Queensland and the Northern Territory have said no to a federal plan that would force big AI computing centres to run on renewable energy. The rejection happened at a meeting of state and federal energy ministers in Canberra on Tuesday, July 28, 2026. (The Guardian)

Datacentres are giant warehouses full of computers that store information and run artificial intelligence programs. They use enormous amounts of electricity. The federal plan, tied to a pledge by Prime Minister Anthony Albanese, would require new datacentres to pay for their own new power supply, cover the cost of connecting to the electricity grid, and put back at least as much energy as they take out. They would also have to use renewable energy, cut down on water use, and be as energy-efficient as possible. The government's goal is for datacentres to build new renewable power and backup systems so they don't push up household power bills. (PM.gov.au)

The stakes are high. S&P Global, a major financial analysis firm, has warned that datacentre power use could rise five-fold by 2035, reaching 10% of all electricity consumed in Australia. The same analysis found that datacentres are being built faster than the renewable energy projects meant to power them, which could send household power bills soaring. The Australian datacentre industry is worth $150 billion. (The Australian)

Every state agreed to the federal push for consistent national rules, including making datacentres fund new renewable energy and ensuring no impact on consumer prices. Only Queensland and the Northern Territory said no. This rift is not new. At a meeting in May 2026, Queensland was already the lone state refusing to require datacentres to fully offset their energy use with renewables. The Northern Territory's stance fits its broader direction: government transcripts from June 15, 2026 show the NT scrapped its target of 50% renewable energy by 2030 and turned to gas instead. (NT Parliament)

Queensland's resistance comes down to attracting investment. Premier David Crisafulli, who leads the Liberal-National government, has said Queensland is the only state that thinks datacentre energy should not have to come from renewables alone. The state has actively pitched itself to the datacentre industry without any green power rules attached. (AFR)

Queensland treasurer and energy minister David Janetzki was blunt. He called the federal proposals "underdeveloped ideas that hand increased power to Canberra at the expense of Queenslanders." The NT's minister, Gerard Maley, is from the Country Liberal Party. Both states are non-Labor, and the clash falls along the same Labor-versus-Coalition energy divide that has shaped Australian politics for nearly two decades.

Federal government sources say the opposition from Queensland and the NT will not stop Albanese's plan, and that work on national rules will continue. Federal energy minister Chris Bowen is also looking at whether the commonwealth can set price protections to stop households from copping bill spikes caused by the datacentre boom. The government has already set up a dedicated AI office to coordinate regulation and standards. (Reuters)

The groundwork has been laid for a while. Senator Tim Ayres, speaking at the Lowy Institute last December, named renewable energy investment and water sustainability as essential conditions for data centre investment. The government's "Future Made in Australia" announcement in March 2026 said data centre developers would need to fund more renewable energy, secure sustainable water, and build local skills. Parliamentary Secretary Dr Andrew Charlton MP has been sent to the United States to promote Australia as a destination for data centre investment. (Minister for Industry)

The broader context here is that three things are colliding at once. The federal government is trying to manage a massive infrastructure boom driven by AI demand, a renewable energy transition that is already under pressure, and a political environment where any rise in household bills is dangerous. The commonwealth's answer is to make the datacentre industry pay its own way and guarantee no costs get passed on to families. That works on paper. The trouble is that Queensland and the NT have plenty of land, cheaper power, and a strong incentive to attract datacentres by skipping the green rules.

Those two states are not blocking the national framework outright. But they are creating a patchwork of different rules, which undercuts the federal government's promise of consistency. If a datacentre company can build in Queensland without a renewable energy requirement, the appeal is obvious. Federal sources insist the plan goes ahead regardless. Whether the government can actually enforce consistent national rules without the states on board is a question it has not yet answered.