EU CBAM electricity reform could broaden recognition of indirect physical power purchase agreements (PPAs), a change described as commercially significant for cross-border electricity arrangements. The approach would aim to reflect the role of intermediaries while keeping requirements for verifiable supply. The proposal is linked to COM(2025) 989, which is still under negotiation.
In current market practice, utilities and electricity traders structure power supply, manage balancing, and intermediate credit between renewable generators and industrial consumers. Under the existing CBAM framework, eligibility for actual electricity emissions values can be difficult when the physical PPA relationship requires a direct connection between the generating installation and the authorised CBAM declarant. This constraint affects how cross-border electricity contracts are structured for compliance purposes.
More flexible contractual chains for industrial electricity procurement
The reform could permit more flexible contractual chains that involve intermediaries, provided that requirements for demonstrating electricity supply and emissions are met. The change is expected to give industrial steel and aluminium buyers more options to procure electricity through licensed suppliers rather than contracting directly with generators. It also points to potential ways to aggregate smaller renewable projects into portfolios aligned with industrial demand.
Any broader PPA framework would not remove obligations tied to evidence and risk management. The need to demonstrate electricity quantities, maintain source traceability, and manage counterparty risk would remain part of the applicable CBAM requirements. Intermediated arrangements would still need to preserve the information needed for compliance.
Traceability, lender expectations, and contract allocation
Lenders would continue to require clear data-access rights, documented allocation arrangements, and transparent responsibility for losses. Traders would need to show how electricity moves through the contractual chain so that intermediated supply does not undermine evidence required under CBAM rules. Contracts would also be expected to address financial consequences if regulatory requirements are simplified.
Where reporting or contractual systems must be revised due to regulatory change, agreements would need to specify who benefits from cost savings and who bears reasonable transition costs. This includes situations where changes affect systems, reporting processes, or contractual structures used for compliance. The reform therefore intersects both operational documentation and commercial contract terms.
CBAM timetable effects on importer cash flow
The CBAM compliance timetable creates a separate treasury consideration for importers. For 2026 imports, certificate sales are scheduled to begin on 1 February 2027, while the first annual declaration and certificate-surrender deadline is 30 September 2027. These dates shape when financial obligations begin relative to import activity.
From 2027, the general certificate-pricing mechanism shifts to weekly averaging of auction prices. Quarterly holding requirements become part of the treasury cycle as well. As a result, financial effects cannot be assessed only by reference to headline electricity costs or expected benefits from a renewable PPA.
Extension of CBAM scope from 2028 to downstream goods
The same legislative file proposes extending CBAM from 2028 to selected steel- and aluminium-intensive downstream goods. Support for expansion comes from both the Council of the EU and the European Parliament, though their proposed product lists differ. The final lists remain subject to negotiation.
Manufacturers planning capital expenditure for 2027–2028 could use proposed product lists as scenarios when designing data systems and electricity procurement strategies. Investments would still need flexibility because the final scope has not been adopted, while the existing scope remains the operating baseline during ongoing negotiations.
Status of COM(2025) 989 and negotiating milestones
COM(2025) 989 would change elements including electricity default-value methodology and aspects of conditions for using actual emissions values. It also covers recognition of physical PPAs involving intermediaries and adjustments related to congestion and nomination frameworks. The proposal is not enacted law at this stage.
The Council adopted its negotiating position on 12 June 2026, while the European Parliament adopted its position on 15 September 2026. The file remains under interinstitutional negotiation and should not be treated as legislation already in force. For policy-sensitive investments, maintaining flexibility while current-law controls remain applicable until an adopted rule changes them is described as an approach reflected in the proposal context.