The European Commission has published a technical study on indirect emissions under the Carbon Border Adjustment Mechanism (CBAM), dated 8 June 2026, through DG TAXUD. The work addresses how emissions from electricity consumed in producing CBAM goods should be calculated. It also covers when importers may claim actual indirect emissions and whether indirect emissions coverage should be extended to additional CBAM sectors. (Taxation and Customs Union)
The Commission structures the study around three policy questions. It examines how to determine operational default emission factors for indirect emissions. It also sets out conditions under which declarants may claim actual indirect emissions, including rules for direct technical links, power purchase agreements and verification. A third question considers whether indirect emissions should be extended to additional CBAM sectors. (Taxation and Customs Union)
The broader final report describes an approach that combines methodological assessment, review of existing CBAM rules, scenario testing and stakeholder input. It evaluates environmental integrity, carbon-leakage prevention, administrative feasibility and even-handed treatment between EU and non-EU producers. It also identifies risks including resource shuffling, weak data, verification complexity and overlap with EU indirect cost compensation. (Publications Office of the EU)
Electricity as a compliance variable in CBAM
The study’s main signal is that electricity is becoming a core CBAM compliance variable. Until now, many exporters have treated CBAM primarily as plant-level process emissions, including fuel combustion, calcination, process chemistry, reduction agents and furnace emissions. The Commission’s new study indicates that the electricity component is moving closer to formal compliance architecture.
The relevance is highest for aluminium, steel, fertilisers, cement, hydrogen and other electricity-intensive processing chains. The focus includes countries outside the EU where grid electricity can have higher carbon intensity than the EU average. For the Western Balkans, Türkiye, Ukraine, North Africa, the Gulf and parts of Asia, the study points to stronger requirements for evidence on electricity origin, metering, consumption boundaries and contractual power supply.
Default emission factors for indirect electricity
One policy area covers the design of default emission factors for indirect emissions. The practical question is which emissions factor should be used when an exporter or declarant cannot prove actual electricity-related emissions with sufficient quality.
The commercial importance is described as substantial because a default factor can become a baseline penalty for weak data. If an exporter cannot document actual electricity consumption and supply, the CBAM declarant may need to rely on a conservative default value. For countries with carbon-intensive grids, this could raise embedded-emissions figures and increase CBAM certificate exposure once the definitive system becomes fully operational.
For exporters, the operational lesson is that weak electricity data may become costly under CBAM calculations. Plants are expected to show not only total electricity consumption but also consumption by installation, production line, product route, batch or process boundary. The study links this to CBAM readiness requirements for aluminium rolling, steel rolling, ferroalloys, cement grinding, ammonia production, hydrogen production and precursor production.
Actual indirect emissions: PPAs, technical links and verification
A second policy area examines when declarants may claim actual indirect emissions. It includes requirements for direct technical links, power purchase agreements and verification processes. The Commission’s publication explicitly identifies PPAs and technical links as central design conditions. (Taxation and Customs Union)
The study frames this as a signal for green electricity procurement because claims about renewable or low-carbon electricity are expected to require more than certificates or supplier statements. Credibility of actual-indirect-emissions claims is described as depending on physical evidence, contractual evidence and verification evidence.
A direct technical link is described as likely to be the strongest form of proof in cases such as a dedicated renewable generation asset connected to a production installation or a clearly traceable behind-the-meter arrangement. PPAs are also presented as potentially relevant; however the key issue is whether a PPA demonstrates genuine low-carbon electricity consumption rather than only reallocating clean electricity on paper while physical grid power remains carbon-intensive.
The report highlights resource shuffling as a central concern in its metadata. Resource shuffling is described as occurring when clean electricity is contractually assigned to CBAM-export production while dirtier electricity is left for other users without reducing total system emissions. The Commission indicates concern that actual-emissions claims must not become a paper exercise that undermines environmental integrity. (Publications Office of the EU)
For Serbian and Southeast Europe exporters, the implications are tied to due diligence expectations around green PPAs. A green PPA is described as insufficient without a credible data package covering power meter readings and hourly or sub-hourly consumption records where relevant. The package also includes generation proof, grid connection documentation, guarantees of origin or equivalent certificate controls, matching logic, settlement records and independent verification.
