How does public policy address the socio-environmental impacts of data centers?

Part 1: Latin American overview

1. Trends in Environmental Assessment of Data Centers in Brazil, Chile, and Mexico

Taking the case of Brazil, Chile, and the state of Querétaro in Mexico, there are at least two trends:

a. There is no specific environmental licensing for data centers

Because the industry has only recently come under scrutiny for its environmental impacts due to the heavy workloads involved in artificial intelligence, there is no special licensing for data centers in environmental assessment systems. 

This seems counterintuitive, especially given the diverse and growing negative environmental implications of these infrastructures. Environmental assessments are often carried out by treating the data center industry as similar to other industries, such as construction, without thoroughly evaluating the specific impacts of data centers.

Brazil, for example, does not yet have a specific federal regulatory framework for data centers, which means that most of these projects are governed by general construction, infrastructure, or environmental licensing standards that do not account for the unique characteristics of data centers (Soares, 2024; Santos & Leyendecker, 2025). While some states and municipalities require environmental licenses or impact assessments (EIA/AAS) for large-scale projects, there is still no uniform regulation to determine when a data center should undergo a detailed environmental review or a simplified process. Additionally, licensing tools often lack standardized metrics specific to data centers—for example, indicators of energy efficiency (PUE), water use (WUE), and waste heat management—which makes it difficult to compare and develop conditions tailored to this type of infrastructure.

Chile faces a similar situation. Although it has an environmental institutional framework that includes an Environmental Impact Assessment System (SEIA) and specifies by decree when a project must undergo an Environmental Impact Statement (DIA) or an Environmental Impact Study (EIA), data centers are not typically included in the SEIA because they are considered “pure” data centers. Instead, they are included when they meet a certain threshold regulated by other activities. For example, storing fuel for generators requires these projects to enter the environmental assessment system under that category. This creates a key regulatory loophole: the fact that fuel capacity or industrial category is deemed more important than a data center’s water, energy, or cooling consumption (Zúñiga, 2024).

In Mexico, the main instrument is the Environmental Impact Statement (MIA) under federal or state jurisdiction, depending on the project or activity; however, there is no specific regulation for “data centers” as a separate category. They are evaluated by analogy with listed sectors or activities, such as industry, energy, water, or waste. In Querétaro, multiple investigative reports and requests for access to information reveal that the administrative classification of data centers as “services” (not “industry” with a fixed source) has, in practice, allowed many projects to avoid requiring EIAs, despite operating in areas of water stress and high electricity demand (Baptista & McDonnell, 2025).

b. There is tension between facilitating investment and environmental assessments of data centers

Indeed, in these countries, there is tension between national or state policies to attract investment in data centers and the lack of strict environmental regulations, which can lead to risks that are not fully assessed.

Brazil aims to accelerate the installation of data centers to benefit from digital growth, employment, data sovereignty, and competitiveness. However, environmental regulation (licensing, impact assessment, operational conditions, and environmental monitoring) is not robust enough to ensure these projects meet high standards of sustainability, transparency, and territorial/social responsibility. This can create “externalities” or risks that the projects do not account for, such as high energy demand in water-stressed areas, waste heat impacting ecosystems or communities, competition for water and energy resources with other needs, and regulatory gaps that let some centers operate with fewer requirements than their size would suggest (Santos & Leyendecker, 2025).

For their part, the current authorities in the state of Querétaro, Mexico, have worked in recent years to prioritize the installation of data centers in the state, sacrificing environmental impact assessments of these infrastructures. In fact, the massive deployment of data centers is taking place under a regulatory framework that allows these centers to avoid environmental impact reports: they operate in industrial parks that are exempt from this requirement and also receive exemptions from local CO₂ emissions taxes because they are not considered “fixed sources of emissions.” Under official logic, data centers are classified as service companies—and therefore not as heavy industry—which, according to local authorities, justifies their exemption from submitting environmental impact studies (Baptista & McDonnell, 2025).

