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Shift comes after Chris Bowen said Labor would use constitutional powers to override states resisting rules on sustainable energy
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Australia news — Tom McIlroy, Josh Butler and Luca Ittimani
Anthony Albanese has backed down on demands that states must power new AI datacentres entirely using renewable energy, with Wednesday’s meeting of national cabinet flagging carveouts for jurisdictions including Queensland and the Northern Territory.
The prime minister welcomed the “positive and constructive” discussions in Sydney, but opened the door to a flexible approach under new nationally consistent standards to deal with AI development, including for governments with state-owned power systems.
Queensland and the NT had resisted signing on to rules requiring them not to use coal and gas to fuel new developments, set to be included in new federal legislation in early 2027.
Related: Australia may face a rush of datacentre construction as AI firms look to avoid upcoming rules, experts say
Albanese’s shift comes weeks after the energy minister, Chris Bowen , said the federal government would override states resisting the renewables rules, using tough powers in the Australian constitution.
The NT’s chief minister, Lia Finocchiaro, said she had won approval to use gas from the massive Beetaloo basin project in the meeting.
“Today’s deal recognises the Beetaloo basin will be online within days, we are not part of the national electricity market and we have a Territory-owned generation, transmission and distribution system,” she said.
“Our focus remains on affordability and reliability of electricity for Territorians above all else.”
Sign up for the Breaking News Australia email The Queensland premier, David Crisafulli, said it was appropriate his state be allowed to use energy from publicly owned networks.
“In the state of Queensland, we’ve got a really big point of difference, and that is that we own distribution, transmission, generation, and that enables us to control that energy mix, and we’ve done that well,” he said.
Wednesday’s meeting did not fully resolve the dispute but Albanese said all the country’s leaders agreed that eight different systems operating around the country would not be workable for investors.
“I certainly understand that different states have different issues, but we know that the priority is keeping our energy costs low,” Albanese said.
He flagged carveouts for jurisdictions with public ownership, where there is a “surplus” of power supply from fossil fuels.
“The commonwealth will legislate, and we have the power under the corporation’s power to do so,” Albanese said. “I’m very confident that we’ll move forward with every single jurisdiction making a difference.”
Federal government sources indicated that even if states were allowed to use gas for power generation, it would likely be a more expensive option when compared with renewable generation.
A communique signed by the leaders indicated further consultation, with the federal government continuing work on “consistent mandatory standards” for energy, water and land use.
The meeting followed the latest forecast from the Australian Energy Market Operator showing datacentre power use is projected to increase seven-fold over the next decade.
Leaders also agreed to further tighten national gun laws at the meeting in Sydney.
Albanese said federal government intelligence would be shared with state and territory law enforcement agencies as part of the deal, and that only Australian citizens would be allowed to hold gun licences.
The push comes amid changes spurred by December’s antisemitic shooting at Bondi beach, and as the federal government’s national buyback plan falters due to low take-up by the states. Only New South Wales and the Australian Capital Territory have signed up to the buyback scheme so far.
Albanese said 3D printed gun technology would be also banned in Australia, and new offences created to prosecute people sharing materials about their production.
Another $125m will be spent on the national biosecurity response to the growing H5 bird flu crisis, split between the states and the federal government.
The prime minister welcomed the “positive and constructive” discussions in Sydney, but opened the door to a flexible approach under new nationally consistent standards to deal with AI development, including for governments with state-owned power systems.
This report is published with credit to theguardian.com. Full available text from the wire is above. Read on theguardian.com →
Source: theguardian.com · Tom McIlroy, Josh Butler and Luca Ittimani. Published 26 Aug 2026, 08:36 am.
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