Climate Council urges tougher data centre energy rules

The Climate Council has welcomed the federal government's commitment to require new large scale data centres to support additional renewable energy but warned the success of the reforms will depend on how quickly the rules are implemented.

The comments follow a meeting of the Energy and Climate Change Ministerial Council (EMC), where all jurisdictions except Queensland and the Northern Territory backed the Commonwealth's plan to legislate national standards requiring new large-scale data centres to underwrite new renewable power supply.

The ministers also agreed to develop changes to the National Electricity Rules to ensure data centres offset their electricity demand with new renewable generation and endorsed a nationally consistent regulatory approach.

Climate Council chief executive Amanda McKenzie said while the direction of the reforms was encouraging, significant questions remained.

"It's encouraging that most states and territories agree that we need additional renewable energy to power data centres, and that the Albanese government plans to legislate imminently," McKenzie said.

"It is vital that data centres are powered with additional renewables to protect consumers from price and pollution spikes."

However, she said governments had yet to agree on implementation timeframes, despite rapid growth in the sector.

"Data centres are coming online very quickly, so the National Electricity Rules must ensure that they are required to source additional renewable power from the get-go," McKenzie said.

She criticised the Queensland and Northern Territory governments for failing to support the proposed reforms.

"Unfortunately, the Queensland and Northern Territory governments continue to put the interests of big tech and fossil fuel corporations first, failing to back strong rules that protect Australians from rising power bills and pollution," she said.

The Climate Council has previously argued requiring data centres to fund new renewable generation is necessary to prevent higher electricity prices as demand from artificial intelligence and cloud computing accelerates.

Its recent Clouded Future report estimated wholesale electricity prices could rise by as much as 26% in New South Wales by 2035 without stronger requirements, while separate YouGov polling commissioned by the organisation found 82% of Australians support requiring new data centres to pay for the renewable energy and storage needed to match their electricity consumption.

The Commonwealth is expected to develop the proposed legislation and rule changes in the coming months.