In Chile, a National Data Center Plan 2024-2030 (PDATA, 2024) has been in place since 2024, aiming to attract investment in data centers across the country. Among its measures, it specifically establishes that “a guide with standardized technical criteria will be made publicly available to optimize the environmental evaluation process of Data Center projects under the Environmental Impact Assessment System (SEIA). This will provide greater certainty to the industry and the public regarding regulatory requirements and standards. Workshops will be conducted to share this knowledge with stakeholders from both the public and private sectors”.

However, in 2025, and only thanks to investigative journalism by LaBot (2025), it was revealed that the Council of Ministers for Sustainability and Climate Change approved an amendment to the environmental assessment regulations. This amendment raised the thresholds for the storage of fuels that do not require passing through the Environmental Assessment System from 80,000 liters to 1,000,000 liters. In practice, with this change, data centers will no longer need to undergo environmental assessments, making information on energy and water consumption and its potential impacts on certain areas even more opaque.

2. Other public policies

Two countries are leading the discussion on data centers at the central government level in Latin America: Chile and Brazil.

In Brazil, two policies are currently under consideration: the program called ReData (Special Taxation Regime for Data Centers), through Provisional Measure No. 1,318/25 (MP 1318/25) and other complementary regulations; and the formulation of a National Data Center Policy for Brazil, which aims to establish a long-term vision for data center infrastructure, its role in the digital economy, the country’s data sovereignty, territorial planning, and regulatory frameworks. As of this report, the latter initiative remains in the public consultation phase.

For this reason, only Chile’s National Data Center Plan, an executive policy to promote investment in data centers in Chile, will be analyzed.

a. Chile’s National Data Center Plan (PDATA)

The PDATA (2024) is a strategy promoted by Chile’s Ministry of Science, Technology, Knowledge, and Innovation (and other government agencies) with a 2024-2030 horizon, whose central objective is to position Chile as a “digital hub” for the data center industry in Latin America.

The objectives of the PDATA are:

• To promote the growth of the data center industry by clarifying the country’s existing regulatory framework and providing investors with certainty about the regulatory processes required to build a data center in Chile.
• Promote a decentralized data center industry with low socio-environmental impact and powered by renewable energy.
• Enhance the country’s research and development capabilities by adopting a forward-looking vision that strengthens data technologies in Chile.

Some of the key elements of the plan are:

• Enabling greater investment in data center infrastructure. The plan seeks to attract US$2.5 billion in new investments over the next five years and, at the same time, consolidate the projection of US$4 billion in total investments by 2028.
• Tripling the size of the data center industry in Chile over five years through planned growth.
• Establishing a series of regulatory, planning, and governance measures to create a more predictable environment for investment and construction of data centers. For example, the plan includes a “critical permit guide,” environmental assessment criteria, a digital tool to identify suitable areas, a multi-stakeholder monitoring committee, and the promotion of a shared state multi-cloud service.
• Encourage decentralization: that is, data centers should not only be located in the Santiago Metropolitan Area—more specifically, where renewable energy is available, in the regions of Antofagasta, Atacama, and Magallanes (LaBot, 2025)—but should also be able to take advantage of other regions with better conditions, such as energy availability, climate, and connectivity.
• The official document states that the plan is geared toward “sustainable growth” of the industry, in which data center infrastructure is developed with principles of sustainability, territorial equity, and collaboration among the public and private sectors, academia, and civil society. 

