Australia’s backdown on data centres allows them to use energy from coal and gas. Here’s what that means

Jason marz/Getty It’s official: Australia’s data centre boom will not be solely powered by renewables.

At the National Cabinet meeting on Wednesday, the federal government softened its stance on using coal and gas to power energy-hungry data centres.

Initially, the government said it would required new data centres to rely on renewables , backed up by batteries and gas.

However, this has changed.

Its new standards, set to be legislated in early 2027, leave room for some jurisdictions to use fossil fuels instead.

Queensland and the Northern Territory have welcomed this shift.

So what are these new standards? And how do they fit into Australia’s energy “clean energy” transition? Desperate for data In our increasingly online world, data centres are a critical piece of digital infrastructure.

These facilities store and process data around the clock.

And they are needed to meet surging demand for generative artificial intelligence (AI), used in everything from health care to journalism .

However, both in Australia and overseas, local communities are increasingly worried about the potential risks of a rapid data centre rollout.

These include strained water supplies , less land for housing, and persistent noise .

Higher power bills are another concern, given how much energy data centres consume.

The Australian Energy Market Operator estimates they will represent 13% of national grid demand by 2035–36, up from just 3% in 2025–26.

This week, Australia’s state and federal leaders agreed to develop mandatory standards for large data centres.