Key Contacts: Niall Donnelly – Partner |
Overview
The European Commission has published a draft Commission Delegated Regulation establishing a common Union-wide scheme for rating the sustainability of data centres operating within the EU (the “Regulation”). The draft was registered with the Commission on 26 March 2026. Once finalised, the Regulation will supplement Directive (EU) 2023/1791 (the recast Energy Efficiency Directive, “EED“) and amend Commission Delegated Regulation (EU) 2024/1364 as regards the establishment of a common Union rating scheme for data centres.
This note summarises the key elements of the draft Regulation and identifies the practical implications for data centre operators.
Background and Policy Context
The information and communication technology sector is one of the fastest-growing sectors in Europe and globally. The accelerated adoption of artificial intelligence is expected to be one of the main drivers of growth in data centre energy consumption, which is already significant and projected to increase substantially by 2030.
Beyond energy consumption, the expanding data centre sector poses challenges for electricity grids, carbon emissions, and environmental resources such as water. The Union’s digital strategy accordingly emphasises the need for highly energy-efficient and sustainable data centres and calls for transparency measures regarding their environmental footprint.
The Regulation forms part of a broader energy efficiency package and is adopted alongside a Strategic Roadmap for Digitalisation and AI in the Energy Sector and a Commission proposal for a Cloud and AI Development Act, a legislative initiative that aims to enhance Europe’s cloud computing and AI capabilities.
Article 12 of the recast EED requires Member States to mandate data centres to publish information on their energy performance and sustainability. In March 2024, the Commission adopted Delegated Regulation (EU) 2024/1364 as a first step towards establishing a common EU rating scheme, introducing the European database on data centres and a reporting framework.
The present Regulation constitutes the second step, setting out rules for how the collected information should be used to rate data centres by means of electronic labels issued by the European database.
Key Features of the Regulation
The Rating Scheme and Label:
The Regulation establishes a common Union scheme for rating the sustainability of data centres. The European database on data centres will rate data centres by means of electronic labels issued based on information and key performance indicators (“KPIs“) communicated by data centre operators to the database.
For the purpose of issuing a label, the European database will use Power Usage Effectiveness (“PUE“) and Water Usage Effectiveness (“WUE“) classes based on indices calculated in accordance with Annex I of the Regulation.
The rating scheme is designed to provide reliable and transparent information on data centres in the Union, classify them based on that information, and allow evidence-based comparisons among data centres located in the same area or with similar characteristics. It is also intended to give visibility to good practices and promote efficiency interventions in new and existing data centres.
Automatic Generation of Labels
By 15 August 2027, and every year thereafter, an electronic label will be automatically generated by the European database and supplied by electronic means to data centres that have communicated the required information and KPIs to the database in accordance with Delegated Regulation (EU) 2024/1364.
Labels will be publicly available in electronic form in all official languages of the Union. A label is valid from 15 August of the year in which it is issued until 15 August of the following year, subject to extension in certain circumstances where a Member State has not completed its verification of reporting.
Obligations on Data Centre Operators
Data centre operators must ensure that the label issued under the Regulation is made available in electronic form to any physical or legal person requesting it. Operators may direct requestors to a free-access website they manage or to the European database.
Data centre operators are expressly prohibited from producing or displaying labels that mimic the official label defined and issued under the Regulation.
Scope: Smaller and Pre-Operational Data Centres
Operators of data centres with an installed information technology power demand of less than 500 kW may voluntarily participate in the rating scheme by communicating the required information and KPIs to the European database by the applicable deadline.
Operators of data centres that have not yet entered into operation may also voluntarily participate by communicating the KPIs that the data centre is designed or expected to achieve after two calendar years of operation. Once operational, those operators must report actual data from the first year of operation.
Defence Exemption
If a data centre is used for, or provides its services exclusively with the final aim of, supporting the defence and civil protection of a Member State, the data centre operator is exempt from the obligation to communicate information and KPIs to the European database, regardless of the Member State in which the data centre is located.
Confidentiality
The Commission and Member States must treat as confidential all information and KPIs for individual data centres communicated to the database, with the exception of the information that forms part of the label itself and appears in the form in which it is shown on the label.
Periodic Review
By 31 March 2029, and every three years thereafter, the Commission must assess the Regulation in light of technological progress and submit a report to the European Parliament and the Council. The review may consider, among other things, addressing additional sustainability and environmental aspects, amending the label scales, introducing an aggregate sustainability indicator, and introducing indicators to measure the performance of ICT equipment energy use.
What This Means for Data Centre Operators
The draft Regulation has significant practical implications for data centre operators doing business in the EU:
- Compliance readiness: Operators subject to mandatory reporting under Delegated Regulation (EU) 2024/1364 should review their existing reporting processes to ensure they can generate labels of sufficient quality and consistency from August 2027 onwards.
- Public transparency: The scheme is designed to increase transparency about the energy use of data centres and to serve as a resource informing policy and procurement of more sustainable digital assets and services across Europe. Operators should anticipate that their sustainability performance will become publicly visible and comparable.
- Voluntary participation: Smaller operators (below 500 kW IT power demand) and pre-operational data centres should consider whether early voluntary participation in the rating scheme could confer a competitive advantage.
- Future legislation: The rating scheme is intended to harmonise approaches across EU Member States and will be used to assess the sustainability of data centres in future legislation, including in the proposed Cloud and AI Development Act. Operators should therefore treat compliance with the rating scheme as a long-term strategic priority.
Please contact us if you would like to discuss the implications of these developments for your specific circumstances.
