EU plans weaker data centre climate rules in boost for Big Tech

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EU weakens data centre rules

Highlights

EU draft proposal dated June 30 weakens data centre climate rules by easing offset requirements and allowing broader use of clean and nuclear energy certificates.
Lobbying by Amazon Web Services, Microsoft, and industry groups led to relaxed standards, enabling fossil-fuel-powered data centres to offset emissions with mismatched clean energy certificates.
Amazon reported a 34 per cent rise in purchased electricity emissions between 2024 and 2025, while Google saw a 37 per cent increase in grid-based electricity emissions amid growing AI-driven energy demand.

Draft proposal eases offset requirements

As reported by the Financial Times, a draft proposal due to be discussed by member state experts on Thursday significantly weakens an earlier EU plan to rate data centres through a traffic light system based on energy and water use. The June 30 draft drops stricter conditions from a March version that would have required fossil fuel emissions to be offset only with clean energy certificates from relatively recent projects producing power at roughly the same time and place as the data centre.

The changes follow lobbying by companies and industry groups including Amazon Web Services, Microsoft and the European Data Centre Association, which argued the original rules risked raising costs. The revised text also says certificates linked to nuclear energy could count, a shift that would favor countries such as France.

In practice, the proposal means a data centre operating overnight on Germany's coal-linked grid could still claim to counterbalance its emissions with certificates associated with solar power generated during the day in Spain. Some accounting and climate experts argue that this kind of matching does little to reduce actual emissions.

Killian Daly, executive director at think-tank EnergyTag, says that if data centres are not powered by new, local renewables matched in real time to their energy use, they will increase demand for imported gas. He says that dynamic could lift energy prices and weaken energy security.

Rising AI demand sharpens policy trade-offs

Commission officials and member state energy experts are due to review the latest proposal on Thursday, although one official says the text is not final and remains subject to feedback from that meeting. The EU is trying to balance climate objectives with the need to build more digital infrastructure to compete with the U.S., while Europe already hosts the world's second-largest data centre hub after North America, according to industry data.

The debate is intensifying as major technology groups continue to rely on clean energy certificates while electricity demand from AI grows. Amazon, Meta and Microsoft all say they match 100 per cent of their fossil fuel electricity use with clean energy certificates, even as growing computing needs push them further toward gas-powered supply.

Amazon published data on Wednesday showing emissions from purchased electricity rose 34 per cent between 2024 and 2025. Google says earlier this week that its grid-based emissions from electricity use rose 37 per cent, although those emissions edged down year on year after accounting for its broader clean energy investments.

The broader regulatory environment is also shifting. The Science Based Targets Initiative last month softened its own proposed rules on the issue after lobbying by technology companies, while Europe faces a historic heatwave and remains the world's fastest-warming continent. At the same time, the bloc has set out plans to triple data centre processing capacity over the next five to seven years. The European Data Centre Association says it supports transparent, credible and practical approaches to measuring and reducing emissions, while Amazon and Microsoft do not immediately respond to requests for comment and the European Commission declines to comment.

Our earlier coverage of ITG’s Nasdaq debut highlighted how investor appetite remains strong for companies positioned around the AI infrastructure buildout. We noted that the IPO pop underscored demand tied to expanding data centres and related network services, while also flagging risks such as client concentration and the need to turn AI-driven demand into durable growth.

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