Nicki Hutley, a consulting economist, argues that the explosion of datacentres across Australia and the world represents a convergence of two existential threats: the climate crisis and artificial intelligence. She warns that the economic, environmental and social consequences of this investment boom are profound, yet governments are largely taking a laissez-faire approach.
The scale of the datacentre boom
Worldwide, there are more than 10,000 active datacentres, with this number expected to increase by 3.5 times at an estimated cost of US$7tn—over 5% of global annual GDP. Australia hosts 286 active or planned centres, with global AI leaders like Anthropic considering the country as a potential training ground.
Governments’ laissez-faire approach
Hutley criticises governments for treating datacentres as “infrastructure” without rigorous cost-benefit analysis. Unlike hard infrastructure (roads, power) or soft infrastructure (healthcare, education), it is unclear who benefits aside from tech billionaires. She calls for datacentres to face the same scrutiny as other projects.
Potential benefits of AI
AI offers significant benefits, such as relieving congestion in Shanghai, improving medical imaging diagnosis, and optimising energy grids. However, Hutley stresses that these benefits must be weighed against the costs.
Environmental and economic costs
Datacentres consume vast amounts of energy and water. In Australia, their usage is expected to triple by 2030, straining grids and potentially slowing the transition to net zero emissions. Queensland has indicated it will continue using fossil fuels for datacentres, resisting federal expectations. Waste heat is also problematic, especially in hot climates.
Economically, while the boom has lifted business investment, most equipment is imported, meaning the direct effect on GDP is near zero. Beyond construction, datacentres create few jobs compared to sectors like manufacturing.
Cybersecurity risks
The Australian Prudential Regulation Authority has warned banks about accelerating cybersecurity risks from AI, ironically recommending AI tools to counter the threat.
Australia’s crossroads
Assistant Minister Andrew Charlton noted Australia is at a crossroads: it can remain a “technology taker” or become a “world-class adopter and creator and exporter of AI technology”. Hutley argues that Australia’s poor record on commercialising ideas suggests the harder option is necessary but challenging.
Hutley concludes that the government has not yet ensured technology works for the Australian people, given the associated costs of datacentres and AI.