Indeed, the PDATA considers sustainability one of its strategic pillars and devotes a significant portion to the sustainability component—especially energy, water, socio-environmental impact, and governance. The main points are as follows:

• The plan establishes that a data center industry “powered by renewable energy” and with low socio-environmental impact will be promoted. It is interesting because the Chilean government, through its Geospatial Data Infrastructure (IDE Chile), will have a digital tool that integrates information on energy availability, suitable land use, connectivity, and socio-environmental variables across the country to identify strategic areas for the development of data centers. The creation of a guide tool for energy availability, connectivity, and territorial expansion will enable visualization of information on electrical substations, fiber-optic networks, and land-use distribution, thereby identifying areas of interest.
• In addition, it is established that a guide with standardized technical criteria will be made publicly available to optimize the process of evaluating data center projects in the Environmental Impact Assessment System (SEIA), providing greater certainty to the industry and the public about the regulatory requirements, criteria, and demands in force in that system. As will be seen later, this point is very controversial among critics of the PDATA.
• It also includes the promotion of a Clean Production Agreement (APL) for the data center industry, with goals for energy efficiency, carbon footprint reduction, and water efficiency. Needless to say, this is self-regulation. 
• The plan envisages a multi-stakeholder committee to monitor and update, involving government, industry, academia, civil society, and regions. This allows for the incorporation of territorial equity criteria, avoiding concentration in a single region.

b. Criticism of the PDATA:

• Environmental deregulation
  Parallel to the enactment of PDATA in Chile and its sustainability discourse, the investigative journalism outlet LaBot (2025) reported that a regulatory modification will allow new data centers in Chile to be built without entering the Environmental Impact Assessment System (SEIA).
• Lack of transparency and real community participation
  Although Chile’s PDATA mentions civil society participation (for example, through the multi-stakeholder committee), in practice, affected neighbors and local organizations complain that they do not have sufficient capacity for real influence, clear access to information, or robust oversight mechanisms (LaBot, 2025).
• Influence of Big Tech on government officials
  The networks of influence of technology companies in Latin American governments are often tied to decisions that favor their investments, such as data center projects (LaBot, 2025). 
• Doubtful promises of economic development
  A cross-border investigation by Agencia Pública and the Latin American Center for Investigative Journalism (CLIP), along with LaBot and 16 other media outlets (2025), reveals that although the data center industry promises hundreds of thousands of direct and indirect jobs from new facilities, studies show that in the medium term, once construction is finished, only dozens of jobs are actually created. Very few staff are needed to operate them, and the benefits for local economies are not clear.

Part 2: International overview

1. United Nations

a. Thematic report “The Water-Energy Nexus”:

The Special Rapporteur on the human rights to safe drinking water and sanitation, Pedro Arrojo-Agudo, in his thematic report “The water-energy nexus” (A/HRC/60/30) presented at the 60th session of the Human Rights Council (2025), addresses the interrelationship between energy systems and water rights, and in his observations makes explicit mention of the impact of mega data centers on water and energy use, noting that:

• “With the emergence of artificial intelligence and the rise of cryptocurrencies, the demand for data computing is skyrocketing, leading to a rapid increase in the number of mega-data centres. That growth generates significant and worrying demands for water, as well as a dramatic rise in electricity consumption. Those trends pose serious risks to aquatic ecosystems and present unsustainable prospects for the future.” 
• It notes that the growth of data centers happened “in opaque circumstances, with a lack of transparency, participation, access to information and accountability.”
• “Faced with the growing alarm, new centres are moving to countries that continue to offer water and energy, often subsidized with public funds, prioritizing alternative energies for these centres that were originally intended for the energy transition in other sector.”

In this context, and understanding that “it is increasingly clear that a shift is needed from traditional supply-side strategies in water management and planning, which dominated throughout the twentieth century, to new approaches focused on demand management and the conservation of aquatic ecosystems,” the rapporteur recommends that States impose a moratorium on data centers:

• “States and international institutions should promote a moratorium on the development of data centres and provide clear information on their water and energy consumption and the risks that they pose to climate change, the sustainability of aquatic ecosystems, the human rights of impoverished populations and the survival of vulnerable productive sectors. Based on transparency and adequate information, priorities should be established based on the principles of sustainability, equity and compliance with human rights to regulate the water and energy demands of such centres.”

b. Digital Economy Report 2024: Shaping an Environmentally Sustainable and Inclusive Digital Future 

The Digital Economy Report (2024) is a UNCTAD document that highlights that the environmental and energy costs of using digital infrastructure, including data centers, disproportionately affect developing countries, which also tend to reap fewer benefits from the digital economy. 

