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The word "Legislation" highlighted in green, under the heading "Legislation." Ivelin Radkov / Alamy

Tougher Reporting Mandates Ahead for Data Centers

The U.S. and Europe are at the helm of requiring data centers to report their operational details and energy and environmental performance.

2023 is shaping up to be a year of increased regulations for the data center industry — both in the U.S. and globally. In Europe, for instance, the European Parliament has been reviewing the European Commission’s Energy Efficiency Directive (EED) recast since last year, with the directive set to be signed into law this year.

The EED will require data centers in the EU with an installed IT power demand of at least 100 kilowatts to publicly report their energy performance yearly, and that’s in addition to reporting:

  • Annual incoming and outgoing data traffic
  • Amount of data stored and processed within the data center
  • Temperature set points
  • Power, water, and carbon usage effectiveness
  • Energy reuse factor
  • Renewable energy use
  • Cooling effectiveness ratio

Data Center Reporting Mandates in the U.S. Gain Ground

In the U.S., similar regulatory initiatives are underway. At the state level, pending data center laws in Virginia are focused on more stringent requirements in terms of carbon reduction and sustainability. In Oregon, a proposed bill would require data centers as well as cryptocurrency mining companies to reduce carbon emissions by 60% by 2027, according to reporting from The Oregonian. This includes providing an annual report that demonstrates compliance — and non-compliance would result in a hefty fine of $12,000 per megawatt-hour per day.

Meanwhile, at the federal level, the White House Office of Science and Technology Policy (OSTP) published a report in September 2022 on the climate and energy implications of crypto-assets in the United States. The report notes that while the country is home to a sizable crypto-asset sector, that sector can be energy-intensive, with its global electricity usage “comparable to the annual electricity usage of all conventional data centers in the world.” Moreover, the crypto-asset sector can have other major environmental impacts, including air and water pollution, e-waste, greenhouse gas emissions, and noise.

Part of the OSTP’s recommendations to mitigate these impacts, promote transparency, and improve environmental performance involves requiring “crypto-asset industry associations … to publicly report crypto-asset mining locations, annual electricity usage, greenhouse gas emissions using existing protocols, and electronic waste recycling performance.”

Lawmakers are taking notice. For instance, Senator Sheldon Whitehouse is “developing draft legislation to address both crypto-asset and conventional data centers, using the EED as a blueprint,” writes Jay Dietrich, research director of sustainability at the Uptime Institute.

Data Centers Need to Be Prepared

So what does this mean for the data center industry?

According to Dietrich, regulation — at least on a federal level — is not expected to be in place anytime soon, writing that “[l]egislative and regulatory processes and procedures in the US can be laborious, and final standards governing data center information and energy efficiency reporting are likely to remain several years away.”

But it’s only a matter of time before the laws are passed. Dietrich recommends a few actions that data centers can take now to prepare for stricter reporting mandates in the future:

  • Create a strategy to comply with information reporting requirements.
  • Establish data collection and management processes for the needed information.
  • Enact policies to ensure projects increase the work delivered per megawatt-hour of energy consumed across data center operations.
  • Engage with industry efforts to develop simple and effective energy-efficiency metrics.
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