The European Commission’s technical work on indirect emissions under the Carbon Border Adjustment Mechanism (CBAM) points to a shift in how electricity used by industrial producers is treated for EU imports. Electricity is expected to be proven, documented for use in CBAM declarations, and supported by evidence credible enough for verification. Where producers seek to claim actual low-carbon electricity rather than a default grid factor, the supporting documentation may carry weight comparable to the physical power itself.
The focus sharpened on 8 June 2026, when DG TAXUD published a technical study on indirect emissions in CBAM. The study is structured around three questions: determining operational default emission factors for indirect emissions, conditions for claiming actual indirect emissions including direct technical links, power purchase agreements and verification, and whether indirect-emissions coverage could extend to additional CBAM sectors.
From electricity supply contracts to CBAM-verifiable electricity
For power producers and traders, the study signals that buyers exposed to CBAM will require more than standard supply arrangements. Industrial buyers are expected to move beyond generic green tariffs or annual certificate statements toward electricity products linked to production and supported by metering, embedded-emissions calculations and audit trails.
A key distinction is between green electricity as a marketing claim and low-carbon electricity as a CBAM evidence file. Under CBAM, the technical question is whether an electricity claim can be used to calculate actual indirect emissions for goods entering the EU and whether it can be relied on by an importer or authorised CBAM declarant. The framework also requires that the claim be checkable by a verifier and that consumption can be allocated to the specific installation, process and product line producing CBAM goods.
DG TAXUD’s emphasis on direct technical links, PPAs and verification indicates that not all green electricity arrangements would carry the same CBAM value. A behind-the-meter renewable asset with clear metering and a direct technical link to an industrial installation may provide stronger evidentiary weight than an ordinary supply contract. A PPA with robust settlement data, certificate cancellation, production matching and verifier access may be more valuable than a generic renewable certificate procured after the fact.
Traders as evidence managers across physical and contractual layers
Traders are positioned as intermediaries that manage data and evidence under the emerging CBAM-linked electricity framework. Industrial buyers are expected to require power products combining physical or financially settled supply with renewable or low-carbon attribution. Additional layers include metered consumption records, production-period alignment, certificate or guarantee-of-origin control, balancing and residual supply treatment, audit access, and documentation transferable into an importer’s CBAM file.
A trader able to assemble power from multiple producers, manage balancing, document certificate flows, reconcile metered consumption and provide a CBAM-ready data package may be valued above a trader focused only on price execution. The role is described as similar to a structured-products desk that packages energy, certificates, shaping, balancing, traceability and verification support into one industrial supply solution.
This approach is highlighted as especially relevant in Southeast Europe where volatility is already intense. In Week 23 of 2026, SEE electricity demand increased 8.2% week on week to 15.15 TWh, while variable renewable output fell 8.9%, wind dropped 15.5%, solar declined 5.1%, hydro rose 10.1%, and thermal generation increased 24.5%. Net imports rose 9.1% to 1.22 TWh, reflecting reliance on cross-border balancing.
Default-factor risk tied to operational emission factors
The first DG TAXUD study question—operational default emission factors for indirect emissions—is identified as crucial for energy markets. A default factor is described not only as a technical fallback but also as a commercial penalty when actual low-carbon electricity use cannot be proven. If an industrial exporter cannot demonstrate actual low-carbon electricity use, an EU importer may have to rely on a default emissions factor.
The implications are described for producers operating in carbon-intensive grids where reliance on defaults could reduce competitiveness of exported goods such as cement, fertiliser, steel derivatives and aluminium products. This creates incentives for industrial buyers to procure electricity through contracts designed to reduce the risk of falling back on default factors.
For suppliers, the sales emphasis shifts from supplying renewable power toward providing the data architecture needed to support an actual indirect-emissions claim. The architecture includes metering, settlement records, generation certificates, PPA documentation, grid connection evidence, time-matching logic and residual consumption treatment. Power suppliers are expected to provide a compliance appendix alongside commercial contract terms.
Direct technical links and redesigned PPAs for verification
A direct technical link is identified as one of the strongest forms of evidence for industrial buyers seeking recognition of low-carbon electricity use. For renewable developers this opens a premium segment involving dedicated solar, wind, hydro, biomass or hybrid plants serving CBAM-exposed industrial sites. The value of such projects is described as extending beyond electricity pricing into potential reductions in embedded-emissions exposure and support for EU market access.
The framework also connects battery storage with evidence strategy where solar output may not match industrial load curves. A battery can shift renewable output into more relevant consumption periods while reducing residual grid draw and strengthening credibility of the supply profile. In this context BESS is described as part of an evidence strategy rather than only flexibility provision.
The source indicates that standard PPAs would not be sufficient for CBAM purposes. A CBAM-ready PPA should include provisions covering data ownership and access rights, metering hierarchy, certificate transfer or cancellation, settlement-period matching, residual electricity treatment, curtailment, outages, replacement power, balancing responsibility and verifier access. It should define what buyers can claim, what sellers guarantee and what documentation will be delivered.
