EU Proposes Rating System for Data Centers' Energy and Water Use

The European Commission has proposed an EU-wide rating and labeling system for data centers with at least 500 kilowatts of capacity, requiring operators to disclose energy and water efficiency data. The ratings would also consider factors such as waste-heat recovery, added clean-energy generation and the ability to reduce demand when electricity grids are strained. The initiative comes as the EU seeks to roughly triple data-center capacity within five to seven years to support artificial intelligence and strengthen technological independence, while electricity use is projected to rise sharply and increase pressure on grids, water supplies and emissions targets. The labeling system would improve transparency but would not itself impose limits on consumption or minimum efficiency requirements; the Commission is separately consulting on potential mandatory standards. The proposal is subject to review by the European Parliament and Council, with labels potentially introduced in 2027.