Datacentres are a ticking time bomb. We must make sure AI’s benefits outweigh the costs | Nicki Hutley
The two great existential threats of our time – the climate crisis and AI – come hurtling together in the explosion of datacentres across Australia and around the world.
You can hardly avoid hearing about them these days, either with awed reverence of the promised benefits to humankind or with fear and anger given the implications for the climate, inflation, jobs and even housing affordability.
And that’s before we get to the implications of artificial intelligence itself – to me, both inspiring and terrifying – which is the primary driver 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. For perspective, that’s a little over 5% of the entire world’s annual GDP – we are talking big bickies. The US hosts most of these centres but Australia is attracting activity, with 286 active or planned centres and global AI leaders including Anthropic looking to Australia as a potential training ground for its models.
The economic, environmental and social consequences of this datacentre investment boom are profound. Yet governments here and around the world are, by and large, taking a laissez-faire approach – perhaps from Fomo on the alleged benefits or from fear of upsetting the billionaire tech bros, or both.
Governments and proponents of datacentres often refer to them as “infrastructure”, which certainly sounds like something we need. But they are neither so-called “hard” infrastructure (think roads, telecommunications or power and water) nor “soft” infrastructure (healthcare or education). Unlike roads or education, it is unclear who is benefiting from all this investment (aside from the tech bros) or how. If we are going to call datacentres infrastructure, they should have to face examination as to whether their benefits outweigh the costs, just as any other projects would.
There’s no doubt that AI can benefit humankind – and I don’t mean getting help designing your travel itinerary or anti-tax meme. In Shanghai, it’s relieving congestion; around the world it’s improving diagnosis accuracy and speed for X-ray, CT, MRI and other imaging; and it is helping optimise energy grids to avoid blackouts. The potential economic and social benefits are enormous. But we cannot look at these benefits without assessing the costs.
And those potential costs are large. The Australian Prudential Regulation Authority has written to banks to warn of the accelerating cybersecurity risk posed by AI. Its recommendation, without any irony, is to use AI tools to help prevent the AI threat.
It is by now fairly well-known that datacentres use huge amounts of energy and water. Datacentres in Australia are expected to triple our consumption of both by 2030. At a time when our best answer to the climate crisis is to electrify as fast as possible using renewable energy and storage, allowing these energy vampires to strain grids could slow the transition to net zero emissions – and add to energy costs for everyday consumers.
While fossil fuels still power about half our energy demand, we will be adding huge amounts of polluting greenhouse gases to the atmosphere. Alarmingly, Queensland says it’s happy to keep using fossil fuels for datacentres, resisting the federal government’s “expectations”. Any cost-benefit analysis must include the collective impact of datacentre emissions.
Waste heat from datacentres is also a significant problem: intense energy going in turns into heat. While this might be useful in cold climates such as Finland, where the waste heat is used to heat homes, in most parts Australia we are already facing more days of extreme heat as the planet warms.
Of the potential to boost economic growth and employment, while the datacentre boom has lifted business investment off the floor over the last year, most of the equipment must be imported. This means that the direct effect of the investment on the size of our economic pie is close to zero. Beyond the construction phase, datacentres do not create many jobs – far less than other sectors such as manufacturing.
When Australian politicians or industry proponents talk about the benefits of datacentres, they are really talking about the possible benefits of the AI that they enable, and especially the productivity gains AI is expected to drive, whatever the size and timing of these might be. In a speech to the Australian Business Economists in February, the assistant minister for science, technology and the digital economy, Andrew Charlton, noted that Australia was now at a crossroad. From here, we could continue to be a “technology taker”, with some productivity benefits, or we could become “a world-class adopter and creator and exporter of AI technology”. Australia’s poor past record on commercialising our ideas and keeping the profits at home suggests the better option will also be much harder.
Charlton also said the government should ensure “that technology works for the Australian people, and not the other way around”. Looking at the datacentre and AI landscape and their associated costs, it has not succeeded.
Read the full story at The Guardian ↗
Rapid global datacentre expansion, driven primarily by AI development, is reaching Australia. Worldwide, over 10,000 datacentres exist with numbers expected to grow substantially at significant cost. Australia attracts major AI companies seeking expansion space. Datacentres consume substantial energy and water—Australian consumption of both is projected to triple by 2030. Most equipment is imported, limiting domestic economic multipliers. Beyond construction, job creation remains limited. Energy sourcing matters: fossil fuels still power roughly half Australia's grid, and Queensland has signalled willingness to continue using them for datacentres. Waste heat from operations poses challenges in warming climates. Potential benefits include AI applications in medical imaging, congestion reduction, and energy grid optimisation. Cybersecurity risks have prompted regulatory attention. Governments have not systematically applied cost-benefit analysis to datacentre projects as they would other infrastructure.
Read the full story at The Guardian ↗
The two great existential threats of our time – the climate crisis and AI – come hurtling together in the explosion of datacentres across Australia and around the world.
You can hardly avoid hearing about them these days, either with awed reverence of the promised benefits to humankind or with fear and anger given the implications for the climate, inflation, jobs and even housing affordability.
