Essay by Eric Worrall
A meeting last Tuesday failed to secure the consensus the federal Green mandate would require.
Queensland and NT reject Labor’s push to ensure that power-hungry AI datacentres use renewable energy
Federal-state stoush comes as rating agency warns that electricity bills could skyrocket
Josh Butler
Wed 29 Jul 2026 13.19 AESTQueensland and the Northern Territory have rejected the federal government’s plans to mandate that AI datacentres use renewable power, rubbishing Anthony Albanese’s proposals to regulate the booming technology as “underdeveloped ideas that hand increased power to Canberra”.
The latest federal-state stoush on energy comes as S&P Global, the economic rating agency, warns that power use from datacentres could rise five-fold by 2035 to 10% of Australia’s total consumption, and that a mismatch between delivery timelines for datacentres and renewable projects could lead to energy bills skyrocketing.
But the federal Labor government says it will forge on with its plans to place energy and water usage rules on datacentres, and to develop “nationally consistent” regulations about AI – even if some states don’t agree.
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Federal government sources said Queensland and the NT’s opposition to the plan would not stymie Albanese’s roadmap, and insisted work to deliver nationally consistent rules would continue. The federal energy minister, Chris Bowen, will address the National Press Club next week, when he is expected to reveal more about the Albanese government’s plans before a national cabinet meeting in August and another energy ministers’ summit in September.
Federal powers relating to the Australian Energy Market Operator and Australian Energy Market Commission and surrounding connections of large facilities to power grids could be invoked to mandate that new datacentres use renewables.
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Read more: https://www.theguardian.com/australia-news/2026/jul/29/queensland-northern-territory-reject-ai-datacentre-renewable-energy
This conflict between state and federal governments could be the wedge issue which smashes the entire Aussie Net Zero framework. Or if the Federal Government wins, it could sabotage the Aussie economy, preventing Australia from fully participating in the AI industrial revolution.
Frankly I have no idea what the outcome will be. While states in Australia generally aren’t as independent as states in the USA, Australia is still a federation of states, where states negotiated significant restrictions on Federal authority when the Aussie constitution was drawn up.
An exception to that is the rebel Northern Territory, which may be in trouble on this issue. Since the Northern Territory was not a state at the time of federation, and still isn’t recognised as a state, the Federal Government retains far greater authority over Northern Territory affairs.
One thing for sure, the lawyers are going to get rich over this one. The external affairs clause in the Aussie constitution allows the Federal Government to encroach on state rights by signing international treaties. I strongly suspect some international organisations with which the Federal Government has signed treaties are fake organisations propped up by Australia as mechanism for abusing the external affairs clause.
And there are international organisations which might provide appropriate leverage. Recent United Nations ICJ rulings on obligations to control CO2 emissions, in my opinion is the most likely lever the Federal Government will use to try to attack the green data center rebellion.
I suspect Queensland and Northern Territory will win this one, regardless of hurdles and road bumps the Federal Government places in their path, simply because I don’t think the current Federal Government will win the next election. Opinion polls suggest the climate skeptic One Nation Party will take a large chunk of votes away from Federal Labor at the next election, so hopefully all Queensland and Northern Territory have to do to win is to tie everything up in court cases and wait for the bums to be tossed out of office.
