Everyone seems to be talking about data centres.

These huge, droning, temperature-controlled, windowless factories are popping up in lots of Australian cities, suburbs and towns – and there are many more on the drawing board.

We didn’t ask for them – and Australian electricity and water authorities did not plan for them, until very recently – yet every one of us who clicks on an AI tool, watches a series on Netflix or Stan, or does internet banking is using them.

What are they? How do they affect the climate, our water resources and nature? Can they be built and maintained in a way that isn’t environmentally disastrous?

What happens in a data centre?

In a nutshell, data centres power online activity. And online activity is increasing all the time. More and more people are conducting more and more of their daily activities on the internet. The rapid emergence and imposition of artificial intelligence (no referendum has ever been held to ask people if they wanted AI to start taking over their lives, jobs etc) has supercharged this trend, sending electricity demand through the roof.

Why are they being built now?

Shares in AI companies have skyrocketed in the last two years. Tech giants Alphabet, Amazon, Meta and Microsoft are collectively expected to spend around a trillion dollars on expanding their AI capacity in 2026 alone. A trillion dollars in one year. A significant chunk of that investment goes into the construction of new data centres. 

At present, the USA hosts far more data centres than any other country, but there are plenty of them being built in Europe, China, India and elsewhere. At the moment there are around 300 data centres in Australia, with plans afoot for another 100. OpenAI chief executive Sam Altman recently said Australia could become a ‘data centre capital of the world.’

How bad are they for the climate?

Data centres are notoriously voracious energy consumers. At present they use just over 2% of the power in Australia’s national electricity market, but the Clean Energy Finance Corporation expects that figure to be 11% in a decade. 

New research by energy analyst Ketan Joshi for Greenpeace Australia Pacific detected ‘early signs of a data centre-fuelled gas boom in Australia.’ It found a single proposal for a gas-powered data centre at Moss Vale in NSW would wipe out that state’s entire projected 2028 emissions cuts. The Greenpeace report concluded the rush to build AI data centres ‘will derail Australia’s energy transition unless the government urgently intervenes.’

A separate report by the Climate Council found if governments don’t boost renewable energy and firming capacity and restrict the use of offsets, data centre demand will push up power prices for homes and businesses and worsen the climate crisis.

What about water and nature?

We live in a dry land. Australia has the lowest percentage of rainfall as run-off of any inhabited continent and the least amount of water in rivers. 

Data centres use huge amounts of water to cool the whirring computer stacks. The Water Services Association of Australia has warned the average Australian data centre is seeking to use up to 40 million litres of fresh water a day. That’s as much water as 80,000 households use.

Data centres presently consume about 3.5 billion litres of water per year in Sydney alone – less than 1% of the total demand. Sydney Water predicts that will jump to 25% by 2035. At least 89 data centres in the Sydney area are believed to be drawing directly from the public drinking water supply.

ACF is keen to find out more about threatened species and ecological communities that are being or may be affected by the new pressure being put on rivers, aquifers and wetlands from data centres’ water demands.

What’s it like to live near a data centre?

Some of these data centres are massive. Plans for Australia’s largest data centre, just north of Western Sydney Airport, would see 52 hectares (imagine 26 MCGs) of paddocks and dams turned into a buzzing compound of bitumen, concrete and steel. 

They generate a lot of noise and heat that affects local communities. One study in the USA found data centres are creating heat islands, warming the land around them by as much as 8.8ºC. 

American AI ethicist Masheika Allgood says many data centres rely on diesel generators for back-up power. They sometimes run on diesel for months when maintenance is needed, worsening living conditions in the vicinity with engine noise and particulate pollution. 

University of Technology Sydney researcher Bronwyn Cumbo says where there are clusters of data centres, such as Northern Virginia in the USA and Dublin in Ireland, some locals have experienced increased energy and water prices. She says communities have also reported water shortages and damage to places of great natural value.

Many communities are standing up and speaking out to oppose the imposition of data centres on their towns and suburbs. In May 2026 more than 200 locals protested against AI company Cloud Carrier’s plans in Moss Vale in the NSW central highlands. Communities around Perth, in Melbourne’s west and at Sydney’s Lane Cove are organising against data centres.

Can data centres be built in a way that isn’t an environmental disaster?

In February 2026, a range of groups (including ACF) released a joint statement setting out some principles for data centres in Australia. To maximise public benefit and minimise public harm, the statement said all new data centres must:

• Be powered by 100% additional renewable energy 
• Strengthen grid stability 
• Be appropriately sited to minimise impacts on nature and land use 
• Minimise embodied emissions and maximise efficiency and circularity 
• Use water resources responsibly 
• Operate with transparency 
• Commit to earning and delivering ongoing social licence 
• Support the training and upskilling of the workforce

In March 2026, the federal government released its ‘expectations’ for data centres.

ACF welcomed the government’s direction and the inclusion of expectations relating to additional renewable energy supply and sustainable and efficient water use but stressed that giving big tech corporations guidelines was not enough. 

“If you want to build a data centre in Australia, you should be compelled to build the renewables and water recycling infrastructure to service it,” said ACF’s CEO Adam Bandt. 

“We are disappointed the government has not listed any expectations relating to the siting of these data centres, to minimise impacts on nature, or relating to community benefits sharing and proper consultation with local communities and First Nations.

“We urge the Albanese government, in partnership with States and Territories, to impose strict, measurable obligations on the tech titans to make sure they do their share, consult properly and don’t drain our resources or derail the clean energy transition,” he said.