Climate Action Network Europe CAN Europe

What the Commission proposes

The European Commission proposes to amend Directive 2003/87/EC to adjust the heat and fuel benchmarks for free emission allowance allocation during the 2026 to 2030 period. The initiative increases free allocation levels determined by fallback benchmarks to enhance carbon leakage protection for vulnerable industrial sectors. The adjustment uses available allowances without triggering the cross-sectoral correction factor, while maintaining existing update rates for oil and gas activities. This stand-alone regulation complements the broader revision of the EU Emissions Trading System.

• Amends Directive 2003/87/EC to revise heat and fuel benchmark values for 2026 to 2030.
• Increases free allocation levels determined by fallback benchmarks to improve carbon leakage protection.
• Utilises available free allocation allowances amounting to around 80 million allowances.
• Ensures the adjustment does not trigger the cross-sectoral correction factor or negative redistribution effects.
• Maintains existing maximum update rates for installations carrying out oil and gas activities.
• Establishes sector-specific sub-benchmarks for specific NACE codes related to oil, gas, and transport activities.

What is asked: Respondents provided feedback on the update of ETS benchmark values for 2026 to 2030, including fallback benchmarks, sector-specific approaches, freeze options, transparency, and the inclusion of indirect emissions.

Summary written by AI from the Commission's document.

Key passages on your topics

1. The MRV data obtained through the regulation of the new sectors will be a key source for information for the Commission to evaluate progress in the sectors concerned. The integrated governance and monitoring process under the Regulation on the Governance of the Energy Union and Climate action is also expected to make sure that climate and energy-related actions at European, as well as regional, national and local level, including the ETS, contribute to the EU climate neutrality and Energy Union's objectives. Several market analysts closely follow various aspects of the carbon market and its functioning, and the Commission will continue to monitor this work. Through regular contacts with stakeholders, the Commission is alert to their views and concerns about the functioning of the ETS.

   Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE..., page 5 (EN)

2. 5 Regulation (EU) 2023/956 of the European Parliament and of the Council of 10 May 2023 establishing a carbon border adjustment mechanism (OJ L 130, 16.5.2023, pp. 52-104). 6 Regulation (EC) No 1893/2006 of the European Parliament and of the Council of 20 December 2006 establishing the statistical classification of economic activities NACE Revision 2 and amending Council Regulation (EEC) No 3037/90 as well as certain EC Regulations on specific statistical domains (OJ L 393, 30.12.2006, p. 1, ELI: http://data.europa.eu/eli/reg/2006/1893/oj).

   Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE..., page 8 (EN)

3. 1 OJ C , , p. . 2 OJ C , , p. . 3 Commission Delegated Regulation (EU) 2019/331 of 19 December 2018 determining transitional Union-wide rules for harmonised free allocation of emission allowances pursuant to Article 10a of Directive 2003/87/EC of the European Parliament and of the Council (OJ L 59, 27.2.2019, p. 8, ELI: http://data.europa.eu/eli/reg_del/2019/331/oj). 4 [please insert the full reference once available - CSCF Decision]

   Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE..., page 7 (EN)

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What the Commission proposes

The European Commission is preparing an initiative to establish common Union minimum performance standards for data centres located in its territory. Building on existing reporting and rating schemes under the Energy Efficiency Directive, the proposed regulation aims to phase out unsustainable practices and technologies in new or retrofitted facilities. The initiative seeks to address rising energy and water consumption, limited waste heat reuse, and regulatory fragmentation across Member States. An impact assessment is planned for late 2026, with a legislative proposal anticipated in the second quarter of 2027.

• Establish common EU minimum performance standards for data centres regarding energy efficiency, water use, waste-heat reuse, and grid services.
• Form the third step in the EU sustainability framework for data centres, following the 2024 reporting scheme and the 2026 rating scheme.
• Prevent divergent national approaches and reduce regulatory fragmentation across Member States.
• Improve sector competitiveness and reduce operational costs by cutting energy and water waste.
• Support energy system integration by aligning data centre operations with power grid and heat network needs.
• Prepare an impact assessment in Q4 2026 to support the drafting of the legislative proposal for Q2 2027.

What is asked: The consultation aims to collect in-depth evidence, information, data and feedback from stakeholders on the need for and feasibility of minimum performance standards for data centres in the EU, the most appropriate way to establish them, which indicators should have standards, and what thresholds should be set.

Summary written by AI from the Commission's document.

Key passages on your topics

1. This sector touches upon two important EU objectives, namely the Union’s technological sovereignty and the Union’s energy resilience and security. Expanding computing capacities and increasing the number of data centres on the Union’s territory is essential, but it also poses challenges, not only in terms of increasing energy consumption but also for electricity grids, carbon emissions and environmental resources such as water. In response, the EU’s digital strategy emphasises the need for highly energy-efficient and sustainable data centres. As highlighted by the Draghi report on EU competitiveness, using energy more efficiently makes it possible to cut costs, which is vital for the competitiveness of European industries. The Energy Efficiency Directive (EU) 2023/1791 (EED) requires to promote energy efficiency and sustainability in data centres.

   Establishment of common Union minimum performance standards for..., page 1 (EN)

2. It is an initiative in the field of energy, where competence is shared between the EU and Member States. Practical need for EU action Ref. Ares(2026)8908107 - 21/09/2026

   Establishment of common Union minimum performance standards for..., page 1 (EN)

3. Problem the initiative aims to tackle As highlighted by the Draghi report and the AI Continent Action Plan, expanding data centre capacity in the EU is essential for fostering AI innovation, accelerating digitalisation, boosting EU competitiveness across industries and supporting a mature data economy. To ensure this, several sustainability challenges need to be tackled: 1. rising energy and water consumption 2. limited waste heat reuse and energy system integration 3. the lack of a framework guiding data centres’ sustainability efforts 4. the lack of regulatory convergence between countries 5. competitiveness and affordability concerns 6. barriers to innovation and uptake of clean technologies Basis for EU action (legal basis and subsidiarity check) Legal basis The legal basis for this initiative is Article 194(2) of the Treaty on the Functioning of the European Union.

   Establishment of common Union minimum performance standards for..., page 1 (EN)

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