Community and environmental organisations are urging authorities to halt approvals for new data centres in Australia until the full impact of the rapidly growing artificial intelligence industry is understood.
During the third hearing of the NSW government’s data centre inquiry on Friday, concerns were raised by energy providers, local councils, and business groups about the increasing demand these facilities could place on essential resources.
Sydney Water reiterated its warning that data centres may consume up to 25 percent of Sydney’s drinking water supply by 2035, potentially requiring major infrastructure upgrades to meet demand.
Australia has become the world’s second-largest destination for data centre investments as technology companies race to expand AI capabilities. However, concerns remain over the industry’s growing electricity and water consumption.
Carbon Zero Initiative strategy lead Alexander Hoysted said the sector’s growth had accelerated rapidly, giving energy providers little time to fully assess its long-term effects.
Greenpeace Australia Pacific also called for a temporary halt on approvals, arguing that renewable energy resources may not currently be sufficient to support large-scale, energy-intensive projects.
Local community groups raised additional concerns about planning standards, including proposals for data centres near homes and schools, citing possible impacts such as noise and air pollution.
Industry representatives, however, argued that while stronger regulations are needed regarding water use and infrastructure planning, NSW should continue supporting data centre development within a transparent and well-managed framework.