Hi,
cloud-init has no dependency on python.  It is possible that your user-scripts 
do, but that is beyond the control of cloud-init.  The ubuntu 16.04 cloud 
images do not have a python2 interpreter installed.  

I put together a gist on how to run either python2 or python3 based on
what is available at https://gist.github.com/smoser/8904199bb8f00a90dd04
that might be useful.  The key point though, is that 16.04 images do not
have python installed.  If you need it, install python2 with apt.

** Changed in: cloud-init (Ubuntu)
       Status: Confirmed => Incomplete

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https://bugs.launchpad.net/bugs/1577787

Title:
  User-data scripts are not executing in Xenial Cloud Image

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