Concerns rise over AI data centre adoption in Australia

Australian Prime Minister Anthony Albanese has announced that data centres built in Australia will need to provide their own energy and minimise water use as part of the government’s new Australian Standards for AI.

The national framework — which will be overseen the newly appointed Office of AI — has been put in place to ensure everyday Australians don’t pay higher energy rates to compensate.

“We will create a legal obligation for the next generation of large-scale data centres to underwrite new power supply,” Albanese said in his speech at the University of Sydney on Wednesday, 14 July.

“To pay their full share of grid connection, so no costs are passed on to homes or businesses.

“And to put at least as much energy into our grid as they take out of it.”

AI data centres are avid energy consumers. Currently, they use just over 2% of the power in Australia’s national electricity market.

However, according to the Clean Energy Finance Corporation, the figure will rise to be 11% within a decade.

Although accelerating the progress of AI in Australia is seen as a necessity on the world stage, environmental groups have concerns whether the nation is prematurely adopting ‘hungry’ data centres without a strict plan to reduce their impact on the environment.

The Water Services Association of Australia has warned the average Australian data centre seeks to use up to 40 million litres of fresh water a day to cool whirring computer stacks — as much water use as 80,000 households.

“The AI-driven surge in data centres will have a profound effect on our energy system, and unchecked, this growth could mean soaring prices and rampant climate pollution,” said Climate Council CEO Amanda McKenzie. “The government must adequately regulate data centre growth to ensure it occurs in the best interests of Australians.

“Australia is a very attractive location for data centre proponents, but it means that we need strong guardrails to protect our standard of living; we need these things to work for us.

“This means upholding Prime Minister Albanese’s pledge ... that data centres match their energy demand with new renewables and storage to shield households and other businesses from increased costs.”

Greenpeace Australia Pacific has said it wants the government to put data centre builds on hold until there are strong and effective guardrails in place to protect both the local communities and the surrounding environment.

“We urgently need a moratorium on AI data centre approvals until there are binding rules in place to protect our communities, our climate and our environment,” said Joe Rafalowicz, Head of Climate and Energy at Greenpeace Australia Pacific. “The Prime Minister is rolling out the red carpet for these water-guzzling energy vampires, with no plans to regulate them until at least 2027 — that is a betrayal of Australian communities and our national interest.

“No new data centres should be approved until there are clearly defined, enforceable regulations in place, including requiring 100% additional renewable energy, that protect people, our climate and our environment — and absolutely no new fossil fuels like gas.”

The Australian Conservation Foundation has agreed, asking for stricter obligations to be enforced on tech giants.

“In emphasising speedy approvals for new data centres, the Prime Minister has his priorities wrong and is not hearing Australians’ concerns about AI and data centres,” said Australian Conservation Foundation CEO Adam Bandt.

“We urge the Albanese government to work with states and territories to give the tech titans strict, measurable obligations to make sure they don’t drain Australians’ shared resources or derail the clean energy transition.”

The rising concerns are not lost on AI experts; however, those at Monash University believe AI adoption is critical for the country’s future and the government must strike the right balance.

“I welcome this important initiative,” said Professor Geoff Webb, Department of Data Science and AI, Faculty of Information Technology. “Developing sovereign AI capabilities is critical to Australia’s future, and the establishment of the Office of AI represents an important first step.

“While many details are still to emerge, it will be vital to bring together Australia’s leading research capabilities and industry expertise to help shape the Office’s direction. A coordinated and collaborative approach will be essential to positioning Australia at the forefront of AI-driven innovation.”

James Bailey, Head of Department of Data Science and AI, Faculty of Information Technology, agreed, and said, “This is an important step. AI technology will be a foundation for Australia’s future and this initiative acknowledges the key role it will play.

“I see the area of AI safety as being primary in future discussions — having the capacity to assess the quality, safety and reliability of AI is critical for future adoption.”

Working out the balance between resource consumption and technology innovation is not the only concern the government will have to manage. Choosing the right location and how the centres will scale as AI use grows need to be planned well, according to risk management consultancy Aon.

“As demand for AI capacity rises, scrutiny is increasing on how these projects are powered, where they are located and how they operate at scale,” said Mary-Catherine Hamill, head of construction, Australia, Aon.

“At the scale we are seeing today, decisions around site selection, power strategy and design increasingly determine whether projects can attract capital, remain insurable and recover from disruption as they grow.

“Organisations that take a more integrated approach, with resilience, energy strategy and long-term performance built in from the outset, will be better placed to navigate these competing pressures.”

Albanese’s speech stated the government will take on these challenges with the new national framework; however, how it will be implemented remains to be seen.

“Our rules will require data centres to minimise their water use, maximise their energy efficiency, and pay for any additional water infrastructure required,” Albanese said. “These location, energy and water obligations take in every level of government and their overlapping powers.

“Which is precisely why we need national standards.”

Image credit: iStock.com/tiero