EU moves to curb data centre energy and water use

The European Union is writing the sustainability rulebook for AI’s power-hungry future, but tech giants like Microsoft are already weighing in on how the bloc’s new rules should work.

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EU data centres with more than 500 kW of installed capacity that report under the bloc’s energy efficiency rules will receive an electronic sustainability label as of 21 September, according to new rules unveiled by the European Commission on Monday.

“The aim of the rating scheme is to increase transparency about the energy use of data centres and to become a resource that will inform better policymaking and procurement of more sustainable digital assets and services across Europe,” the Commission said in its new rules on rating schemes for data centres.

The move comes as Brussels aims to triple data centre capacity across the bloc by 2035, as part of a push to reduce reliance on Big Tech and develop Europe’s own AI capabilities. EU lawmakers have, however, recently raised concerns about Microsoft’s efforts to influence the new rules.

At the same time, the EU is grappling with a growing energy crisis and data centres are already seen as a growing source of electricity demand and have faced opposition from some local communities.

The Commission argues that the bloc needs data centres to underpin cloud computing, AI and digital services, but their rapid expansion is putting pressure on electricity networks, water resources and local communities.

In 2024, data centres in Europe used 68 terawatt-hours (TWh) of electricity and the EU expects that number to hit 114 TWh by 2030, gobbling up 3.2% of all the electricity in the bloc, up from the current 2.5%, according to EU data.

The new sustainability label is intended to make facilities comparable on power and water efficiency as well as the sourcing of their electricity. However, despite mandatory reporting requirements for data centres above 500 kW being in place since 2023, the Commission acknowledged that compliance remains incomplete.

“In the first year (…) we had something like one third of the data centres reported. In the second year, it improved, and in the third year, the preliminary results improved further. We are, I think, hitting the 50% mark easily,” a Commission official speaking on condition of anonymity told reporters on Monday.

The Commission official noted, however, that enforcement largely rests with EU countries. The real pressure will come early next year.

Ceilings on energy and water only in 2027

For now, the Commission is stopping short of imposing a hard ceiling on energy or water consumption.

The real regulatory teeth — minimum performance standards — will be announced in 2027 to establish a floor and to prevent new facilities from being built below certain efficiency standards, according to the Commission official.

However, the “probation time” creates an important opening for the industry, which has been lobbying the Commission on these key sustainability parameters.

In a July 2026 submission to Germany’s federal government, Microsoft said it supported using clean power, energy and water efficiency as sustainability indicators, while specifically seeking changes to the proposed water-efficiency bands in the label, according to the German lobby register.

Bram Vranken, a researcher and campaigner at the watchdog Corporate Europe Observatory (CEO), criticised Big Tech’s influence over the new EU rules on data centres.

“The Microsoft confidentiality clause is kept in – though rewritten – so that’s hugely problematic. It will also mean that much of the information in the label will be impossible to check,” Vranken told Euronews.

He added that with the current rules, if a Google data centre scores high on the label in terms of energy efficiency, it might consume an undisclosed gigawatt of power without being properly disclosed.

Because the bloc needs to rely on Big Tech companies to build its infrastructure, it gives them considerable importance in the regulatory debate. While the Commission’s new rules reflect its ambition to make Europe a “leading AI continent”, they also highlight the tension between rapidly expanding the infrastructure needed for AI and regulating the US technology companies expected to provide much of it.

Commission officials say the new sustainability label can recognise low-emission energy, including nuclear, while the future minimum-performance standards could eventually become mandatory.

Brussels is also examining whether data centres could become more active participants in the electricity system by providing flexibility and potentially supplying waste heat to as many as four million European homes.