However, data centres are resource-intensive. Cooling systems alone account for a significant share of electricity consumption and drive water use. As demand for compute capacity accelerates, Europe faces a dual challenge: expanding digital infrastructure to remain globally competitive while managing growing pressures on electricity grids, water resources and local communities.
If Europe wants to stay globally competitive in AI and cloud computing, efficiency must be the default for data centre growth. Clear and predictable policy frameworks will guide decisions and speed up investment in proven systems that reduce water and energy consumption and enable high performance cooling. That way, together, we can support responsible growth that safeguards local resources.
Within the EU, this challenge is compounded by diverse regional conditions. Northern regions benefit from cooler climates and greater water availability, while southern regions face higher temperatures and increasing water stress. At the same time, major urban hubs are experiencing grid congestion and land constraints, slowing deployment. Without careful coordination, inefficient or poorly sited data centres risk exacerbating infrastructure bottlenecks, increasing costs – including investment costs, operational expenses, and consumer electricity prices – and triggering public opposition.
Yet these constraints also present a strategic opportunity. Europe’s position as both a major market and global regulatory leader enables it to define standards for sustainable digital infrastructure. By prioritising efficiency, heat and water reuse, and system integration, Europe can turn resource constraints into a competitive advantage
Ultimately, this paper outlines why data centre efficiency is no longer a technical detail but a strategic lever. With the right policies, Europe can expand digital infrastructure while strengthening energy security, reducing environmental impact and enhancing long-term competitiveness. Poorly coordinated growth risks resource strain and investment friction; well-designed policy can position Europe as a global leader in sustainable digital infrastructure.
We take a deeper look at practical technical solutions and policy frameworks to enable the efficient, responsible and long-term sustainable development of the EU’s digital infrastructure in our latest policy paper.