CBAM-ready data packs covering metering, certificates and reconciliation
The PPA requirements are described as needing compatibility with plant electrical systems and production processes as well as buyer reporting boundaries under CBAM. Contracts may fail if production lines cannot allocate electricity consumption to specific CBAM goods or if suppliers cannot provide required audit trails supporting allocation decisions.
Power producers and traders are expected to prepare standardised CBAM electricity data packs for industrial buyers containing generation asset identity and location; installed capacity and technology; grid connection status; direct-line or grid-supply structure; PPA delivery period and settlement granularity; metered generation and consumption data; certificate issuance and cancellation evidence; balancing and replacement power treatment; residual mix disclosure; third-party verification rights; plus monthly and annual reconciliation templates.
Definitive-period timing and scope under EU carbon border rules
The definitive regime is described as starting on 1 January 2026. EU importers or indirect customs representatives importing more than the single mass-based threshold of 50 tonnes of CBAM goods must apply for authorised CBAM declarant status. The source also states that CBAM certificate prices are calculated from EU ETS allowance auction prices quarterly in 2026 and weekly from 2027.
The current definitive-period treatment of indirect emissions is described as narrower than transitional reporting experience. A Publications Office summary for Task 2 notes that during the transitional period indirect emissions were reported for all CBAM goods except electricity. It also states that in cement and fertiliser goods under CBAM coverage includes indirect emissions from electricity consumed to produce those goods alongside direct production emissions.
A forward-looking trigger is linked to DG TAXUD’s third study question on whether indirect-emissions coverage could extend to additional CBAM sectors beyond those currently covered in the same way. The source lists steel, aluminium, hydrogen and downstream processing chains as areas that should not ignore electricity data because some indirect emissions are not yet chargeable in the same manner.
Regional price fragmentation in SEE alongside gas market risk
The source frames volatility in SEE power markets as increasing urgency for contracts that support both price hedging and carbon evidence needs. In Week 23 of 2026 price divergence across selected markets is reported with Italy averaging €128.09/MWh, Bulgaria €100.83/MWh, Hungary €103.15/MWh, Greece €89.25/MWh, Serbia €99.63/MWh, Croatia €99.29/MWh, while Türkiye averaged only €22.53/MWh.
The source adds gas risk through TTF gas futures averaging €48.56/MWh during the first week of June while one-month forward contracts traded near €49.335/MWh. It also warns European gas markets remain vulnerable to LNG disruption, storage risk and competition for cargoes.
Procurement priorities: price hedging plus decarbonisation evidence
The procurement challenge is described as having three linked purposes: price hedging, decarbonisation and CBAM evidence support under volatile conditions in SEE and wider Europe . A buyer fixing price but unable to prove low-carbon supply is described as addressing only one element of requirements while certificates without control over volatile spot residual supply address only part of the problem.
The source also states that signing a PPA without metering and verification rights may still fail evidence tests required for CBAM declarations . This positions integrated products combining contractual terms with data access as necessary for meeting buyer expectations around allocation decisions during production periods.
Producer roles across renewables, hydro, thermal generation and storage
The source describes expectations placed on power producers where buyers ask for documentation at least as intensively as they ask for price . Renewable producers are expected to provide asset-level generation data including metering records plus certificate issuance and cancellation evidence along with curtailment logs and outage reports tied contractually to industrial buyers.
The framework expects hydro producers to document generation origin alongside dispatch periods and certificate treatment so that low-carbon attributes remain traceable without double-counting . Thermal producers are described as facing different expectations where fossil-based residual supply could be treated as a liability unless explicitly separated, priced and disclosed within contract structures supporting buyer reporting needs.
Trader requirements: reconciliation systems plus importer-facing documentation
The source describes trader preparation requirements where “best” industrial contracts are framed around defensibility rather than cheapest pricing . Traders need systems reconciling generation with consumption records plus certificates schedules and imbalances while managing residual electricity transparently . They also need monthly evidence packs that industrial buyers can pass to EU importers while avoiding double-counting renewable attributes.
Toward structured services including sleeving, shaping and certificate management
A CBAM-ready trader offering capabilities listed includes structured renewable PPAs; sleeving services; balancing and shaping; storage optimisation; certificate management; residual mix disclosure; hourly or settlement-period reporting; importer-facing documentation; verifier cooperation; plus audit-ready data rooms . The source characterises this service model as higher-margin than commodity trading but requiring stronger controls .
Buyer information needs: five questions tied directly to declaration use
The source lists five questions industrial buyers are expected to demand answers for within their electricity contracts supporting CBAM claims . These include identifying what electricity was consumed during production of CBAM goods; which emissions factor was attached; whether claims rely on default factors actual factors PPAs direct technical links or blended methods; whether evidence reconciles with production volumes plus product-level allocation; and whether EU importers or authorised CBAM declarants can use evidence safely in declarations . Any producer or trader unable to answer these questions is described as selling a weaker product within this framework.
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