Data centers have been specifically targeted because they account for an estimated 2% to 3% of the total energy consumption in the EU. The increasing demand for data processing power, driven largely by the rise of AI technologies, is a major factor behind this significant energy use.
Ermengarde Jabir, a senior economist at Moody’s, highlights the immense power requirements of data center hubs within the EU.
For instance, data centers in Amsterdam demand approximately 950 megawatts of energy capacity, while those in Dublin require over 700 megawatts. Similarly, data centers in Paris and Frankfurt have comparable energy needs to Dublin. To put this in perspective, 1 megawatt of power is sufficient to power between 750 to 1,000 homes for an entire year. Notably, the world’s largest data center hub, located in northern Virginia, has a staggering capacity of 4,500 megawatts.
The EU's new reporting rules, along with any subsequent regulations aimed at reducing energy consumption, currently apply only to data centers within EU member states. However, EU environmental regulations often serve as a model for other regions, with the notable exception of North America, according to Cándido García Molyneux, an environmental lawyer based in Brussels with the law firm Covington & Burling.
“When the EU adopts these reporting requirements, it is very likely that many other countries will follow suit,” Molyneux explains. He also notes that nations aspiring to join the EU or engage in trade with the EU may need to comply with these energy regulations.
Moreover, the EU has already implemented government procurement regulations focused on energy efficiency. Companies providing cloud or web-based services to EU residents and businesses from data centers outside the EU might also face future energy use regulations.
The EU’s drive to reduce energy consumption is motivated by several factors, including the desire to phase out fossil fuels and decrease dependence on foreign energy sources, according to Moody’s Jabir.
Although efforts to reduce energy consumption began before the conflict in Ukraine, the war has intensified the EU's resolve to cut imports of Russian oil, gas, and coal.
The introduction of energy and water use reporting rules marks an early step toward broader regulation. While some energy experts believe most data center operators are prepared to comply, Molyneux anticipates challenges for certain operators. Smaller data center operators might not be aware of the new rules, and others could struggle to gather the required information in time.
In summary, the EU’s new reporting requirements for data centers represent a crucial move toward greater transparency and accountability in energy and water use. By enforcing these regulations, the EU aims to achieve substantial reductions in energy consumption, contributing to broader environmental and sustainability goals.
