Green Data Centers: Pioneering Energy Efficiency and Sustainability in the EU
In recent years, the demand for data centers has increased dramatically, driven by the growth of digital data and the increasing reliance on cloud computing.
As a result, the EU has introduced the Code of Conduct for Data Centre Energy Efficiency, offering guidelines to improve energy efficiency. Furthermore, the EU Taxonomy Regulation classifies data centers as sustainable investments if they meet specific energy efficiency criteria, promoting green technologies. The updated Energy Efficiency Directive and the Delegated Act on a common rating scheme for data centers ("Delegated Act") include specific requirements and performance indicators for data centers. Key energy-savings measures to enhance efficiency and reduce environmental impact include:
- Mandatory reporting before national authorities;
- Energy management systems and energy audits;
- Waste heat recovery;
- Implementation of best practices and technologies to optimize energy consumption; and
- Renewable energy integration
The European Commission has recently intensified its work on the environmental performance of data centers. In July 2025, it published a technical report (Assessment of the energy performance and sustainability of data centers in the EU), which found that only 1.9% of the heat generated by data centers in the EU is actually reused ("Energy Reuse Factor"). This was followed in October 2025 by a second report (Assessment of next steps to promote energy performance), highlighting that only 8% of EU data centers have implemented heat recovery processes and suggesting that performance standards for heat recovery should be established at the Member State level.
These technical reports are intended to lay the groundwork for a European performance rating scheme. To support this initiative, the Commission launched a public consultation, which closed on April 23, 2026, to gather input from stakeholders and citizens. Data submitted by operators through the European reporting database will be analyzed in line with this rating scheme, with the aim of introducing electronic labels for data centers, automatically generated by the database.
The adoption of this rating scheme is part of the Data Centre Energy Efficiency Package, expected in the second quarter of 2026. This package will be presented alongside the Strategic Roadmap for Digitalisation and AI in the Energy Sector and the Cloud and AI Development Act. The latest aims to triple EU data center capacity within five to seven years through simplified permitting and possible state aid, conditioned on energy and water efficiency.
With regard to water consumption, the Commission presented the European Water Resilience Strategy on June 4, 2025, outlining its intention to introduce minimum performance standards for water use in data centers. These standards are expected to be incorporated into the rating scheme. The Commission also announced plans to establish a public-private initiative to support investment in the development of dry cooling solutions.
Member State Framework Evolutions
At the national level, several Member States have already begun translating these objectives into binding obligations.
- In France, the DDADUE Act (2025-391) of April 30, 2025, supplemented by Decree n°2025-1382 of December 29, 2025, transposed Directive (EU) 2023/1791. Article 236-2 of the Energy Code requires data centers with an installed capacity of at least 1 megawatt to recover the waste heat they generate. Under Article R. 237-4, a data center is considered to be effectively using its waste heat if its energy reuse factor ("ERF") is equal to or greater than 0.20. However, Article R. 237-6 allows for exemptions where technical or economic constraints make compliance impractical; in such cases, operators are only required to recover the portion of waste heat that can be reused under reasonable technical and economic conditions. Furthermore, Article 15 of the draft Economic life's simplification Bill ("Projet de Loi de simplification de la vie économique"), adopted by the French Senate and National Assembly on April 15, 2026, provides that building permits for data centers located in areas experiencing structural pressures on water resources may be denied.
- In Germany, the new Energy Efficiency Act (EnEfG) provides that new data centers must use at least 10% of their generated waste heat, a threshold that will be gradually increased to reach 20% by the end of 2028.
- In Spain, the Draft Royal Decree transposing Directive (EU) 2023/1791 requires data centers with a power capacity exceeding 100 MW to rank within the top 15 of the sector's performance in terms of energy efficiency, water usage, energy reuse, and the share of renewable energy.
Future Outlook
Looking ahead, the EU is expected to continue tightening regulations to ensure that data centers contribute to climate goals. Future regulations may include stricter energy efficiency targets, mandatory use of renewable energy, and enhanced reporting requirements.
