What powers is he going to use? The fact now he is going to use desperate measures and probably unconstitutional measures to try and force Queensland and the Northern Territory to take a particular course of action is just absurd.” He added, “He hasn’t been clear on what he wants to use. It looks like he is going to attempt to use the Corporations [Act] power, which would bring with it all types of legal uncertainty.”
Queensland maintains that energy sources for data centres should remain technology-agnostic. Premier David Crisafulli stated his government would develop its own framework to ensure communities and local councils have a direct say in data centre proposals. Under Queensland’s model, developers would be required to submit a social impact assessment and a community benefit agreement with the relevant local council prior to lodging a development application, mirroring recent reforms for battery storage and solar farm assessments. “This is about data sovereignty for our country, it’s about respecting communities’ wishes and resources, and it’s about creating the jobs of tomorrow while protecting the Queensland of today,” Mr Crisafulli said.
Canberra aims to mandate that data centres secure their own energy supplies to preempt a US-style populist backlash. In the United States, community resistance has stalled construction as facilities strain local electricity grids and raise concerns in water-scarce regions. According to the advocacy group Data Center Watch, dozens of US data centre projects valued at more than $US100 billion have been blocked or delayed by local opposition this year. Establishing consistent national standards would also provide investors with greater certainty. Although data centre energy demands are projected to triple over the next four years, the government estimates that investment plans announced over the past three years alone could contribute more than $100 billion to the Australian economy.
The federal government also anticipates the rules will accelerate the completion of renewable energy projects. Numerous initiatives are struggling to secure final investment decisions despite government underwriting via the Capacity Investment Scheme, largely due to a shortage of energy buyers willing to enter Power Purchasing Agreements that guarantee demand. At least nine renewables projects announced under the scheme have since withdrawn, and most awarded underwriting support have yet to reach a final investment decision. Shadow Energy Minister Dan Tehan argued that linking data centres to renewables jeopardizes their social licence. “This policy on AI and data centres shouldn’t be trying to make up for Chris Bowen’s abject failures. The fact that he can’t get renewable energy projects up shouldn’t be an excuse for tying states and territories to this policy,” he said. “They’re saying there needs to be social licence around data centres, but they’re also saying, ‘We’re not worried about there being no social licence when it comes to renewable energy.’ If you tie the two hand-in-glove together, it’s going to lead to an even bigger backlash.”
Despite disagreements over renewable mandates, the major political parties are seeking common ground on a long-term AI policy to capture the sector’s substantial economic potential. Last week, both sides agreed to establish a dedicated parliamentary committee to investigate AI-related issues and advance policy frameworks. Mr Tehan emphasized the Coalition’s willingness to collaborate where it serves the national interest. “We’ve shown that over the last fortnight when it came to reform of the NDIS, reform of media bargaining codes, so we will continue where it is in the national interest,” he said. “And given the importance of this sector going forward and making sure that it’s established here in Australia in a way that works for everyone, especially those in regional and rural Australia, I think it is critically important, and we can work with government to achieve that.”