Download Kit

AI and Sustainability: The Impact of Data Centres

AI is increasingly shaping our daily lives. As AI’s reach expands, so too does

its energy consumption – with serious implications for resources, emissions

and environmental sustainability.

Data centres consume huge volumes of power and water and if their

development is uncontrolled in the long-term may slow down the

achievement of Australia’s energy security and emissions reduction

objectives, and globally cause public health concerns from the pollutants

they release.

Victoria is encouraging the establishment of more data centres by

promising less regulation for them. Considering the pace at which Artificial

Intelligence (AI) is developing, the leadership in Victoria is of the view that

they cannot afford to impose new regulation on data centres. New

regulations would take a significant amount of time to establish and

become operational.

Data centres support infrastructural and technological development, and

make operations more efficient. They are significant investments which

boost economies, and many regions around the world race to encourage

their establishment. However, the energy required for AI is growing faster

than the ability to build renewable, sustainable energy sources. While

individual chips are becoming more energy-efficient, the rise in the

number and scale of AI models cancels out these gains.

Dialogue is essential amongst all stakeholders on how the many risks that

data centres pose should be handled to make the most out of their

positives.

Does the potential that AI holds outweigh the environmental impact of data centres? What can be done to make data centre operations more sustainable?
Is Victoria’s approach of reducing regulation the way forward to incentivise data centres and handle their impact?

Climate Leaders Coalition. AI, climate and the environment: Strategies to reduce the impact. September 2025. https://www.climateleaders.org.au/wp-content/uploads/2025/10/2509-CLC-AI-Climate-and-Environment-Strategies-to-Reduce-Impact.pdf
Ren, S. &Wierman, A. (2025, November 5). Mitigating the Public Health Impacts of AI Data Centers. Harvard Business Review. https://hbr.org/2025/11/mitigating-the-public-health-impacts-of-ai-data-centers
Bleby, M. (Jan 30, 2026). Victoria woos monster data centres with light-touch regulation. Financial Review. https://www.afr.com/property/commercial/victoria-woos-monster-data-centres-with-light-touch-regulation-20260127-p5nxd4
The Economist Foundation, Topical Talk. AI and sustainability: difficult choices. https://talk.economistfoundation.org/resources/ai-and-sustainability-difficult-choices/