Executive Summary
- The 2026 Cloud and AI Development Act is a huge legislation change expected to come into effect in quarter 1 of 2026, which aims to address the growing demand for AI by tripling the EU’s data centre capacity within the next 5 to 7 years, whilst promoting innovation and sustainability measures.
- Last year, the EU published its first technical report on the impact of data centre energy use and performance, but it couldn’t draw any conclusions – funnily enough, it lacked sufficient data. Now, they seek to establish robust frameworks, regluations and reporting procedures to gain clarity around energy performance to add more sustainability requirements to reduce carbon emissions.
It’s safe to say, with the growth that the data centre industry is experiencing and the net-zero climate goals to reduce greenhouse gases by 100% by 2050, there will be policy changes this year surrounding energy usage from data centres and carbon reporting.
The issue Europe is facing right now is aligning the growth of projects with climate goals, to ensure that the next generation of data centres are using renewable energy and not being set back in the face of their environmental pledge, which is only 24 years away. The EU aims to fast-track projects in the wake of rapid growth of cloud services and AI, but to do that and become net-zero, they must first get clarity on energy usage andthe environmental impact of data centres.
Sustainability of data centres
In July last year, the EU published its first technical report on the energy performance and sustainability of data centres, titled, Assessment of the energy performance and sustainability of data centres in the EU. However, despite its investigations, the conclusions weren’t firm enough and didn’t give an overall indication of where data centres were in the bid to be more sustainable and efficient.
Furthermore, only 36% of data centres covered by those rule submmited data, with some countries not having the law in effect. This is quite concerning in the face of our 2050 climate goals.
We need a clearer understanding of the environmental impact data centre infrastructure is having before setting out a clear, and it’s pretty ironic that we need more data for this to happen.
Mandatory sustainability indicators
The EU introduced four mandatory sustainability indicators for data centres so they could get a clearer understanding, though the results are far from it. They are:
- Energy usage
- Water usage
- How much renewable energy do they rely on
- How much, if any, heat do they reuse
Now, they’re reviewing these indicators and making changes, whilst indicating they want to introduce a ranking system, so they can rank data centres based on their energy performance. This is in the hopes that operators will be more encouraged to improve efficiency and increase the sustainability measures they have in place.
2026 Cloud and AI Development Act
The ranking system, as proposed by the EU, will reward the data centres that rank the highest when the 2026 Cloud and AI Development Act comes into effect in the first quarter of 2026.
The 2026 Cloud and AI development act aims to boost Europe’s digital sovereignty, triple data centre capacity in 5-7 years, streamline permit processes and focus on high-performance computing and AI demands while addressing energy demands and sustainability. This act will strengthen the EU’s position in the AI race, thus addressing dependency on US cloud providers.
Rapid growth and long-term environmental responsibility
To conclude, this new act aims to reflect the EU’s commitment to address the data centre industry’s need for growth, high computing, and balance this with long-term environmental responsibility. As AI demands rapid expansion of data centres, the need for stronger regulations, clearer sutainabiility reporting and performance ranking systems will play a key role in keeping data centres in line with net-zero climate goals.
Challenges will remain, especially around data transparency and energy use, but the measures coming into effect in Q1 will help to create a more sustainable, competitive and advanced European digital infrastructure.
