22 Jun
Climate Risk Becomes a Strategic Factor in the Data Center Industry—Including Europe
The global race for computing capacity is no longer being played out solely on the grounds of power availability, land supply, and permitting speed. An increasing number of digital infrastructure investors, developers, and operators are bringing a fourth decision-making factor to the table—one that until now was treated as a secondary risk: climate exposure.
This is the central message of the latest report published by First Street, a firm specializing in climate risk analysis, titled “18th Risk Assessment – Climate Risk in Global Data Center Markets”. The study analyzes 97 investable data center markets globally and reaches a conclusion that is hard to ignore: climate risk is no longer a “what-if” scenario, but a variable already integrated into the operational performance of current digital infrastructure.
According to the report:
- Approximately 54% of global data center capacity operates in markets exposed to chronic climate stress (extreme heat or drought).
- 79% faces significant acute risks—such as flooding, extreme winds, or wildfires.
Practically, the vast majority of the world’s digital infrastructure is already operating under some form of climate pressure, whether gradual or episodic.
Chronic vs. Acute Risks: The Financial Difference
- Chronic risks erode margins through higher energy and water costs, as well as reduced cooling efficiency.
- Acute risks introduce volatility through downtime, repair costs, and skyrocketing insurance premiums.
Both ultimately reflect on Net Operating Income (NOI) stability and asset financing conditions.
How Risk is Distributed by Region
The report’s data maps out a geographically differentiated landscape of risk:
| Region | Chronic Exposure (Heat/Drought) | Acute Risks (Floods/Wind/Wildfires) |
| Asia-Pacific (APAC) | 89% of capacity exposed | 60% of capacity exposed |
| North & Latin America | 50% of capacity exposed | 86% of capacity exposed |
| Europe, Middle East & Africa (EMEA) | 46% of capacity exposed | 25% of capacity exposed |
The report identifies specific hubs that sit simultaneously in the high-risk zone across both dimensions. Johor (Malaysia), Singapore, Marseille, and the US state of Virginia are among the markets with the highest combined exposure. Conversely, Nordic cities like Stockholm, Oslo, or Copenhagen remain at the bottom of the risk rankings, benefiting from cooler climates and access to clean energy.
The authors’ conclusion carries direct implications for investment strategies: some of the world’s largest and fastest-growing data center hubs are being built precisely in the areas with the highest climate risk, rather than the safest ones.
Europe: Caught Between AI Ambitions and Climate Goals
Beyond First Street’s data, the climate risk debate directly intersects with a broader discussion gaining momentum in Brussels: Can Europe achieve its technological sovereignty goals in AI without compromising its climate commitments?
Lex Coors, President of the European Data Centre Association (which represents giants like Microsoft, Google, and Amazon before the EU, alongside European players like Digital Realty/Interxion, EdgeConneX, and LCL Data Centers), recently stated that the European power grid is not yet ready to power the next-generation data centers required for AI. Furthermore, Small Modular Nuclear Reactors (SMRs) will not be available in time. In this context, he suggested that the discussion regarding a potential temporary return to gas-fired power plants should at least be opened.
The European Commission aims to triple the bloc’s data center capacity by 2032 as part of its “AI Continent Action Plan”. The issue, according to industry voices, is that the expansion of grids, green energy capacities, and advanced nuclear projects is failing to keep pace with this growth rate.
On the other hand:
- Commission officials have signaled that data centers are only welcome in Europe if they actively contribute to the energy transition—by supporting renewable capacities and waste heat recovery.
- Environmental organizations like Greenpeace EU warn that expanding gas capacity would lock Europe into an energy dependency it is already actively trying to eliminate.
The tension is real and lacks a simple solution for now: competitiveness, sovereignty, sustainability, and speed are four objectives that currently cannot be maximized simultaneously.
And in Romania?
While the discussion on the climate risk of digital infrastructure has already reached public and investment agendas in Western Europe, the conversation in Romania remains much quieter.
Romania was not included in First Street’s analysis—a sign that the local data center market does not yet possess the critical mass of capacity required to appear on the radar of global institutional investors. However, the closest analyzed market in the region, Polonia, has its chronic risk level (heat/drought) evaluated in the 25-50% band. This represents a moderate risk—well below top markets like Johor, Singapore, Marseille, or Virginia, but also above the lowest-risk Nordic markets. Effectively, the Central and Eastern European (CEE) region sits somewhere in the middle of the global ranking—neither in the danger zone nor in the maximum climate safety zone.
In Romania, there is currently no real regulatory or local market pressure forcing the integration of climate risk into data center site selection decisions. Compared to the markets analyzed by First Street—where climate has already become an underwriting criterion alongside power costs and connectivity—the topic remains largely peripheral in Romanian public discourse.
The Corporate Divergence
However, things look different for major market players. International operators and large digital infrastructure companies present locally broadly follow the global agendas of their parent organizations:
- Aiming for near-100% access to green energy.
- Reducing carbon footprints.
- Rigorous ESG reporting.
This is driven less by a locally perceived climate risk and more by global corporate commitments, financing requirements, and European regulations (such as the data center sustainability label currently being developed by the European Commission).
The Bottom Line for Romania: A discrepancy is visible. Physical climate pressure, in the strict sense defined by First Street (extreme heat, drought, floods, wind), is still low compared to markets like Johor, Marseille, or Virginia. However, compliance and sustainability pressure coming from investors and European regulations is already present and will continue to escalate.
In the medium term, as regional data center capacity expands—fueled by growing demand for cloud and AI services—climate risk will likely become highly relevant for the local market. This will not necessarily be triggered by immediate extreme weather events, but because the financing, insurance, and valuation of these assets will increasingly depend on climate standards imposed at the European level.
