A new report published by Greenpeace on 26 May has warned that the rapid expansion of AI data centres could place significant pressure on Australia’s electricity grid and undermine the nation’s transition to renewable energy. 

Independent climate and energy expert Ketan Joshi argued that the uncontrolled rollout of AI data centres is likely to accelerate greenhouse gas emissions unless the government introduces stricter regulations.      

The report found that the rapid growth of AI technology, or “AI boom”, has dramatically increased the demand for on-site gas generation. Australia is already showing signs of a data-centre-driven gas boom. 

“Even if only one in four new Australian data centres were powered by new on-site gas, it would result in 2.8 times higher total emissions compared to using grid power”, the report said, warning that emissions from on-site generation at data centres worldwide could exceed the total emissions from Brazil’s electricity grid by 2030. 

Australia has more than 250 data centres, with Sydney and Melbourne ranked among the top ten data centre markets in the Asia-Pacific region. The Australian Government has described the country as a “regional data centre hub” and “a global leader for artificial intelligence”. 

The growth is becoming increasingly visible in Victoria, with plans for the development of a 350-hectare data centre precinct, known as the "Victorian AI Hub", in Melbourne's west.

The Age said this facility would consume more power than the entire output of Victoria’s largest coal fired power station, Loy Yang A, alongside its reliance on fossil gas turbines to keep up with its energy demand.

The government has said that alongside supporting everyday digital services, creating jobs, and strengthening the economy, data centres will help Australia reach their sustainability goals.

However, the Greenpeace report argues that this growth undermines Australia’s climate commitments. It found that many existing data centres are not adding enough renewable energy to keep up with their growing electricity demand.

Similar concerns have emerged overseas. A recent United Nations report described Ireland as a “cautionary example” of AI infrastructure growth outpacing energy making. Data centres currently make up 21 per cent of Ireland’s total electricity use, a figure expected to exceed 30 per cent within the next few years as facilities expand to meet growing demand for artificial intelligence.

In an Instagram post, Joshi and Greenpeace said that Australia’s largest proposed data centre, the Mamre Road Data Centre at Kemps Creek in western Sydney, would use the same energy as 2 million Australian homes, or the entire city of Adelaide.

Australia’s data centre operational capacity is projected to reach between 2.2 and 3.2 gigawatts by 2035, up from approximately 0.3 gigawatts in 2024-25. This would account for between eight to 11 per cent of Australia’s total electricity consumption, according to a 2025 report by the Clean Energy Finance Corporation.

The report recommends pausing the construction and expansion of new data centres until stronger safeguards are in place. These include requirements for cleaner energy use and greater transparency around emissions and energy consumption.

Image source: ABC News (Supplied: Google)