Data centres should back renewable transition to ensure priority under new guidelines

Tech giants seeking to build artificial intelligence data centres in Australia should create their own renewable infrastructure to avoid sucking up domestic resources if they want to win government support under new investment guidelines.

Industry and Innovation Minister Tim Ayres will announce on Monday a set of expectations for prospective developers looking to build sprawling AI infrastructure in Australia as the government seeks to harness the economic and productivity benefits of the rapidly developing technology.

Advocates have warned the massive amount of energy and water required to run data centres poses a risk to Australian resources and energy security, and an increase in demand could drive up energy prices. The energy market operator has forecast data centres could quadruple their consumption of energy produced by the national grid to 12 per cent by 2050.

Under the new guidelines, pitched as a way to boost investor confidence by establishing a nationally consistent framework, data centre developments will be expected to use water efficiently to stabilise server temperatures and support Australia’s renewable energy transition without driving up consumer prices.

“This will be achieved by data centres adding new supply of clean energy, paying their full share of network connection costs, and supporting demand flexibility to strengthen the grid. Non-genuine proposals will not be welcome,” a departmental briefing paper on the new guidelines says.

Proposals “most closely aligned” with the guidelines will be prioritised, but investors won’t be required by law to comply. Resilience and national security will continue to be considered as part of the prioritisation.

Projects should also preserve Australia’s national interest by protecting data and fostering a social licence to operate, investing in Australian skills and jobs, and supporting local research and innovation.

The government’s National AI Plan relies on investment in data centres, huge computer server facilities used for cloud storage, and it shies away from heavy regulation as it attempts to boost the nation’s languishing productivity rate with the technology. Labor is seeking to retain Australia’s title as second only to the United States as the global destination for AI investment, which has helped grow the nation’s economy.

Ayres said the capability advancements offered by data centre investment could be deployed to help address Australia’s national challenges.

“Securing this infrastructure onshore strengthens our security, supports our startups and researchers and ensures Australian data benefits Australians – not offshore jurisdictions,” Ayres said in a statement.

Australian Council of Trade Unions assistant secretary Joseph Mitchell welcomed the goal of protecting Australian resources and jobs and urged the government to ensure there were enforcement mechanisms in place to boost compliance.

Ayres’ predecessor, Ed Husic, has said the rush to dominate the data centre sector without a comprehensive plan to regulate the industry more broadly risked leaving Australia exposed to the dangers of the rapidly evolving technology.

“Data centres is one thing, but it’s not the be-all and end-all of AI. It’s like trying to suggest that if we have the biggest number of hard drives, we’ll be right with the technology. I mean, that is such a simplistic and basic view,” Husic told The Issue podcast earlier this month.

“It’s got to be a lot more detailed and thought through than just [building data centres].”

Husic, who was industry minister in the Albanese government’s first term before being dumped from the frontbench in a factional reshuffle in May, said the government was taking a “spotfire approach” to AI where only the loudest voices were prioritised.

Ayres scrapped Husic’s AI advisory body, which would have brought together leading experts to advise on AI guardrails, in favour of a safety institute that will assess the need for new laws on a case-by-case basis.

A spokesperson for Ayres said: “Existing laws, covering workplace safety, consumer protection already applies to AI today. The safety institute’s job is to work across government to ensure these laws continue to be fit for purpose.”

The announcement comes as job losses in the thousands and attributed to expanding AI capability have sent shockwaves through the global tech sector, sharpening concerns over its potential to inflict damage on Australian jobs.

Global software giant Atlassian, headquartered in Sydney, this month said it would axe 1600 jobs, just weeks after WiseTech Global, one of Australia’s most valuable technology companies, slashed nearly a third of its workforce, about 2000 jobs.

Opposition digital economy spokesman Aaron Violi said: “In the first three months of this year, we’ve witnessed thousands of Aussie jobs lost and the Albanese Labor government has been silent.”

Leading Australian artificial intelligence researcher Professor Toby Walsh has said Australia has not learned the lessons of social media and the dangers of unregulated tech, arguing a lack of AI guardrails was putting younger generations at risk.

“We’re about to supercharge the sort of harms we saw with social media with an even more powerful and persuasive technology,” the University of NSW AI Institute’s chief scientist told the National Press Club last month.

“There are huge financial incentives for the tech industry to move fast and break things — to break things like the mental health of our youth.”

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