EU proposes A-to-G energy labels for data centers as AI power demand climbs

The European Commission on Monday proposed a common rating system for the EU’s largest data centers, grading them on energy efficiency, water use and clean-power sourcing.

The proposed scheme is an early attempt by the Commission to make the infrastructure behind the AI boom more compatible with the bloc’s climate goals as data centers take up a growing share of electricity.

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

A new A-to-G label for data centers

The Commission’s proposed label would rate data centers with over 500 kilowatts of capacity from letters A to G, with green depicting the most efficient centers and red for the least efficient ones. The design’s model is directly based on the familiar energy labels used for household appliances all across Europe.

But the scheme goes beyond electricity consumption. The rating would also consider water use, the cleanliness of a facility’s power supply and whether it can reuse the heat produced by its operations.

Ahead of the launch, Energy Commissioner Dan Jørgensen told POLITICO that Australia and Singapore already use 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 inculcating measures that support the energy system in general, such as reusing waste heat, the addition of clean power capacity and adjusting the demand for electricity demand when it is 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 in the continent in 2024, and the Commission expects that figure to nearly double to 114 TWh by 2030, putting 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 to triple its data-center capacity while putting the same level of pressure on its grids, water resources and energy bill.

Commissioner Jørgensen described the proposal as a way to work with the industry and not in any way intended as punishment, while encouraging 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 unfortunately has a reporting gap as an obvious weakness. Many sites are still not providing all required information 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. But a Commission report found that only 36% of EU data centers currently provide the required information. 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 with the European Data Centre Association warning in April that the rules could discourage investment in AI. The association also argued in June that AI ambitions should take priority over climate targets.

The proposal is being introduced as a delegated regulation, allowing it to 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 within the proposal, and neither can amend the text, according to the Commission.