Extending indirect-emissions coverage across CBAM sectors
A third policy area addresses whether and how indirect-emissions coverage could be extended to additional CBAM sectors. Under the definitive CBAM framework described in the summary provided for Task 2, indirect emissions are currently covered for cement and fertilisers.
During the transitional period referenced in the summary for Task 2, indirect emissions are reported for all CBAM goods except electricity. (Publications Office of the EU)
The Task 3 summary places this question within a broader EU carbon leakage framework that includes the EU ETS Directive, free allocation and indirect cost compensation alongside the CBAM Regulation. It also notes that state-aid rules for indirect cost compensation define how Member States may compensate electricity-intensive industries for indirect carbon costs passed through power prices. (Publications Office of the EU)
The study describes political sensitivity around extending coverage because wider inclusion could increase compliance and cost burdens for non-EU exporters. If coverage is not extended broadly enough, EU producers paying indirect carbon costs through electricity prices may argue imports face no equivalent constraint. The balancing described in the report includes environmental integrity, WTO/legal robustness, administrative feasibility and competitive neutrality.
Sectors affected by electricity-linked calculations
For energy-intensive sectors discussed in the study’s scope framing, aluminium is identified as an obvious candidate because electricity is central to primary aluminium emissions and cost structure. Steel is also described as potentially affected through electric arc furnace routes plus rolling and downstream processing steps.
The study also points to hydrogen-based pathways affecting steel-related chains where applicable. Fertilisers are presented as relevant because electricity can influence ammonia production routes and hydrogen-related production routes.
Cement is described as affected through grinding and electricity consumption even though process emissions remain dominant within cement production chains.
Exporter readiness: building an electricity evidence system
The exporter implication described in the study materials is that CBAM readiness must include an electricity evidence system. Exporters are described as needing not only legal readiness but data architecture built before final legal wording becomes available.
The minimum credible package listed includes plant-level electricity balance and production-process boundary maps. It also includes product-level electricity allocation rules plus metering hierarchy details and electricity supplier contracts alongside PPA documentation.
The package further includes guarantees of origin or equivalent instruments plus grid-emission-factor assumptions. It also requires an audit trail linking electricity use to exported goods so importer review can be supported by documentation.
Importer review and mirror-verification expectations
The role of the EU importer changes under these requirements because supplier declarations cannot be accepted at face value by importers or authorised CBAM declarants. Importers are expected to apply mirror-verification steps rather than relying solely on exporter-provided documentation.
The protocol described includes requesting supplier data followed by plausibility checks on contract terms tied to electricity supply arrangements. It also includes reviewing metering evidence plus reconciling production volumes with embedded-emissions calculation inputs.
If data quality is weak, escalation rules are expected to apply within this review process framework.
PPA bankability linked to structured compliance evidence
The study describes a commercial opportunity for renewable developers outside the EU through PPAs with exporters facing reduced CBAM indirect-emissions exposure. A PPA with an exporter may improve offtaker credit quality while strengthening bankability of renewable projects serving industrial customers.
PPA value depends on compliance credibility rather than contract labeling alone. A generic green contract is described as weaker than a structured CBAM-ready PPA supported by clear metering arrangements plus generation matching logic.
The materials list certificate retirement processes along with grid connection evidence as part of structured arrangements. They also reference delivery shape requirements plus balancing responsibility details and verification access provisions needed for compliance-grade documentation.
Verification support: technical due diligence before sign-off
The study reinforces third-party technical support needs before formal verification steps occur under CBAM processes described in its scope framing. Exporters are expected to use consultants who understand production processes alongside electricity systems integration details such as metering configurations.
The readiness review described extends beyond accounting support into technical due diligence covering SCADA inputs plus PPA arrangements and guarantees of origin controls tied to emission-factor logic.
A practical readiness review checklist includes an electrical single-line diagram plus grid interfaces with self-generation assets where relevant. It also covers metering points plus transformer and substation records alongside SCADA logs capturing operational data used in reconciliation between production volumes and electricity consumption.
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