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EU Targets Data Centres’ Water And Energy Use As AI Demand Surges

The European Commission has proposed new rules that would require data centres across Europe to disclose how efficiently they use energy and water, as policymakers move to confront the growing environmental cost of digital infrastructure.

Europe’s Data Centre Expansion Meets Resource Constraints

The initiative comes as the European Union seeks to triple its data centre capacity over the next seven years, a move designed to support rapid artificial intelligence development and reduce dependence on US-based technology giants. But the expansion also raises a familiar infrastructure dilemma: how to scale digital capacity without overloading electricity grids, intensifying water stress, and increasing carbon emissions.

A New Transparency Regime For Operators

To encourage more efficient design and operation, the Commission has proposed a rating system intended to make energy and water performance more transparent. The scheme would not cap consumption or require operators to disclose total power use. Instead, facilities with a capacity of 500 kW or more would need to report energy and water efficiency through an EU-designed labelling framework.

Operators would also be required to reveal how their water consumption relates to local water stress conditions, as well as whether their sites can support the broader energy system, for example by reusing waste heat.

A Possible Precursor To Stricter Standards

The label may prove more than a disclosure exercise. It could pave the way for mandatory minimum standards on energy and water efficiency, rules the EU is already developing as it tries to align digital growth with sustainability goals.

According to an EU report published in June, data centres account for about 2.5 per cent of electricity consumption across the bloc. That share is expected to rise sharply as capacity more than doubles by 2030, reaching 28 gigawatts from 12 gigawatts last year.

What Comes Next

EU member states and lawmakers now have two months to object to the proposal. If no objections are raised, the rules will automatically enter into force.

EU Agrees On Major Overhaul Of Financial Market Supervision

European Union finance ministers have reached agreement on a sweeping package designed to strengthen oversight of the bloc’s financial markets, in a move aimed at reducing fragmentation and improving the flow of capital across borders.

A Push To Deepen Capital Markets

The Market Integration and Supervision Package, or MISP, would grant the European Securities and Markets Authority direct supervision over major market operators that are currently regulated by national authorities. The reforms are intended to make Europe’s capital markets more integrated, more efficient and better able to channel savings into productive investment.

According to the Irish presidency, the package is meant to help savings and investments move more freely across the European Union, improving access to finance for companies while giving households broader opportunities to earn returns on their savings.

What The Reform Would Change

Under the new framework, ESMA would take direct oversight of key trading venues, clearing houses, securities settlement bodies and crypto-asset service providers. The package would also establish a permanent, independent executive board within the regulator, strengthening its institutional capacity.

Market operators would be able to opt into a new EU-wide operating framework. In parallel, the reforms would seek to make national supervision more consistent and update rules governing trading, transaction completion, investment management and the use of blockchain technology.

Why The Agreement Matters

Supporters of deeper capital markets argue that Europe has long paid a price for regulatory inconsistency. While many rules are harmonised across the bloc, differences in enforcement and supervision have contributed to a patchwork system that can make cross-border investment slower and more costly.

A more integrated framework, proponents say, could lower costs for companies seeking funding and broaden the menu of investment options available to savers and institutional investors alike.

Outstanding Questions Remain

Despite the broad agreement, some important details remain unresolved. Trading venues operated by Deutsche Börse, the company behind the Frankfurt stock exchange, may remain outside ESMA’s direct supervision.

Euronews previously reported that Germany had secured an exemption for Deutsche Börse’s domestically focused trading venues, leaving part of the system under regional supervision. The latest announcement did not clarify whether that arrangement will stand.

A Step Forward For The Savings And Investments Union

Dutch Finance Minister Eelco Heinen welcomed the deal, calling it a major advance for the Capital Markets Union and saying Europe had made more progress in 10 months than in the previous 10 years.

The agreement is an important milestone in the Savings and Investments Union, the EU’s broader effort to channel more of Europeans’ savings into investments that can support growth, innovation and competitiveness across the bloc.

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