This report points out that data centers are among the digital infrastructure sectors with the most significant environmental impact, due to their high energy and water consumption. This, it asserts, underscores the importance of powering data centers with renewable energy sources to reduce greenhouse gas emissions (without displacing other sectors’ use of renewable energy), while reducing emissions from supply chains and increasing the circularity of data center hardware. It also states that more attention will need to be paid to mitigating the impact of data centers on scarce water resources.

To enable a global distribution of data centers that supports environmental sustainability, measures need to be taken to improve data governance. Policymakers around the world should:

• Assess the costs and benefits of deciding on the physical location of data, considering the particularities of each country and its own development strategy needs. 
• Government policies to promote good practices, together with efforts by the ICT industry to improve energy efficiency, could play an essential role in slowing the growth of overall energy demand. For example, in data networks, policies to accelerate the early phase-out of energy-intensive legacy networks could be particularly important.
• Even if further efficiency improvements are achieved, it is necessary to ensure that the future adoption of increasingly sophisticated, computationally intensive digital services takes their environmental footprint into account. Limiting the environmental impact of these services will require careful planning and significant investments in renewable energy and electricity grid infrastructure.
• More accurate data and further research are needed, particularly studies and information related to the specific challenges faced by many developing countries. This would help create a reliable basis for policy-making that promotes sustainable energy use and better water management for data centers. There is a lack of detailed data on the energy and water consumption characteristics of data centers and networks, including specific segments like smaller data centers and supply chains. 
• Better and more frequent monitoring of a broader range of indicators related to greenhouse gas emissions, water consumption, and noise generation is also needed.
• Governments can play a leading role in accelerating research and development to promote more efficient next-generation technologies and systems. Through regulation, they can promote improved energy efficiency in data centers and renewable energy obligations to reduce the carbon footprint. Regulation should provide long-term planning security for private-sector investment while recognizing the dynamic nature of the ICT sector. This may require agile policymaking. Regulators should ensure that the electricity market design provides clear, sufficient price signals for data centers and other large electricity consumers to participate in demand response programs. For example, allowing some flexibility in ancillary service requirements, such as longer notice periods and response times, can facilitate data center operators’ participation in such programs.
• In developing countries, governments and utilities could explore opportunities to jointly develop local electricity and water infrastructure alongside new data center and network projects to expand access to these services in communities, with digital infrastructure serving as a key reference customer for electricity and water.
• Sectoral regulations are important for promoting circularity and sufficiency. For example, when considering the energy impact of AI from a sustainability perspective, it is crucial to weigh its risks and benefits. Given the limited availability of information on AI-related resource use, regulators could consider introducing specific environmental disclosure requirements to improve transparency across the AI supply chain.

2. United States

According to Mayo (2025), the three federal laws most relevant to the construction and operation of data centers are the Clean Air Act (CAA), the National Environmental Policy Act (NEPA), and the Endangered Species Act (ESA). None of these laws is specific to data centers; instead, they apply generally to all sectors of the economy.

a. Clean Air Act (CAA)

This is one of the key laws because data centers can involve air emissions associated with their operation, for example, through backup generators, intensive heating or cooling systems, or even indirect emissions linked to energy consumption and energy sources. Under the CAA, the Environmental Protection Agency (EPA) has the authority to regulate air pollutant emissions, require emission permits, and impose monitoring or disclosure obligations.
Although data centers have not always been explicitly addressed under the CAA, the growing size of some facilities (and their backup generators) makes the CAA increasingly relevant. For example, the EPA could use its information-gathering authority (section 114) to require data on electricity consumption or emissions from “cryptocurrency mining” facilities, as an analogy to large-scale data centers.

