The Australian government has reached an agreement with state and territory governments to develop new national standards for data centres, marking a significant shift toward a coordinated regulatory approach for one of the country’s fastest-growing infrastructure sectors.
The agreement was reached during a National Cabinet meeting, where First Ministers from the Commonwealth, states and territories committed to designing standards that will apply consistent expectations across the sector.
According to details of the agreement, the new framework will focus on four key areas: energy use, water use, land-use planning, and skills and training opportunities within the industry.
The move comes as Australia experiences a surge in demand for data centre infrastructure, driven largely by the rapid expansion of artificial intelligence services and broader digital transformation across the economy.
Data centres, which house the servers and computing hardware that power everything from cloud storage to AI models, require substantial resources to operate, including significant electricity for computing and cooling, as well as water for temperature regulation.
Under the current system, data centre development and operation are governed by a mix of state and territory-based rules, creating inconsistencies for operators working across jurisdictions.
The agreement between First Ministers is designed to replace this fragmented regulatory landscape with a unified national approach, giving developers, operators and investors a single, predictable set of expectations regardless of where in Australia a facility is built.
The energy component of the standards is expected to address how data centres source and consume power, a particularly pressing issue given the sector’s substantial electricity demands and its potential impact on the broader energy grid.
Water use standards will likely set benchmarks for cooling systems, an area of growing scrutiny as large-scale facilities can consume significant volumes of water in regions already facing supply pressures.
Land-use provisions are expected to guide where and how data centres can be developed, addressing planning and zoning considerations as the sector expands into new areas.
The inclusion of skills and training reflects an effort to ensure the workforce needed to build, operate and maintain this infrastructure grows alongside the industry itself.
The Green Building Council of Australia (GBCA) has welcomed the agreement, with the organisation’s Chief Executive Officer, Davina Rooney, saying it would help address the risk of inconsistent state based rules as demand for AI and digital infrastructure continues to climb.
“The agreement provides a strong foundation for responsible growth in a sector that is evolving rapidly as demand for digital services and artificial intelligence continues to accelerate,” said Rooney.
The GBCA said the new standards would establish a clear benchmark for development and investment decisions, while giving industry and investors the greater certainty they have been seeking.
“Clear, consistent rules help ensure growth strengthens our economy and energy system, rather than placing new costs on consumers and communities,” said Rooney.
The agreement follows years of rapid data centre expansion across Australia, as global technology companies and local operators race to build capacity to meet demand for cloud computing and AI processing power.
That growth has raised questions among policymakers, industry groups and communities about how to balance the economic benefits of the sector with its environmental footprint and impact on local infrastructure, including electricity and water networks.
The GBCA is currently working with data centre operators and developers through its Sustainable Data Centres Program, and is also part of an international coalition of building and sustainable finance organisations focused on improving environmental outcomes for AI data centres, including energy efficiency, renewable energy use, water stewardship and reduced upfront carbon emissions.
Further details on the timeline for developing and implementing the national standards are expected to be released as governments continue work on the framework agreed at the National Cabinet meeting.
