Australia data centre inquiry finds inadequate checks, stops short of moratorium

On November 5, an inquiry into Australia's data centres, conducted by the most populous state of New South Wales, revealed that approvals were insufficient in considering the overall impact on resources and infrastructure. However, the report did not recommend a moratorium on data centre approvals, leading to criticism from its chair.

The report, a reflection of the global struggle faced by lawmakers, highlights the tension between the potential benefits of AI-led data centre expansion, valued at $7 trillion by 2030 by McKinsey, and growing community resistance due to rising energy and water demands. In New South Wales, the capital city of Sydney, residents are increasingly resisting data centre projects, even forcing smaller ones to be withdrawn.

The report highlighted that the state lacked a coherent strategy to address the data centre boom's consequences on water, electricity, and infrastructure, warning that existing guidelines might underestimate future power needs and water limits. Moreover, clustering multiple facilities could exacerbate infrastructure pressures. The committee did not support recommendations for a state or national moratorium on data centre approvals, as it required a thorough understanding of social and environmental impacts.

The committee's chair, Abigail Boyd, a Greens party member, expressed concern over the "AI-fuelled data centre frenzy" that threatens to consume enormous amounts of energy and water. She criticized the current approach as a "false economy," emphasizing that governments need a more sustainable solution.