b. National Environmental Policy Act (NEPA)

This law requires federal agencies to assess the environmental effects of federal actions (or actions involving federal funding, permits, or land) before authorizing them (through Environmental Impact Statements). For data centers that require federal permits, connect to national transmission networks, use federal land, or receive federal subsidies, NEPA may require that impacts on air, water, soil, fauna/flora, heritage, etc., be assessed. The report highlights that NEPA constitutes a regulatory “bottleneck” for large-scale infrastructure projects, as it can delay authorizations or require mitigation measures.

c. Endangered Species Act (ESA)

This law regulates activities that may affect threatened or endangered species or their critical habitats. When a data center or its associated infrastructure (such as transmission lines, substations, pipelines, etc.) is located in areas where protected species or critical habitats may be found, the ESA requires consultation with the U.S. Fish and Wildlife Service (or the appropriate agency) to determine the impact and obtain approval. The ESA can represent another source of restriction or delay for data center projects, especially in rural or environmentally sensitive are.

d. Executive Order to Accelerate Federal Permitting of Data Center Infrastructure

At the federal level, there are White House Executive Orders, which are directives from the president that manage federal government operations. Executive Orders (EO) are only binding on the executive branch of the federal government.

On July 23, 2025, US President Donald Trump issued an Executive Order called “Accelerating Federal Permitting of Data Center Infrastructure” (2025), whose objective is the creation of AI data centers through the establishment of “qualified projects,” easing regulatory burdens, and optimizing federally owned land and resources for the development of these centers. Both Trump’s AI Action Plan and this executive order send a strong message: the federal permitting system is an impediment that must be addressed. According to the AI Action Plan, “the U.S. system of environmental permits and other regulations makes it nearly impossible to build this infrastructure in the United States at the speed necessary” (Orler et al, 2025).

The document, among other things, instructs agencies to launch an initiative that provides federal financial support to “Qualified Projects,” which include “Data Center Projects” or “Covered Component Projects” designed by the Secretary of Defense, the Secretary of the Interior, the Secretary of Commerce, or the Secretary of Energy. It also covers projects where: (1) the project sponsor commits $500 million in capital expenditures, (2) there is a projected load increase of over 100 MW, or (3) there is a national security benefit. However, not all energy projects that support data centers are included. The list encompasses transmission lines, natural gas pipelines, and “dispatchable baseload energy sources,” such as natural gas, coal, nuclear, and geothermal, excluding non-dispatchable solar and wind projects. Additionally, this EO offers procedural support for developers: “for the purposes of this EO, it interprets the National Environmental Policy Act as not applying to “financial assistance that represents less than 50 percent of the total cost of the project.”

The Executive Order expands the network for expedited permitting in this area. The Executive Order directs the U.S. Environmental Protection Agency (EPA) to expedite permitting by developing or modifying regulations.

The AI Action Plan and Executive Order (EO) urge agencies to use the popular fast track for National Environmental Policy Act (NEPA) reviews: categorical exclusions. Under current guidelines, agencies should adopt categorical exclusions from other agencies or establish new categorical exclusions to facilitate the development of this infrastructure. It also requires the Departments of the Interior, Defense, and Energy to identify federal and military lands suitable for these projects.

Furthermore, this document revokes Executive Order 14141 of January 2025, which contained requirements related to diversity, equity, inclusion, and climate criteria for AI infrastructure on federal lands.

Among the criticisms leveled at this new Executive Order are:

• It reinforces the use of fossil fuels that jeopardize the energy transition.

In recent years, many data centers built in the US have prioritized renewable energy. With the administration’s policy shift away from wind and solar power generation and its desire to return to fossil-fuel-derived electricity, the supply of energy to data centers from traditional sources has been prioritized. 

