Albanese seeks to quell datacentre disquiet as climate expert warns ‘we’ve got one shot to get the rules right’

Prime minister will use national cabinet meeting to assuage premiers over new AI law as AEMO forecasts seven-fold rise in datacentre power use

Anthony Albanese will seek to use Wednesday’s high-stakes talks with premiers to quell growing unhappiness about national controls on datacentre developments , promising new approval laws will complement state rules.

Faced with growing opposition from conservative governments in Queensland and the Northern Territory, Albanese will tell national cabinet he plans a major piece of legislation next year to ensure the economic benefits of AI are shared widely.

With potential to be one of the major reforms of Labor’s second term, the new law will set tough copyright rules for AI businesses, and impose standards for security, safety and skills development.

The meeting on Wednesday will come after the latest forecast from the Australian Energy Market Operator showing datacentre power use is projected to increase seven-fold over the next decade.

The industry’s rapid growth, driven by increasing reliance on AI and cloud computing, remained one of the most significant causes of growth in electricity demand, according to AEMO’s annual Electricity Statement of Opportunities.

In addition to 165 datacentres already operating around the country, a further 225 are in development, the report showed, reflecting a substantial increase in new proposals compared to 2025, AEMO said on Tuesday.

Datacentre electricity demand was expected to grow from 5 to 34 terawatt hours by 2035-36, the report said, growing from 3% of overall consumption to 13%.

AEMO said high datacentre growth could see consumption reach 52 TWh – a 10-fold increase over the decade.

But there were high levels of uncertainty, with more than a third of projects listed in 2025 since cancelled, and operating facilities taking years to ramp to full capacity.

Daniel Westerman, AEMO’s chief executive, said record levels of new generation and storage coming online had improved the outlook for reliability, even with the expected retirement of coal power stations.

“The reliability outlook has improved, supported by record levels of new generation and storage, and a strong pipeline of projects expected over the next decade.”

Climate Council chief executive, Amanda McKenzie, said datacentres were set “to devour an enormous share of Australia’s electricity in the coming years”.

“We’ve got one shot to get the rules right now and ensure that datacentre growth doesn’t strain our grid and push up pollution.”