Datacenter lobby blows a fuse over EU efficiency proposals

A trade body representing datacenter operators in Europe worried about standards for efficiency imposed by the EU has published a report to ensure its arguments are heard first.

The Climate Neutral Data Centre Pact (CNDCP or the Pact) is made up of more than 100 bit barn operators and trade associations, and claims to account for more than 85 percent of Europe's datacenter capacity. It lists AWS, Microsoft, and Google among its signatories, as well as firms like Digital Realty, NorthC, and Vantage Data Centers.

Members claim to be committed to the European Green Deal, an ambitious program of policies from the EU to promote sustainable growth with the goal of achieving net-zero greenhouse gas emissions.

Yet the Pact says that while it is supportive of the concept of minimum performance standards (MPS) for sustainability in principle, it just doesn't like what it has seen of the proposals so far.

In fact, the paper [PDF], submitted to the European Commission and its consultants tasked with defining MPS, claims that the current plans fall "short strategically and tactically," and may actually hinder progress.

Wasting no time, the Pact makes sure to get the point across in its introduction that energy demand from air conditioning and cooling systems is rising faster than that from AI, but claims the sheer speed of datacenter growth and the difficulty in obtaining robust data is "troubling policy makers and leading to unhelpful speculation."

Its ire is centered on the Energy Efficiency Directive (EED), which introduced mandatory reporting requirements on datacenter power use, plus the option to develop a rating/labeling scheme for bit barn facilities and minimum performance standards.

That the EC is considering MPS at this early stage is particularly concerning, the Pact says, in light of issues encountered regarding data collection and reporting.

Regulators have not had adequate time to learn from these initial reporting efforts, so implementing standards now, prematurely, in the Pact's view, could "cement flawed metrics into long-term policy," creating market distortions and ultimately undermining the very goals they are intended to achieve.

What the datacenter companies would like to see instead is a "phased, evidence-based policy approach based on transparency, market maturity and continuous improvement." This would allow for reporting mechanisms to be tweaked over time, and for development of better datasets and industry best practices, leading to improved standards, the report asserts.

Members of the Pact also call into question whether the proposed MPS would work. This is due to "multiple shortcomings in the regulatory approach, including incorrect scope, a muddled view of policy instruments, and rushed rollout." The report claims that the direction of travel with these standards is "contrary to the Commission's pro-AI and competitiveness agendas."

Data from the first round of EED reporting is incomplete and littered with errors, the report claims, because the policy was hastily implemented and few member states met the first deadline (May 2024) for datacenter reporting requirements. Any consideration of MPS should be delayed until data has been collected through at least two complete reporting cycles, it says.

One complaint leveled by the Pact is that the MPS proposals would focus on the largest datacenter operators, which it says are those already doing the most to meet sustainability standards, while facilities under 500 kW would be excluded despite often being the worst performing.

The counter argument to this is that the smallest facilities are not the ones to be worried about if you want to reduce greenhouse gas emissions; it's the multi-gigawatt monsters now being planned that need taming first.

Another argument from the Pact is that the proposals take no account of regional variations in climate and water scarcity across the EU, from the parched Mediterranean to the cooler Nordic countries. To address this, the Pact advocates a sliding scale of power usage effectiveness (PUE) and water usage effectiveness (WUE) metrics – and its members already have some defined.

(The Pact presented the Commission with proposals for minimizing water use in their bit barns a few years back, giving themselves until 2040 to get their houses in order.)

Water use and energy efficiency need to be considered carefully, as the two can pull in different directions, the report claims. It points out that cooling towers are widely deployed as a cheap and energy efficient means of dissipating heat, but are relatively water-intensive. They may be the most sustainable solution in areas where industrial water is plentiful but energy is at a premium, and pushing operators to minimize water use at the expense of energy efficiency could be counterproductive.

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A different industry body, Cloud Infrastructure Service Providers in Europe (CISPE), recently warned the Commission that burdensome regulations governing water use might see operators choose to build infrastructure in other regions instead.

Finally, the Pact members believe the entire policy is at odds with the Commission's competitiveness agenda. The introduction of novel regulatory burdens runs counter to its ambition for the EU to be a center of excellence for AI and cloud computing, the report states.

Introducing complexity and regulatory uncertainty will create planning blight and discourage investors, the Pact says.

In other words, back off on the regulations or risk killing the goose that lays the AI golden eggs. Although in this analogy, we aren't actually sure if the eggs are going to turn out to be golden at all.

"The Pact is in favor of well-designed and effective minimum performance standards as a way of achieving the Commission's policy objective," said chair of the CNDCP Board Matt Pullen.

"However, the current proposals are confused. A lot more work is needed to ensure the proposed MPS deliver their intended outcome without inflicting significant harm on Europe's digital ambitions."

But some action needs to be taken to ensure that datacenter operators are making their facilities as efficient as possible, given the direction of travel.

In the US this week, for example, it was reported that a bit barn to be built for AI near Cheyenne in Wyoming is projected to use more electricity than every home in the state combined, with plans to expand to be five times larger than that, reaching 10 GW.

With AWS, Google and Microsoft hundreds of billons of dollars more on global bit barn capacity this year, regulators want to tackle the wider environmental implications of expansion.

Vlad Galabov, Omdia Senior Research Director for Enterprise Infrastructure, told us he isn't surprised there are objections against the minimum performance standards for efficiency the European Commission wants to develop.

"I think the industry is concerned that regulation might not take into account all aspects of what makes a datacenter efficient or inefficient such as outside air temperature, and that regulation might dramatically increase the reporting burden on datacenters. Both of these make sense," he said. ®