Summary The proposed Cloud and AI Development Act (CADA) does not invent new sustainability metrics from scratch; instead, it legally anchors the deployment of data centres in "acceleration zones" to the existing Delegated Regulation (EU) 2024/1364. As proposed in COM(2026) 502 final, Article 11(1) explicitly mandates that Member States "shall use the key performance indicators specified in Delegated Regulation (EU) 2024/1364 pursuant to Directive (EU) 2023/1791" when setting sustainability requirements for data centres in these zones. This regulation, adopted under the Energy Efficiency Directive (EED), establishes the first phase of a common Union rating scheme. By cross-referencing this Delegated Regulation, CADA ensures that the rapid expansion of computing capacity does not compromise the EU's climate goals, making metrics like Power Usage Effectiveness (PUE) and Water Usage Effectiveness (WUE) legally binding for projects in priority zones.

Detail

The intersection of the proposed Cloud and AI Development Act (CADA) and the EU's existing energy efficiency framework represents a critical shift from voluntary sustainability guidelines to enforceable regulatory standards for digital infrastructure. At the core of this mechanism is Delegated Regulation (EU) 2024/1364, which establishes the "first phase of the establishment of a common Union rating scheme for data centres." This regulation was adopted pursuant to Directive (EU) 2023/1791 (the Energy Efficiency Directive or EED), which tasked the Commission with developing a rating scheme to monitor and improve the energy efficiency of data centres.

The proposed CADA leverages this existing regulatory architecture to address a specific policy gap: the need to accelerate the deployment of data centres to meet the surging demand for AI compute, while simultaneously preventing a "race to the bottom" in environmental standards. To achieve this, CADA introduces the concept of data centre acceleration zonesβ€”geographic areas designated by Member States where permitting processes are streamlined to facilitate rapid construction. However, this acceleration is conditional.

Article 11(1) of the CADA proposal serves as the legal bridge between the new acceleration framework and the established sustainability metrics. The text states:

"When setting sustainability requirements for data centres deployed in acceleration zones, Member States shall use the key performance indicators specified in Delegated Regulation (EU) 2024/1364 pursuant to Directive (EU) 2023/1791 under Annex II, from (a) to (n)."

This provision is significant for several reasons. First, it avoids regulatory duplication. Rather than CADA creating a parallel set of environmental indicators, it adopts the KPIs already defined in the Delegated Regulation. These KPIs cover a comprehensive range of environmental impacts, including energy efficiency (such as PUE), water usage (WUE), carbon emissions, and the reuse of waste heat. By referencing "Annex II, from (a) to (n)" of the Delegated Regulation, the proposal ensures that the full spectrum of the rating scheme's metrics applies to acceleration zones.

Second, the use of the word "shall" in Article 11(1) creates a mandatory obligation. Member States cannot opt out of these KPIs when designating acceleration zones. If a Member State wishes to designate an area as an acceleration zone to speed up permitting, it must enforce the sustainability standards defined in Delegated Regulation (EU) 2024/1364. This ensures that the "acceleration" of infrastructure does not come at the cost of environmental degradation.

The Delegated Regulation (EU) 2024/1364 itself was designed to provide a standardized, comparable, and transparent framework for assessing data centre performance. Prior to this regulation, the industry relied on a fragmented landscape of private certifications and national standards, making it difficult to compare the true environmental footprint of facilities across borders. The regulation defines specific methodologies for calculating KPIs, ensuring that a PUE score in one Member State is directly comparable to a PUE score in another.

Under the proposed CADA framework, these KPIs become the baseline for compliance. For instance, if the Delegated Regulation sets a specific threshold for PUE or requires a minimum percentage of waste heat reuse, data centre projects in acceleration zones must meet these thresholds to qualify for the streamlined permitting processes. This creates a "green gate" for rapid deployment: you can build faster, but only if you build sustainably according to the Union's common rating scheme.

Furthermore, the proposal aligns with the broader objectives of the Energy Efficiency Directive. The EED aims to reduce the EU's overall energy consumption and greenhouse gas emissions. By mandating the use of the EED's rating scheme KPIs for data centres, CADA ensures that the digital sector's growth is decoupled from energy consumption growth. This is particularly relevant given the high energy demands of AI workloads. The proposal recognizes that without strict, harmonized standards, the rapid deployment of data centres could undermine the EU's climate neutrality goals.