Furthermore, while promoting an energy boom to support AI, it is blocking solar, wind, and storage energy, which are the fastest, cleanest, and most economical options for meeting demand. As a result, the growing data center industry is being used as an excuse to prolong the life of fossil fuel-based power plants, which are polluting and harmful to the climate (SELC, 2025; Suchman & Sundback, 2025).

• Impact on transparency and participation.

The creation of a NEPA exemption would make it difficult for affected communities to obtain information about the environmental or public health impacts of new data centers, and the plan does not mention the need to consult with communities in advance (SELC, 2025).

• Benefits the world’s wealthiest companies.

The Trump administration has created barriers and a false sense of urgency to dismantle public safeguards that benefit the world’s wealthiest companies at the expense of communities in the Global South (SELC, 2025).

• The race for AI offers an uncertain future.

International rivalries are perceived in the development of data centers. While the US is issuing these types of executive orders, the European Union is proposing the “Cloud and AI Development Act,” designed to triple the capacity of European data centers over the next five to seven years. Given this competition, the rules governing AI and electricity consumption will continue to change over time due to national and international pressures (Suchman & Sundback, 2025).

3. The European Union (EU)

While the EU has implemented generic regulations for data centers, such as those set out in the Energy Efficiency Directive and the Delegated Regulation, these rules also indirectly regulate the environmental impact of AI by imposing reporting and data-collection requirements. One of the strengths of the EU’s approach is the establishment of specific reporting obligations. Data center operators must collect and publicly report energy consumption, energy utilization, water use, waste heat utilization, and renewable energy use. These measures contribute to transparency and lay the groundwork for future efficiency improvements (Ebert et al, 2025).

Based on the work of Commins & Irion (2025), some of the EU directives and initiatives that address the socio-environmental impacts of data centers are:

a. Energy Efficiency Directive (recast) and the Commission Delegated Regulation

The revised Energy Efficiency Directive (EED) contains several general obligations applicable to data centers. The “energy efficiency first” principle requires Member States to assess energy efficiency solutions in any major planning, policy, and investment decisions exceeding €100 million, including ICT infrastructure. Hyperscale data centers can far exceed this threshold. 

The EED introduces an obligation for companies with an average annual consumption of more than 85 TJ (approximately 23,611 MWh) to implement an energy management system, which would encompass the upper end of the “medium-sized” data center range within this scope. Companies with an energy demand between 10 TJ and 85 TJ (2,778 MWh) do not have to implement an energy management system. Still, they must conduct an energy audit by October 11, 2026, and at least every 4 years thereafter.

With specific regard to data centers, Article 12(4) of the EED states that Member States should “encourage” owners and operators of data centers with an installed IT energy demand of at least 1 MW to “take into account” the best practices of the latest version of the European Code of Conduct for Energy Efficiency in Data Centers (the European Code of Conduct). 

In addition, Article 26 of the EED requires Member States to ensure that data centers with an energy consumption of more than 1 MW use waste heat or other forms of recovery, unless they can demonstrate that this is not technically or economically feasible.

In addition to obligations to improve energy efficiency, the EED introduces reporting obligations that aim to facilitate data collection for a standard Union classification system for data centers. Each year, Member States must require owners and operators of data centers with an installed IT energy demand of at least 500 kW to disclose the information contained in Annex VII of Directive 186 (excluding those providing services exclusively for defense and civil protection purposes).

The Delegated Regulation establishes key performance indicators and a specific methodology. Most notably, it requires measuring and reporting the energy consumption of installed information technology. 

