Essay by Eric Worrall
“… Failing to win the support of Queensland could be a deal breaker, according to the Climate Council …”
Data centres will have “legal obligation” to BYO renewables, says PM, but LNP looms as spoiler
Sophie Vorrath
Jul 15, 2026Prime minister Anthony Albanese says data centre developers will have a “legal obligation” to meet their own energy needs by underwriting new renewable supply, in the first clear sign that the government’s bring-your-own power concept is more than just a polite request.
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“We will create a legal obligation for the next generation of large-scale data centres to underwrite new power supply,” Albanese said on Wednesday in his address at the University of Sydney.
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But whether the new rules are supported by all states and territories – and whether unanimous support is necessary to get the new rules over the line – remains to be seen.
…At a meeting of state and territory energy ministers in May, Queensland withheld support for the National Data Centre Expectations set out by the federal government in March, including the push to reuire developers to offset their demand with new renewable and storage projects.
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Failing to win the support of Queensland could be a deal breaker, according to the Climate Council, which says “changes to coordinated regulation of (and any policy changes affecting) the electricity market depends on cooperation between federal and state governments.”
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Read more: https://reneweconomy.com.au/data-centres-will-have-legal-obligation-to-byo-renewables-says-pm-under-proposed-national-ai-standards/
This isn’t the first time Queensland has defied federal green mandates;
Sadly there is still significant risk for data center investors, even if they invest in Queensland. Queensland opposition parties are as deep green as their current federal counterparts, so a change of government in Queensland could be a significant sovereign risk for AI and data center investors.
Despite encouraging moves like refusing to cooperate with the new data center green energy mandate, and support for coal, Queensland Premier Crisafulli has sometimes played both sides of the fence when it comes to renewables, like his solar power for tenants programme. His resistance to the new green energy for data center mandate could be a play to win more concessions or funding for Queensland, rather than a hardline position.
The complex interplay of Federal and State laws means the Federal Government could make life difficult for Queensland if Queensland refuses to cooperate, for example it may be within the power of the Federal Government to legislate national carbon taxes which could be applied to any new or upgraded coal plant capacity. So even though Queensland might permit new data centers without enforcing the new federal green energy mandate, the Federal Government might be able to sabotage the economics of constructing the fossil fuel capacity required to power those new data centers.
Data centers and AI are stirring just as much controversy in Queensland as they are elsewhere. My enthusiasm for data centers is a minority opinion in my local drinking establishment, and that’s amongst people who are mostly conservative leaning. A public backlash against Queensland becoming the data center capital of Australia could trigger a rapid reversal of the current policy of supporting large data centers.
Yet for all these qualifiers, this defiance of the absurd federal green mandate for data centers is an encouraging sign that the Aussie economy may not be entirely cooked. If Queensland pushes forward with this defiance, New South Wales would be in an intolerable position of watching the center of Australia’s investment and business activity drift North. The Climate Council is entirely correct that continued defiance could topple the whole federal green data center mandate.
Australia cannot survive without its own data centers. As I recently demonstrated through example, data centers have the capacity to deliver 800%+ productivity improvements in industries which embrace them. Trying to live without data centers and AI is to be like the factories in 1913 which looked on as Henry Ford created the first mass production line, and thought they could ignore these new ways of working and carry on as before. To not have sufficient domestic data centers is to be at the end of the queue when demand surges, like being at the end of the power line. The future belongs to people who adapt to and embrace technological advances. Those who don’t, don’t have an income earning future.
