Australia moves to block gas-only data centres amid state pushback

Australia's federal government says it will stop data centre proposals that rely entirely on gas, in a move that has drawn criticism from the Northern Territory and Queensland. Federal Energy Minister Chris Bowen said such projects would not meet minimum national standards and would not be allowed to proceed. The dispute centres on how new data centres should be powered as demand grows for digital infrastructure.

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Bowen said the proposed rules would require renewable energy use and a national renewable energy offset policy for data centres. Speaking at the National Press Club, he said a project that used only gas would not be able to register, even if it had support from state or territory authorities. He also said gas could still have a role as a firming option, provided renewable energy requirements were met and sensible backup arrangements were in place.

The Northern Territory government has described the federal approach as overreach, while Queensland has also rejected the plan. NT minister Josh Burgoyne said Territorians should be able to make their own decisions and argued that the Commonwealth was stepping into territory powers. His portfolios include lands, planning and environment, as well as corporate and digital development.

The NT government has been backing a gas-fired data centre boom linked to development in the Beetaloo Basin. The issue matters because data centres are increasingly central to digital services and artificial intelligence, and their power needs are becoming a major policy question. Governments are under pressure to balance investment, energy security and emissions goals, especially where large industrial users seek fast access to electricity.

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In this case, the federal government is trying to set a national standard that could override local approvals, which raises questions about the division of powers in Australia's federal system. The developer behind a major proposal on the outskirts of Darwin has said it could work with renewable energy projects, although it did not say to what extent. That leaves open how much of the project's power supply could come from non-gas sources if it is to satisfy the federal rules.

The NT government has recently set aside land near Darwin for the proposal, showing that planning for the project is already under way. What remains unclear is how quickly the federal rules would be introduced and whether they would affect projects already in the pipeline. It is also not yet clear how the Commonwealth would assess compliance with the proposed renewable energy and offset requirements.

The next stage will likely depend on whether the federal government can turn the policy into law and how strongly the NT and Queensland continue to resist it.

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