In addition to requiring information on energy consumption, both the EED and the Commission Delegated Regulation emphasize the need to collect data on the water footprint of data centers. The key performance indicators included in the Delegated Regulation include information on water consumption, including total water consumption, total drinking water consumption, and water use efficiency. This will enable the total water consumption of all data centers reporting at the Member State and Union level to be published in the database.

b. The Renewable Energy Directive (RED)

The RED affects the development of new data centers, as it introduces the Union target that, by 2030, at least 49% of the final energy consumed in buildings should come from renewable sources. Like the EED, the RED focuses on using heat pump technology to mobilize waste heat from data centers as a renewable energy source. 

c. The EU Taxonomy Regulation (the taxonomy)

It provides a unified classification system that enables investors and companies to identify and channel financing towards sustainable activities that are in line with the European Green Deal’s objectives. Data centers are eligible for sustainable activity status, contributing to two of the six categories: climate change mitigation and transition to a circular economy.

Besides providing a framework for sustainable investment, the EU Taxonomy Regulation and the Corporate Sustainability Reporting Directive (CSRD) introduce reporting obligations for companies operating data centers. The aim is to enable investors and the public to understand the company’s sustainability performance better. For example, a data center operator would have to calculate and publish the percentage of its activities that derive from sustainable data hosting and storage or from contributing to a second-hand EEE market. Companies that are not subject to the CSRD may also disclose this information, but on a voluntary basis.

d. Green Public Procurement (GPP) criteria  

The GPP criteria for data centers, server rooms, and cloud services are voluntary, also developed by the Commission’s Joint Research Center (JRC), and provide public authorities with guidance on the procurement of products and services with reduced environmental impact.

e. European Code of Conduct and CEN/CENELEC/ETSI CG-GDC

There are two sets of non-binding standards that hold some authority because they are incorporated into the EED, the taxonomy, and the EU green public procurement criteria mentioned above.

The European Code of Conduct is a voluntary initiative of the JRC, which sets minimum standards and compiles best practices in the use, management, and planning of data centers. These are described in the annual best-practice documents. The European Code of Conduct was revised in 2022 to include non-energy-related environmental indicators such as water consumption, the proportion of renewable energy use, and the proportion of energy reuse.

The second set of key standards was developed by CEN/CENELEC/ETSI, in collaboration with industry stakeholders and EU projects, especially concerning the energy management and environmental sustainability of data centers, and some of these have been incorporated into the legislation mentioned above.

f. WEEE Directive

The Waste Electrical and Electronic Equipment (WEEE) Directive aims to contribute to sustainable production and consumption, reduce waste electrical and electronic equipment (WEEE), contribute to the efficient use of resources, recover valuable secondary materials, and improve the environmental performance of all operators directly involved in the collection and treatment of WEEE. Equipment used in data centers is classified, depending on its size, in category 4 (large equipment) or category 6 (small IT and telecommunications equipment). 

g. Greenwashing and eco-labeling directives

This establishes that a company, such as a data center operator, cannot make generic environmental claims without sufficient evidence. This means that the operator will have to back up the environmental claim with clear, objective, public, and verifiable commitments set out in a public implementation plan. This plan must include measurable and time-bound targets and be verified periodically by an independent third party; otherwise, the environmental claim will be considered a misleading commercial practice. In the context of data centers, “consumers” include data center customers and cloud service users, as well as the customers of those customers.

h. Criticism of the European framework

While data collection and reporting obligations are useful, the absence of binding efficiency and renewable energy targets at the EU level is a significant limitation. Although the Commission is expected to propose new legislative measures by 2025, the current lack of enforceable standards means that data centers could continue to consume large amounts of energy and water without significantly reducing their environmental impact (Ebert et al, 2025). The key question will be how the EU responds to the growth of the data center sector in order to meet its 2030 sustainability target. One option to contain the rebound effect would be to adapt and strengthen its regulatory approach to data centers beyond energy efficiency, and to manage the sector’s growth with the availability of renewable energy. In addition, the EU and its Member States will need to pool their policy efforts and coordinate EU sustainability policy with new developments in data centers in Member States. Finally, key advances still need to be made before it becomes a technically or economically viable option for most data centers to be a source of waste heat (Commins & Irion, 2025).