As AI infrastructure expands worldwide, the proposed Beetaloo Digital project highlights the growing challenge of balancing rising computing demand with emissions reduction, water security and long-term community and environmental concerns.
Australia’s ambition to become a major global hub for artificial intelligence (AI) infrastructure is facing an early climate test as a proposed $40 billion data centre project in the Northern Territory raises questions over emissions, water use and whether the digital revolution can be powered sustainably.
The controversy comes as countries across the United States, Europe and Asia race to expand AI infrastructure, creating a global challenge over whether the rapid growth of artificial intelligence can be achieved without increasing dependence on fossil fuels.
The proposed Beetaloo Digital project near Weddell, about 30 kilometres from Darwin, has become one of the first major tests of Prime Minister Anthony Albanese’s vision that Australia’s AI boom should be powered by new renewable energy rather than by expanding fossil fuel use.
The project is currently in the investigation and planning stages. The Northern Territory Government has granted Beetaloo Digital exclusive rights to explore the development of two hyperscale AI data centre campuses across 185 hectares of land.
The facilities are expected to use electricity generated from Beetaloo Basin gas, one of Australia’s largest undeveloped gas reserves. Beetaloo Energy says its gas-to-power proposal would be integrated with renewable energy sources and designed to supply additional electricity to Darwin’s grid rather than increase pressure on existing supplies.
The project would require up to 2 gigawatts of electricity, more than six times the peak electricity demand of Darwin and Katherine combined. It would also require around 4 gigalitres, or 4 billion litres, of water every year from the Montejinni Limestone Aquifer in the Georgina Wiso Basin.
AI data centres require enormous amounts of electricity because they operate thousands of advanced computing chips that generate significant heat. Large-scale cooling systems are needed to maintain these facilities, often requiring substantial water resources.
Project at a glance
- Investment: $40 billion
- Location: Weddell, Northern Territory
- Power demand: Up to 2 gigawatts
- Water use: Around 4 billion litres annually
- Proposed energy source: Beetaloo gas with renewable integration
Environmental groups warn of climate risks
Environmental groups have warned that the project could lock Australia into decades of additional emissions at a time when governments worldwide are attempting to align AI growth with climate goals.
Greenpeace Australia Pacific described the proposal as a warning sign of the potential environmental risks linked to the rapid expansion of hyperscale data centres.
The organisation said large AI infrastructure projects must not increase pressure on water resources or undermine efforts to reduce greenhouse gas emissions.
“This proposal mirrors the unchecked expansion of hyperscale data centres seen elsewhere, where communities are increasingly concerned about rising emissions and pressure on natural resources,” said Joe Rafalowicz, head of climate and energy at Greenpeace Australia Pacific.
The Australia Institute also criticised the project, warning that it could lead to decades of new fossil fuel infrastructure.
The organisation raised concerns that Australia’s carbon offset system could allow major emitters to compensate for emissions without making direct reductions in their own operations.
“The Safeguard Mechanism was supposed to reduce industrial emissions, but relying heavily on offsets risks allowing companies to continue polluting instead of cutting emissions at the source,” said Louise Morris of the Australia Institute.
Climate justice concerns over AI expansion
Sohanur Rahman, Executive Coordinator of YouthNet Global, said the Beetaloo project reflects a wider global challenge of ensuring that the AI revolution does not accelerate fossil fuel dependence.
“The AI revolution must not become another driver of fossil fuel expansion. Digital infrastructure should be powered by clean energy solutions that protect communities and ecosystems,” said Sohanur Rahman, Executive Coordinator of YouthNet Global.
He said countries investing in AI infrastructure must ensure that technological progress goes hand in hand with renewable energy development, sustainability and social equity.
“The future of technology must not come at the cost of climate-vulnerable communities already facing the impacts of climate change,” he added.
Energy transition and community concerns
The debate highlights a wider challenge for Australia, which has committed to reducing emissions while also seeking to expand natural gas production as a source of economic growth and energy security.
Traditional Owners in the region have previously raised concerns about the impacts of gas development on groundwater, sacred sites and long-term cultural connections to Country.
Environmental advocates argue that major infrastructure decisions must include meaningful consultation with affected communities and Indigenous groups.
Similar debates are emerging in the United States and Europe, where rapid data centre expansion is increasing pressure on electricity grids and raising concerns over emissions and water consumption.
Government pushes renewable-powered AI growth
Prime Minister Anthony Albanese recently announced that future large-scale data centres would face stronger requirements to manage their energy and environmental impacts.
“We will create a legal obligation for the next generation of large-scale data centres to underwrite new power supply,” Albanese said during a speech at the University of Sydney.
He said data centre operators would be required to contribute to new electricity generation, fully fund their grid connections, reduce water consumption, improve energy efficiency and ensure additional infrastructure costs were not passed on to households and businesses.
“Data centres must be net generators, not net users,” he said.
The government’s approach aims to ensure that Australia’s growing digital economy strengthens rather than weakens the country’s transition towards clean energy.
Northern Territory sees economic opportunity
However, Northern Territory authorities argue that the Beetaloo project could bring major economic benefits while helping meet rising demand for digital infrastructure.
Northern Territory Chief Minister Lia Finocchiaro said the Territory had the potential to become a global data centre hub because of its energy resources, strategic location and connections with major Asian markets.
“Data centre proponents are looking to the Territory because of the promise of reliable and affordable Beetaloo gas-to-power supported by renewables, and because of how close and connected we are to major Asian markets and digital superpowers,” she said.
She said the Territory could provide critical resources for Australia’s future, including energy, digital capacity, defence, minerals and agriculture.
Beetaloo Energy Managing Director Alex Underwood said the company planned to build an oversized power facility capable of supplying electricity beyond the data centres and supporting Darwin’s electricity grid.
He said the project aimed to create an integrated energy and digital infrastructure precinct capable of meeting growing global demand for AI computing.
“The demand for power into data centres, both here in Australia and globally, is truly insatiable,” Underwood said.
“This is, in my opinion, the next wave of the Industrial Revolution.”
A global test for AI’s climate future
The Beetaloo debate has become more than an Australian energy dispute. It represents a growing international challenge: how to build the infrastructure needed for the AI revolution without creating a new wave of fossil fuel dependence.
As governments and technology companies compete to lead the next generation of artificial intelligence, the question is becoming increasingly urgent: can the world build the digital future on clean energy, or will AI expansion create a new era of fossil fuel dependence?
For Australia, the Beetaloo project may become an important test of whether economic growth, technological leadership and climate responsibility can move forward together.
