The European Commission on Monday proposed a common rating system for the European Union's largest data centers, grading facilities on energy efficiency, water use and clean-power sourcing. The scheme, announced by the Commission, marks an early attempt to make the infrastructure behind the AI boom more compatible with the bloc's climate goals as data centers claim a growing share of electricity.

The proposal arrives as the Commission seeks to triple its computing capacity while avoiding any additional strain on electricity networks it aims to decarbonize by 2050.

A new A-to-G label for data centers

Under the proposed label, data centers with more than 500 kilowatts of capacity would be rated from letters A to G, with green denoting the most efficient facilities and red the least efficient. The design is directly modeled on the familiar energy labels long used for household appliances across Europe.

The scheme goes beyond electricity consumption. Ratings would also weigh water use, the cleanliness of a facility's power supply and whether the site can reuse the heat produced by its operations.

Ahead of the launch, Energy Commissioner Dan Jørgensen told POLITICO that Australia and Singapore already operate systems to rate data-center efficiency, but he claimed the EU's proposal takes a more extensive approach toward the issue.

The scheme would also reward operators for adopting measures that support the broader energy system, such as reusing waste heat, adding clean power capacity and adjusting electricity demand when required. The potential impact of heat reuse is significant: the Commission estimates that reusing about half of the waste heat generated by Europe's data centers could provide enough heating for 4 million households.

Why the EU is tightening scrutiny

Data centers consumed about 68 terawatt-hours of electricity across the continent in 2024, and the Commission expects that figure to nearly double to 114 TWh by 2030, pushing consumption above 3% of the EU's total demand, according to the International Energy Agency. Jørgensen told POLITICO that data centers already make up about 2.5% of Europe's electricity use.

Teresa Ribera, the Commission's executive vice-president for Clean, Just and Competitive Transition, said the EU cannot go ahead and triple its data-center capacity while placing the same level of pressure on its grids, water resources and energy bills.

Jørgensen described the proposal as a way to work with the industry rather than punish it, and encouraged technology companies to see regulation as an "opportunity" to build greater public support.

That concern is already playing out in the United States, where opposition to AI infrastructure has grown around its heavy use of electricity and water. Similar protests have also emerged in parts of Europe.

A system with a reporting problem

The system's most visible weakness is a reporting gap. Many sites are still not providing all the information required for the ratings, even though this is a prerequisite for data-center operators under EU energy rules.

The labels would be generated automatically each year using information submitted by companies. However, a Commission report found that only 36% of EU data centers currently provide the required information — a gap that will shape how complete a picture the first rounds of ratings can present. An internal Commission document reportedly suggested that about one-fifth of Europe's data centers could receive ratings close to the very bottom of the scale.

The industry has pushed back against the proposed requirements. The European Data Centre Association warned in April that the rules could discourage investment in AI, and the association argued in June that AI ambitions should take priority over climate targets.

The proposal is being introduced as a delegated regulation — a mechanism that allows the Commission to supplement existing EU law without a standalone legislative vote — so the scheme can take effect without a vote by EU member states or the European Parliament. Both institutions will, however, have two months to object to the text, and neither can amend it, according to the Commission. That two-month window is the next procedural milestone that will determine whether the labels proceed as drafted.