Datacentres, AI gigafactories and affordable housing may be exempt from mandatory environmental impact assessments in the EU under a proposal that advances the European Commission’s rollback of green rules.

The latest in a series of packages to cut red tape calls for permitting processes for critical projects to be sped up and reducing the scope of environmental reporting rules for businesses.

The proposed overhaul would expand the list of strategic sectors to count datacentres, in line with the EU’s ambitions to become a global leader in AI, and affordable housing, to improve labour mobility. Member states would be free to decide whether such projects should be subject to environmental impact assessments.

Other parts of the simplification plan include repealing a hazardous chemical database that lists “substances of concern in products”; removing requirements on EU polluters to have authorised representatives in member states where they sell their products; and pushing the need for environmental management systems in farms and industry from the level of plants to that of companies.

Jessika Roswall, the environment and water commissioner, said: “Make no mistake: this is not a dilution of our environmental rules. However, we must adapt to a rapidly changing world.”

The commission estimates its proposals, which were not accompanied by a formal impact assessment, will save companies €1bn a year.

Green groups described the plans as part of “a broader pattern of attack” that is dismantling European environmental policy and undermining democratic accountability, and warned of its indirect costs to human health and nature. A study conducted for the commission in April put the costs of not implementing existing EU environmental law at €180bn a year.

Sabien Leemans, a biodiversity campaigner at the European branch of WWF, siad: “Today’s proposal marks yet another sad milestone in the deregulation madness.

“It’s like watching a car crash in slow motion on repeat. The commission proposes ‘minor’ changes, completely loses control and we end up with MEPs and member states ripping apart entire environmental laws.”

The environmental package was announced alongside a proposal to expand and modernise the EU’s electricity grid as it moves from burning fossil fuels in power plants to generating electricity mainly from wind turbines and solar panels.

Overnight, lawmakers and member states agreed on a climate target to reduce planet-heating pollution by 90% compared with 1990 levels, with loopholes allowing for 5% of the total cuts to come from foreign carbon credits.

Ottmar Edenhofer, the chair of the European Scientific Advisory Board on Climate Change, said it was an “important milestone” to keep the EU on a feasible path towards climate neutrality by 2050.

“However, some of the flexibilities introduced by policymakers – such as the possible use of international carbon credits – risk weakening domestic emissions reductions by 2040 and therefore jeopardising the EU’s long-term climate-neutrality goal,” he added. “If international carbon credits are to play any role, they must meet the highest standards of environmental integrity to avoid undermining the EU’s domestic transition.”

On Tuesday, EU governments and lawmakers also reached a deal to scale back its corporate sustainability laws. The agreement, which came after heavy pressure from within the EU as well as from the US, limits the number of companies covered, delays the deadline for compliance with one of the directives until 2029 and scraps a requirement for companies to adopt climate change transition plans.

The deal was welcomed by business lobby groups, who had campaigned to reduce the scope of the rules.

Markus Beyrer, the director general of BusinessEurope, said: “It is encouraging to see the more realistic rules on conducting due diligence which recognises that not all risks or business partners in chains of activities need to be mapped. We also welcome refocusing of the rules to core diligence rather than transition plans, which risked duplication and clashes with other EU rules.”