Council moves to rein in AI infrastructure impacts as data centres surge

The City of Melbourne is aiming to guide the rapid expansion of artificial intelligence (AI) infrastructure, including data centres, as concerns grow about their long-term environmental and community impacts.

The notice of motion, which was debated at the February 2 Future Melbourne Committee meeting (after Inner City News published its February edition), was put forward by Lord Mayor Nick Reece, with support from environment portfolio lead Davydd Griffiths. It calls on council management to develop planning guidance and advocacy frameworks to ensure the city’s growing digital backbone does not undermine sustainability goals.

Under the proposal, council would explore best-practice planning and design principles for data centres and other AI-related infrastructure, while also working more closely with industry, utilities and global city networks to promote cleaner technologies and shared community benefits. These include renewable energy use, recycled water systems and the potential to reuse waste heat for nearby community facilities.

The motion comes amid accelerating investment in AI and cloud computing infrastructure across Melbourne. Around 20 data centres already operate within the City of Melbourne, with further growth occurring in Fishermans Bend and the city’s western suburbs. While recognised as a critical economic driver, council papers warn that data centres are highly resource-intensive, placing increasing pressure on electricity networks, water supplies and emissions targets.

According to the motion’s background notes, Melbourne’s data centres currently consume about two per cent of the city’s electricity grid, a figure projected to rise to eight per cent within five years and almost 20 per cent by 2050 if growth continues unchecked. Planned facilities in Melbourne’s west alone could use up to 20 billion litres of water annually – around four per cent of Greater Melbourne’s current drinking water supply.

Lord Mayor Reece’s motion also highlights gaps in existing planning frameworks, arguing that councils currently lack the power to manage the cumulative impacts of data centres on energy, water and greenhouse gas emissions. Many projects are approved through fast-tracked state pathways, limiting local oversight.

If adopted, the motion would see the City of Melbourne advocate to state and federal governments for clearer regulatory standards, mandatory sustainability requirements and transparent monitoring of data centre performance. The motion also seeks to align Melbourne’s approach with global efforts, building on commitments made at the C40 World Mayors Summit in Rio last year, where Melbourne co-led a coalition of cities calling for responsible AI infrastructure development.

While acknowledging the role of data centres in supporting Melbourne’s digital economy and data sovereignty, the motion frames early action as essential to avoid locking in long-term environmental costs. •