And that’s before we get to the implications of artificial intelligence itself – to me, both inspiring and terrifying – which is the primary driver 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. For perspective, that’s a little over 5% of the entire world’s annual GDP – we are talking big bickies. The US hosts most of these centres but Australia is attracting activity, with 286 active or planned centres and global AI leaders including Anthropic looking to Australia as a potential training ground for its models.
The economic, environmental and social consequences of this datacentre investment boom are profound. Yet governments here and around the world are, by and large, taking a laissez-faire approach – perhaps from Fomo on the alleged benefits or from fear of upsetting the billionaire tech bros, or both.
Governments and proponents of datacentres often refer to them as “infrastructure”, which certainly sounds like something we need. But they are neither so-called “hard” infrastructure (think roads, telecommunications or power and water) nor “soft” infrastructure (healthcare or education). Unlike roads or education, it is unclear who is benefiting from all this investment (aside from the tech bros) or how. If we are going to call datacentres infrastructure, they should have to face examination as to whether their benefits outweigh the costs, just as any other projects would.
There’s no doubt that AI can benefit humankind – and I don’t mean getting help designing your travel itinerary or anti-tax meme. In Shanghai, it’s relieving congestion; around the world it’s improving diagnosis accuracy and speed for X-ray, CT, MRI and other imaging; and it is helping optimise energy grids to avoid blackouts. The potential economic and social benefits are enormous. But we cannot look at these benefits without assessing the costs.
And those potential costs are large. The Australian Prudential Regulation Authority has written to banks to warn of the accelerating cybersecurity risk posed by AI. Its recommendation, without any irony, is to use AI tools to help prevent the AI threat.
It is by now fairly well-known that datacentres use huge amounts of energy and water. Datacentres in Australia are expected to triple our consumption of both by 2030. At a time when our best answer to the climate crisis is to electrify as fast as possible using renewable energy and storage, allowing these energy vampires to strain grids could slow the transition to net zero emissions – and add to energy costs for everyday consumers.
While fossil fuels still power about half our energy demand, we will be adding huge amounts of polluting greenhouse gases to the atmosphere. Alarmingly, Queensland says it’s happy to keep using fossil fuels for datacentres, resisting the federal government’s “expectations”. Any cost-benefit analysis must include the collective impact of datacentre emissions.
Waste heat from datacentres is also a significant problem: intense energy going in turns into heat. While this might be useful in cold climates such as Finland, where the waste heat is used to heat homes, in most parts Australia we are already facing more days of extreme heat as the planet warms.
Of the potential to boost economic growth and employment, while the datacentre boom has lifted business investment off the floor over the last year, most of the equipment must be imported. This means that the direct effect of the investment on the size of our economic pie is close to zero. Beyond the construction phase, datacentres do not create many jobs – far less than other sectors such as manufacturing.
When Australian politicians or industry proponents talk about the benefits of datacentres, they are really talking about the possible benefits of the AI that they enable, and especially the productivity gains AI is expected to drive, whatever the size and timing of these might be. In a speech to the Australian Business Economists in February, the assistant minister for science, technology and the digital economy, Andrew Charlton, noted that Australia was now at a crossroad. From here, we could continue to be a “technology taker”, with some productivity benefits, or we could become “a world-class adopter and creator and exporter of AI technology”. Australia’s poor past record on commercialising our ideas and keeping the profits at home suggests the better option will also be much harder.
Charlton also said the government should ensure “that technology works for the Australian people, and not the other way around”. Looking at the datacentre and AI landscape and their associated costs, it has not succeeded.
Read the full story at The Guardian ↗
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. Australia hosts 286 active or planned datacentres and is attracting global AI leaders including Anthropic. Datacentres in Australia are expected to triple consumption of both energy and water by 2030. Fossil fuels power approximately half of Australia's current energy demand. Most datacentre equipment must be imported to Australia, meaning direct economic impact on GDP is close to zero. Beyond the construction phase, datacentres create far fewer jobs than sectors such as manufacturing. The Australian Prudential Regulation Authority has warned banks of accelerating cybersecurity risks posed by AI. AI applications include relieving congestion in cities like Shanghai, improving medical imaging accuracy, and optimising energy grids. Datacentres should be examined as infrastructure projects to determine whether their benefits outweigh costs, rather than accepted without scrutiny. Allowing energy-intensive datacentres to strain grids could slow Australia's transition to net zero emissions and add to energy costs for consumers. Waste heat from datacentres poses a significant problem in warming climates like Australia's. When politicians discuss datacentre benefits, they are really discussing possible benefits of AI and productivity gains with uncertain size and timing.
Read the full story at The Guardian ↗
- Australia hosts 286 active or planned datacentres, part of a global expansion expected to cost US$7tn and increase datacentre numbers 3.5-fold
- Datacentres are projected to triple Australia's energy and water consumption by 2030, with potential climate and grid implications
- Most datacentre equipment is imported, limiting direct economic benefit; construction phase aside, job creation is low compared to other sectors
- Governments largely lack formal cost-benefit frameworks for datacentre projects despite profound economic, environmental and social consequences