Powering Europe’s Green Transition With Digital Technology
Main takeaways
- Digital technologies, such as AI and the cloud, help the EU achieve its sustainability goals – they improve energy efficiency, reduce waste, and optimise resource use
- Clear, coherent policies are needed to promote investment in green digital infrastructure, simplify sustainability reporting, and ensure regulatory consistency
- Cutting red tape and fostering cooperation will help Europe stay competitive
The European Union is at a critical juncture in its journey toward a greener, more competitive future. As EU policymakers push ambitious climate goals, digital technologies are emerging as indispensable tools in accelerating sustainability efforts. From artificial intelligence (AI) helping optimise energy use to cloud computing reducing waste, technology is not just an enabler but a catalyst for change.
To harness this potential fully, the EU must foster policies that encourage innovation while ensuring regulatory clarity. This means supporting investment in clean energy, streamlining environmental reporting requirements, and enabling businesses to leverage digital tools.
However, the current EU regulatory landscape allows for little flexibility. For example, reporting requirements under the Ecodesign for Sustainable Products Regulation (ESPR) that entered into force last year do not align with other reporting frameworks, such as the Corporate Sustainability Reporting Directive (CSRD).
Digital solutions are also still often overlooked for improving sustainability. For instance, the European Commission recognises that documentation burdens stem from outdated, paper-based obligations in the New Legislative Framework, while modern solutions – such as the Digital Product Passport (DPP) – could improve efficiency if implemented correctly.
Let’s dive deeper into how the EU can put cutting-edge technology at the heart of its sustainability efforts.
1. Smart tech and digital infrastructure: enable a greener economy
AI-driven solutions help optimise industrial processes, enhance building energy efficiency, and design vastly more sustainable products. In the energy sector, AI predicts demand fluctuations, enabling smarter grid management and reducing waste. Similarly, cloud computing and the Internet of Things (IoT) help businesses monitor resource use in real time, cutting emissions and improving overall efficiency.
Data centres, which power these technologies, play a crucial role in the EU’s green transition. As demand for cloud services grows, questions about its energy consumption have emerged. Cloud providers are already addressing this challenge by ramping up the deployment of advanced cooling technologies, sourcing carbon-free energy, and implementing heat-reuse systems.
Moreover, the International Energy Agency acknowledges that the “growth of electricity demand for data centres is projected to be rapid, but the level looks set to remain relatively small in the context of overall global demand growth.”
Policymakers can help European data centres become a driving force for sustainability by promoting incentives for the full range of carbon-free energy sources, encouraging investments and ensuring regulatory consistency across EU Member States. Sweden is already a leader in this field, with Areim recently raising €450 million in funding for the development of sustainable data centres.
French electricity company EDF has invited tech companies to access sites near its grids and power plants for low-carbon energy supply. Yet, current EU regulations still lack true technology neutrality. While nuclear energy is included in the EU taxonomy, it faces stricter conditions than renewables, highlighting a regulatory bias that might limit the diversification of carbon-free energy options for data centres.
Going forward, the EU should support the use of all carbon-free energy sources, while also addressing the patchwork of national rules that create uncertainty for businesses and investors. A clear, coherent legal framework will enable businesses to invest in sustainable digital infrastructure without unnecessary bureaucracy.
2. Cut red tape and strengthen policy coherence
Digital sector businesses are strongly committed to meeting sustainability targets. Yet, overlapping EU regulatory requirements continue to slow progress. For instance, a company developing AI-powered energy management solutions must comply with multiple rules: the AI Act for the development of said AI, the General Data Protection Regulation (GDPR) for data handling, and the Energy Efficiency Directive for energy consumption impact.
More transparent and efficient reporting rules would help maintain accountability without excessive complexity. However, fragmented rules continue to create burdens that hinder innovation, as highlighted in Professor Draghi’s report. That is why the EU should simplify sustainability reporting, align new rules with existing legislation, and ensure mutual recognition of verified environmental claims across all Member States.
This would reduce red tape for businesses and enforcement authorities alike. Policymakers should also leverage digital tools such as QR codes and digital product passports to bring compliance into the 21st century and provide consumers with easy access to information.
Finally, policies governing sustainable products should encourage flexibility and innovation rather than imposing rigid requirements. Companies should be free to develop environment-friendly solutions without unnecessary constraints or mandated technology choices.
3. Avoid protectionism and promote cooperation
As the EU accelerates its green transition, open and competitive markets are essential for scaling clean technologies. While strengthening Europe’s manufacturing base and reducing reliance on foreign supply chains are valid goals, protectionist policies like local content requirements or trade restrictions may hinder progress. Such measures would only increase costs, disrupt supply chains, and limit access to cutting-edge technology.
Instead, the European Union should prioritise global cooperation, resilient and diversified supply chains, and an open trade environment that enables the rapid deployment of clean technologies. Aligning EU sustainability policies with global standards will prevent regulatory fragmentation and keep European businesses competitive.
Conclusion
The EU’s sustainability goals depend on strong policies, innovation, an investment-friendly environment, and international cooperation. In the current geopolitical climate, Europe might be tempted to consider a shift towards protectionist measures, but ultimately this would only undermine the green transition.
With the right framework, the EU can lead the way toward a cleaner, more resilient future – one where digital technology and climate action go hand in hand.
