Steel producers in the Western Balkans face increasing pressure to decarbonise their energy supply and meet EU customer requirements. Renewable electricity procurement can support these objectives, but it should not be automatically linked to lower CBAM certificate costs for every steel product.
CBAM methodology prioritises direct emissions for covered goods
For iron-and-steel and aluminium goods currently listed in Annex II of the CBAM framework, the calculation focuses on direct emissions. Purchased-electricity emissions therefore do not automatically reduce current certificate liability for these goods, even when renewable electricity delivers operational and environmental benefits.
For covered steel products, CBAM liability depends on the production route, fuels, process emissions and the precursor chain. Electricity procurement can still support decarbonisation and commercial competitiveness, but its benefits need to be separated from emissions categories that legally enter the current CBAM calculation.
Product classification and precursor mapping guide CBAM liability
Steel producers are advised to start by classifying the product and mapping its production route. They also need to identify relevant precursors before assessing which emissions categories apply under CBAM.
After determining the applicable emissions categories, companies can connect electricity procurement to a specific regulatory or customer benefit. This approach is intended to ensure that customer-facing claims or environmental attributes are not treated as emissions categories used in the current certificate calculation.
Commercial value of renewable power extends beyond CBAM savings
Green electricity can reduce operating emissions and support corporate procurement requirements. It can also improve product-level information supplied to customers and strengthen the economics of electric arc furnace (EAF) production.
A domestic renewable power purchase agreement (PPA) can hedge wholesale electricity price exposure while providing long-term demand for renewable generation projects. These benefits are described as providing a commercial basis for renewable electricity procurement independently of any immediate reduction in CBAM certificate liability.
Banks assessing PPAs are expected to evaluate demonstrable value, including electricity price stability, counterparty credit quality, renewable attributes, operating resilience and customer demand. The material also notes that a premium based only on unsubstantiated claims of current CBAM savings is a weaker basis for financing.
Separating electricity procurement evidence from CBAM emissions data
Steel companies can combine competitive renewable electricity pricing with Guarantees of Origin (GoOs) and metering records for customer reporting. In parallel, they can improve data on direct process emissions and precursor emissions for CBAM purposes.
Keeping these elements distinct is presented as a way to capture renewable electricity benefits without confusing environmental attributes or customer-facing claims with the emissions categories used in current certificate calculations. For steel buyers, the decision rule is described as paying for renewable electricity against a defined energy, customer or decarbonisation benefit rather than relying on generic CBAM savings.
COM(2025) 989 proposes changes to future electricity treatment
A separate legislative proposal, COM(2025) 989, would revise electricity treatment, including the methodology for electricity default values and conditions governing actual values. It would also broaden physical PPAs to include intermediaries and change elements of the congestion and nomination framework.
The Council adopted its negotiating position on 12 June 2026, followed by the European Parliament’s position on 15 September 2026. The proposal remains under interinstitutional negotiation and is not treated as enacted legislation.
The same legislative file proposes expanding CBAM downstream coverage from 2028 to selected steel- and aluminium-intensive goods. Both institutions support an expansion, but their proposed product lists differ and remain subject to negotiation; until final adoption, the existing scope remains the operating baseline.