The legal structure also provides clarity for investors and operators. By referencing a specific Delegated Regulation, CADA points to a stable, existing legal text rather than a moving target of new rules. Operators can look to Delegated Regulation (EU) 2024/1364 to understand exactly which metrics they must monitor and report. This reduces regulatory uncertainty and allows for long-term planning.

It is important to note that while CADA mandates the use of these KPIs for setting requirements in acceleration zones, the specific numerical thresholds or targets may be further refined by Member States within the framework of the Delegated Regulation. However, the indicators themselvesβ€”the specific metrics to be measuredβ€”are fixed by the Delegated Regulation. This ensures a consistent language of sustainability across the Union, even if the strictness of the targets varies slightly to account for local conditions, provided they remain within the bounds of the common scheme.

What this means for you

For technology leaders, data centre operators, and investors, the integration of Delegated Regulation (EU) 2024/1364 into the proposed CADA framework has profound practical implications.

1. Compliance is now a prerequisite for speed. If you are planning to deploy a data centre in an EU acceleration zone, your project's sustainability profile is no longer just a "nice-to-have" or a marketing differentiator; it is a regulatory gatekeeper. Article 11(1) means that you cannot access the streamlined permitting benefits of an acceleration zone unless your design and operational plans align with the KPIs in Delegated Regulation (EU) 2024/1364. You must be prepared to demonstrate compliance with metrics such as PUE, WUE, and carbon intensity from the earliest stages of project planning.

2. Design and engineering must prioritize the KPIs. Architects and engineers must design facilities specifically to meet the indicators defined in the Delegated Regulation. This may require investing in advanced cooling technologies, waste heat recovery systems, and renewable energy integration. The "first phase" of the rating scheme sets a baseline, but as the scheme evolves, operators should anticipate that the KPIs will become more stringent. Designing for the current KPIs with a margin for future tightening is a prudent strategy.

3. Operational monitoring becomes mandatory. The rating scheme is not just about design; it is about ongoing performance. Operators will need to implement robust monitoring systems to track the required KPIs in real-time. This data must be reported to the relevant authorities to prove continued compliance. For SMEs, this may require investment in new software tools or partnerships with specialized monitoring providers. However, it also creates an opportunity to differentiate your services based on verified sustainability performance.

4. Strategic alignment with EU funding. Projects that align with the CADA acceleration zones and the Delegated Regulation's KPIs are likely to be prioritized for EU funding and support mechanisms. The proposal aims to triple EU data centre capacity by 2035, and projects that meet the sustainability criteria will be better positioned to access these resources. Conversely, projects that fail to meet the KPIs may face delays, penalties, or exclusion from priority zones.

5. Cross-border consistency. Because the KPIs are derived from a Union-wide Delegated Regulation, operators can expect a consistent set of requirements across different Member States. This reduces the complexity of operating in multiple jurisdictions and allows for the scaling of best practices across the EU.

Common misconceptions

"The rating scheme is voluntary for new data centres." While the initial adoption of the rating scheme under the EED may have been viewed as a best-practice tool, the proposed CADA changes this dynamic for acceleration zones. Article 11(1) uses the mandatory term "shall," making the use of these KPIs a legal requirement for Member States setting requirements in these zones. If you are building in an acceleration zone, the scheme is effectively mandatory.

"Only energy efficiency (PUE) matters." The Delegated Regulation (EU) 2024/1364 covers a broad range of environmental indicators, not just energy. It includes water usage (WUE), carbon emissions, and waste heat reuse. Focusing solely on PUE while ignoring water or carbon metrics could lead to non-compliance with the requirements set by Member States under CADA.

"National standards are sufficient." CADA aims to harmonize requirements to prevent fragmentation. Relying solely on national standards that differ from the KPIs in Delegated Regulation (EU) 2024/1364 may not satisfy the EU-wide requirements for acceleration zones. The proposal explicitly mandates the use of the Union scheme, ensuring a level playing field.

"SMEs are exempt from these sustainability rules." The sustainability requirements for acceleration zones apply to all data centres deployed within them, regardless of the operator's size. While CADA includes measures to support SMEs, such as simplified reporting or access to expertise, the fundamental obligation to meet the KPIs remains. SMEs must ensure their facilities meet the same environmental standards as larger operators to access the benefits of acceleration zones.

Related

This is general information about a draft EU regulation, not legal advice.