Amazon Web Services says existing state-level permits prevent it from switching its Australian data centres’ backup generators to renewable diesel, a step it has begun at sites in Europe and on the US west coast. In a submission to the Senate Environment and Communications References Committee’s inquiry into AI and data centres, AWS said it started moving to hydrotreated vegetable oil (HVO) in 2023 where such fuels are reasonably priced and reliably available.
It said a reliable, diverse local supply chain does not yet exist in Australia to support HVO use in all circumstances, and that domestic demand from the data centre sector alone is not enough to stimulate local production at scale.
AWS claimed HVO can cut lifecycle greenhouse gas emissions by up to 90 percent compared with fossil diesel. It said its Australian backup generators are not used for primary generation, and that it is prohibited from doing so under its development approvals. They are run mostly for brief fortnightly tests without load, it said.
The submission also backs nationally consistent regulation of the sector. AWS said existing frameworks were already comprehensive, covering planning and environmental assessment, electricity network connections and water servicing, but said clear expectations on environmental performance, energy procurement, water efficiency and infrastructure cost recovery were important for maintaining community confidence.
Long-term certainty
It said reforms should be implemented in a “nationally consistent” manner to provide long-term certainty for both investors and communities. Instead of proposing a detailed alternative regulatory regime, the submission largely argues for consistency between the reforms now being developed at federal and state level.
It cites the federal government’s planned AI standards legislation, energy reforms being developed by the Australian Energy Market Commission and the NSW Data Centre Policy Framework as concurrent reforms that should be bedded down consistently.
That position comes as other major cloud and data centre companies have also made submissions to the inquiry, with Google and Microsoft calling for regulatory approaches that give operators flexibility in how they meet clean-energy and environmental objectives.
Water use
AWS also stated that its Sydney facilities withdrew 207 megalitres of water in 2025, compared with 158ML across its Melbourne Region. AWS said its Sydney facilities recorded a water usage effectiveness (WUE) of 0.10 litres per kilowatt-hour, down from 0.12 L/kWh in 2024. Melbourne’s WUE was 0.06 L/kWh in 2025, up from 0.02 L/kWh in 2024.
AWS said its Australian data centres use no water for cooling for 95.5 percent of the year, relying on free-air cooling. During periods of higher temperatures, they switch to direct evaporative cooling, which uses water to reduce the temperature of incoming air.
The company said it is also seeking to use recycled rather than potable water where possible and funds infrastructure upgrades required to supply recycled water to its facilities. Its first Australian data centre to use recycled water is currently under construction in Victoria.
Where recycled water is unavailable, AWS said it works with water utilities and other partners on replenishment projects in the same catchments as its data centres.
On energy, the submission claims Amazon was the largest corporate purchaser of carbon-free energy in Australia in 2025 and that, since 2020, it has invested an estimated AU$2.8bn in 20 Australian renewable energy projects, with a combined capacity of approximately 990MW once fully operational.
AWS also addressed one of the inquiry’s specific areas of interest, around potential government deals with global AI companies. It said that, apart from a July 2024 partnership to provide a purpose-built Top Secret cloud environment for Australia’s defence and intelligence agencies, it is not party to agreements with the Australian government concerning data centre investment and has no such arrangement contemplated.